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Exit from the Meatpacking Industry: A Microdata Analysis

Author

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  • Donald W. Anderson
  • Brian C. Murray
  • Jackqueline L. Teague
  • Richard C. Lindrooth

Abstract

We model the determinants of plant exit from the cattle-slaughter industry using probit to distinguish between plant-level (e.g., age, scale, and scope) and market-level (e.g., market share, concentration, and competitive fringe) factors. Market variables are shown to be less important determinants of exit than plant-level factors, though a significant tendency for very small plants to exit already highly concentrated markets is apparent. Government actions to stem the industry's consolidation must consider the trade-off between welfare gains from the reduction of market power and welfare losses from foregone technological efficiency improvements. Copyright 1998, Oxford University Press.

Suggested Citation

  • 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.
    • Handle: RePEc:oup:ajagec:v:80:y:1998:i:1:p:96-106
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    Cited by:

    1. Muth, Mary K. & Karns, Shawn A. & Wohlgenant, Michael K. & Anderson, Donald W., 2002. "Exit Of Meat Slaughter Plants During Implementation Of The Pr/Haccp Regulations," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(1), pages 1-17, July.
    2. Ollinger, Michael & Nguyen, Sang V. & Blayney, Donald P. & Chambers, William & Nelson, Kenneth B., 2005. "Effect of Food Industry Mergers and Acquisitions on Employment and Wages," Economic Research Report 7250, United States Department of Agriculture, Economic Research Service.
    3. Ward, Clement E., 2002. "A Review of Causes for and Consequences of Economic Concentration in the U.S. Meatpacking Industry," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 3, pages 1-28, January.
    4. Mary K. Muth & Michael K. Wohlgenant & Shawn A. Karns, 2007. "Did the Pathogen Reduction and Hazard Analysis and Critical Control Points Regulation Cause Slaughter Plants to Exit?," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(3), pages 596-611.
    5. Tina L. Saitone & K. Aleks Schaefer & Daniel Scheitrum & Shawn Arita & Vince Breneman & Rebecca Nemec Boehm & Josh G. Maples, 2024. "Consolidation and Concentration in U.S. Meat Processing: Updated Measures Using Plant-Level Data," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 64(1), pages 35-56, February.
    6. Hayes Dermot & Jacobs Keri & Schulz Lee & Crespi John, 2023. "Resilience of U.S. Cattle and Beef Sectors: Lessons from COVID-19," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 21(1), pages 53-67, May.
    7. Hornung, Jonathan T. & Ward, Clement E., 2005. "Positive Market Effects from a Meatpacking Plant Opening: Perceptions and Reality," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 6, pages 1-10, March.
    8. Franz Sinabell, 2005. "Marktspannen und Erzeugeranteil an den Ausgaben für Nahrungsmittel," WIFO Studies, WIFO, number 25398.
    9. Wohlgenant, Michael K. & Karns, Shawn A. & Muth, Mary K. & Anderson, Donald W., 2001. "Plant Entry And Exit From The Meatpacking Industry During Pathogen Reduction And Haccp Implementation," 2001 Annual meeting, August 5-8, Chicago, IL 20673, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Michael Ollinger & Danna Moore, 2007. "Food safety approaches to examining HACCP costs and performance and technologies," Agribusiness, John Wiley & Sons, Ltd., vol. 23(2), pages 193-210.
    11. Camilo Sarmiento & William Wilson, 2007. "Spatially correlated exit strategies in the baking industry," Applied Economics, Taylor & Francis Journals, vol. 39(4), pages 441-448.
    12. Tengying Weng & Tomislav Vukina & Xiaoyong Zheng, 2015. "The Effects of Productvity and Demand-Specific Factors on Plant Survival and Ownership Change in the U.S. Poultry Industry," Working Papers 15-20, Center for Economic Studies, U.S. Census Bureau.
    13. Hooker, Neal H. & Nayga, Rodolfo M., Jr. & Siebert, John W., 2002. "The Impact Of Haccp On Costs And Product Exit," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 34(1), pages 1-10, April.
    14. Brester, Gary W. & Marsh, John M., 2001. "The Effects Of U.S. Meat Packing And Livestock Production Technologies On Marketing Margins And Prices," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(2), pages 1-18, December.
    15. Andrianos Tsekrekos, 2013. "Irreversible exit decisions under mean-reverting uncertainty," Journal of Economics, Springer, vol. 110(1), pages 5-23, September.
    16. Brady, Michael P. & Marsh, Thomas L., 2013. "Do Changes in Orchard Supply Occur at the Intensive or Extensive Margin of the Landowner?," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150452, Agricultural and Applied Economics Association.
    17. Ollinger, Michael & Mueller, Valerie, 2003. "Managing For Safer Food: The Economics Of Sanitation And Process Controls In Meat And Poultry Plants," Agricultural Economic Reports 33975, United States Department of Agriculture, Economic Research Service.
    18. 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," Research Discussion Papers 29242, Montana State University, Department of Agricultural Economics and Economics, Trade Research Center.

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