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Technological Change In The U.S. Beef And Pork Sectors: Impacts On Farm-Wholesale Marketing Margins And Livestock Prices

Author

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  • Marsh, John M.
  • Brester, Gary W.

Abstract

Real livestock prices and farm-wholesale marketing margins have steadily declined over the past 20 years. Many studies have examined the effects of increasing packer concentration on these declines. However, most have generally failed to account directly for technological change in livestock production and red meat slaughtering. We estimate reduced form models for beef and pork farm-wholesale marketing margins and cattle and hog prices that specifically include measures of technological change. Empirical results indicate that meat packing technology has reduced real margins and technological change embodied in cattle and hog production accounts for substantial declines in real slaughter cattle and hog prices. When technological change is explicitly considered, we find that increasing packer concentration: (1) does not affect real farm-wholesale marketing margins, (2) positively affects real slaughter cattle prices, and (3) does not affect real slaughter hog prices.

Suggested Citation

  • Marsh, John M. & Brester, Gary W., 1999. "Technological Change In The U.S. Beef And Pork Sectors: Impacts On Farm-Wholesale Marketing Margins And Livestock Prices," Trade Research Center Research Discussion Papers 29242, Montana State University, Department of Agricultural Economics and Economics.
  • Handle: RePEc:ags:motrdp:29242
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    File URL: http://purl.umn.edu/29242
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    References listed on IDEAS

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    1. Lee, Jung-Hee & Brorsen, B. Wade, 1994. "Effect of Risk Aversion on Feeder Cattle Prices," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 26(02), pages 386-392, December.
    2. Ted C. Schroeder & Clement E. Ward & James R. Mintert & Derrell S. Peel, 1998. "Value-Based Pricing of Fed Cattle: Challenges and Research Agenda," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 20(1), pages 125-134.
    3. Eales, James S., 1994. "The Inverse Lewbel Demand System," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 19(01), July.
    4. Dunn, James E. & Heien, Dale, 1985. "The Demand For Farm Output," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 10(01), July.
    5. Lustgarten, Steven, 1979. "Gains and Losses from Concentration: A Comment," Journal of Law and Economics, University of Chicago Press, vol. 22(1), pages 183-190, April.
    6. James Kliebenstein & Peter F. Orazem, 1999. "The Structure of Wages and Benefits in the U.S. Pork Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 144-163.
    7. Brester, Gary W. & Mustek, Douglas C., 1995. "The Effect of Market Concentration on Lamb Marketing Margins," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 27(01), pages 172-183, July.
    8. John M. Marsh, 1999. "The Effects of Breeding Stock Productivity on the U.S. Beef Cattle Cycle," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(2), pages 335-346.
    9. Brester, Gary W. & Schroeder, Ted C. & Mintert, James R., 1997. "Challenges to the Beef Industry," Choices, Agricultural and Applied Economics Association, vol. 12(4).
    10. Brester, Gary W. & Musick, Douglas C., 1995. "The Effect Of Market Concentration On Lamb Marketing Margins," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 27(01), July.
    11. Donald W. Anderson & Brian C. Murray & Jackqueline L. Teague & Richard C. Lindrooth, 1998. "Exit from the Meatpacking Industry: A Microdata Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 96-106.
    12. Quail, Gwen & Marion, Bruce & Geithman, Frederick & Marquardt, Jeffrey, 1986. "The Impact of Packer Buyer Concentration on Live Cattle Prices," Working Papers 204089, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.
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    More about this item

    Keywords

    livestock prices; marketing margins; packer concentration; technological change; Marketing; Research and Development/Tech Change/Emerging Technologies; D4;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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