Productivity Growth Patterns in U.S. Food Manufacturing: Case of Meat Products Industry

A panel constructed from the Census Bureau’s Longitudinal Research Database is used to measure total factor productivity growth at the plant-level and analyzes the multifactor bias of technical change for the U.S. meat products industry from 1972 through 1995. For example, addressing TFP growth decomposition for the meat products sub-sector by quartile ranks shows that the technical change effect is the dominant element of TFP growth for the first two quartiles, while the scale effect dominates TFP growth for the higher two quartiles. Throughout the time period, technical change is 1) capital-using; 2) material-saving; 3) labor-using; and, 4) energy-saving and becoming energy-using after 1980. The smaller sized plants are more likely to fluctuate in their productivity rankings; in contrast, large plants are more stable in their productivity rankings. Plant productivity analysis indicate that less than 50% of the plants in the meat industry stay in the same category, indicating considerable movement between productivity rank categories. Investment analysis results strongly indicate that plant-level investments are quite lumpy since a relatively small percent of observations account for a disproportionate share of overall investment. Productivity growth is found to be positively correlated with recent investment spikes for plants with TFP ranking in the middle two quartiles and uncorrelated with firms in the smallest and largest quartiles. Similarly, past TFP growth rates are positively correlated with future investment spikes for firms in the same quartiles. \