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Do Alternative Marketing Arrangements Increase Pork Packers' Market Power?

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  • Xiaoyong Zheng
  • Tomislav Vukina

Abstract

In this article we use structural econometrics to formally test whether the use of the alternative marketing arrangements (AMAs) by pork packers is the source of their market power on the spot (cash) market for live hogs. We specify the pork packers' conjectures of the change in the industry total market procurement of live hogs through the spot market with respect to their AMAs stocks. The test is carried out using the mandatory price reporting data. Our results show that pork packers have statistically significant market power on the spot market for live hogs, but the source of that market power cannot be narrowed down to the existence of AMAs stocks. Copyright 2009, Oxford University Press.

Suggested Citation

  • Xiaoyong Zheng & Tomislav Vukina, 2009. "Do Alternative Marketing Arrangements Increase Pork Packers' Market Power?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 250-263.
    • Handle: RePEc:oup:ajagec:v:91:y:2009:i:1:p:250-263
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2008.01185.x
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    Citations

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    Cited by:

    1. Xia, Tian & Sancewich, Brian, 2012. "Retail Markets and Buyer Power in Agricultural Procurements," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124929, Agricultural and Applied Economics Association.
    2. Tian Xia & John M. Crespi & Kevin C. Dhuyvetter, 2019. "Could packers manipulate spot markets by tying contracts to futures prices? And do they?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 67(1), pages 85-102, March.
    3. Inbae Ji & Chanjin Chung & Jungmin Lee, 2017. "Measuring Oligopsony Power in the U.S. Cattle Procurement Market: Packer Concentration, Cattle Cycle, and Seasonality," Agribusiness, John Wiley & Sons, Ltd., vol. 33(1), pages 16-29, January.
    4. Tian Xia & Brian Sancewich, 2018. "Interaction between buyer power in agricultural procurement and seller power in food retailing, and optimal allocation of anti-trust efforts," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 6(1), pages 1-19, December.
    5. MacDonald, James M. & Dong, Xiao & Fuglie, Keith O., 2023. "Concentration and Competition in U.S. Agribusiness," Economic Information Bulletin 337566, United States Department of Agriculture, Economic Research Service.
    6. Kim, Jong-Jin & Zheng, Xiaoyong, 2015. "Effects of Alternative Marketing Arrangements on the Spot Market Price Distribution in the U.S. Hog Market," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(2), pages 1-24, May.
    7. Key Nigel, 2011. "Does the Prevalence of Contract Hog Production Influence the Price Received by Independent Hog Producers?," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 9(1), pages 1-26, May.
    8. Shang, Max Zongyuan & McEwan, Ken, 2017. "The Boundary of the Farm: Homegrown versus Purchased Feed on Ontario Swine Farms," Annual Meeting, 2017, June 18-21, Montreal, Canada 264191, Canadian Agricultural Economics Society.
    9. Simon Pröll & Heidelinde Grüneis & Franz Sinabell, 2022. "Market Concentration, Producer Organizations, and Policy Measures to Strengthen the Opportunities of Farmers for Value Addition—Empirical Findings from the Austrian Meat Supply Chain Using a Multi-Met," Sustainability, MDPI, vol. 14(4), pages 1-18, February.
    10. Adjemian, Michael & Brorsen, B. Wade & Hahn, William & Saitone, Tina L. & Sexton, Richard J., 2016. "Thinning Markets in U.S. Agriculture," Economic Information Bulletin 232928, United States Department of Agriculture, Economic Research Service.
    11. Ji, In Bae & Chung, Chanjin, 2011. "Dynamic Assessment of Bertrand Oligopsony in the U.S. Cattle Procurement Market," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103558, Agricultural and Applied Economics Association.
    12. Ji, Inbae & Chung, Chanjin, 2016. "Assessment Of Market Power And Cost Efficiency Effects In The U.S. Beef Packing Industry," Journal of Rural Development/Nongchon-Gyeongje, Korea Rural Economic Institute, vol. 39(Special, ), pages 1-24, December.
    13. Perekhozhuk, Oleksandr & Chezhia, Giorgi & Glauben, Thomas, 2021. "Measuring Oligopsony Market Power in Kazakh Grain-Processing Industry: Converging Evidence from Two Structural Approaches," 2021 Conference, August 17-31, 2021, Virtual 315345, International Association of Agricultural Economists.
    14. Rao Fu & Chenguang Li & Liming Wang, 2021. "Market Power in the Irish Beef Processing Industry," Sustainability, MDPI, vol. 13(11), pages 1-18, June.
    15. Timothy A. Wise & Sarah E. Trist, "undated". "Buyer Power in U.S. Hog Markets: A Critical Review of the Literature," GDAE Working Papers 10-04, GDAE, Tufts University.
    16. 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.

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