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Rigidity in Packer-Feedlot Relationships

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  • Hunnicutt, Lynn
  • Bailey, DeeVon
  • Crook, Michelle

Abstract

Concentration in beef packing has risen dramatically in the past 25 years. We develop measures used to describe feedlot-packer relations: (1) a statistic based on the proportion of its sales a feedlot makes to a given packer, and (2) a measure of the switching behavior of feedlots. The measures are calculated using a confidential data set from the USDA Grain Inspection, Packers, and Stockyards Administration. Relationships are found to be both exclusive and stable. Causes for this rigidity are then examined using regression analysis. Transaction costs are shown to help explain why this market differs from a perfectly competitive one.

Suggested Citation

  • Hunnicutt, Lynn & Bailey, DeeVon & Crook, Michelle, 2004. "Rigidity in Packer-Feedlot Relationships," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 36(3), pages 1-12, December.
    • Handle: RePEc:ags:joaaec:43453
    DOI: 10.22004/ag.econ.43453
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    References listed on IDEAS

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    1. Ward, Clement E. & Koontz, Stephen R. & Schroeder, Ted C., 1998. "Impacts From Captive Supplies On Fed Cattle Transaction Prices," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(2), pages 1-21, December.
    2. Stephen R. Koontz, 1999. "Marketing Agreement Impacts in an Experimental Market for Fed Cattle," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(2), pages 347-358.
    3. Baldwin, John R & Gorecki, Paul K, 1994. "Concentration and Mobility Statistics in Canada's Manufacturing Sector," Journal of Industrial Economics, Wiley Blackwell, vol. 42(1), pages 93-103, March.
    4. Ted C. Schroeder & Rodney Jones & James Mintert & Andrew P. Barkley, 1993. "The Impact of Forward Contracting on Fed Cattle Transaction Prices," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 15(2), pages 325-337.
    5. Azzeddine Azzam, 1998. "Captive Supplies, Market Conduct, and the Open-Market Price," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 76-83.
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    Cited by:

    1. Lee, Yoonsuk & Ward, Clement E. & Brorsen, B. Wade, 2010. "Relationships among Prices across Alternative Marketing Arrangements for Fed Cattle and Hogs," 2010 Annual Meeting, February 6-9, 2010, Orlando, Florida 56282, Southern Agricultural Economics Association.
    2. Ward, Clement E., 2007. "Feedlot and Packer Pricing Behavior: Implications for Competition Research," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 7365, Western Agricultural Economics Association.

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