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Meatpacking plant capacity and utilization: Implications for competition and pricing

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  • Clement E. Ward

    (Extension Economist in the Department of Agricultural Economics, Oklahoma State University, Stillwater)

Abstract

A conceptual framework for examining implications of excess slaughtering capacity in meatpacking is presented. Excess capacity stems from two sources: percentage plant utilization based on line speed and based on length of operating time per given period. Data from a mail survey of 310 meatpacking firms verified that significant size differences exist among slaughtering plants. Significant differences in percentage utilization were also found for some species. Results suggest larger fed cattle slaughtering firms could be paying higher prices for cattle purchased.

Suggested Citation

  • Clement E. Ward, 1990. "Meatpacking plant capacity and utilization: Implications for competition and pricing," Agribusiness, John Wiley & Sons, Ltd., vol. 6(1), pages 65-73.
    • Handle: RePEc:wly:agribz:v:6:y:1990:i:1:p:65-73
    DOI: 10.1002/1520-6297(199001)6:1<65::AID-AGR2720060107>3.0.CO;2-V
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    References listed on IDEAS

    as
    1. Crom, Richard J., 1988. "Economics of the U.S. Meat Industry," Agricultural Information Bulletins 309472, United States Department of Agriculture, Economic Research Service.
    2. V. Eldon Ball & Robert G. Chambers, 1982. "An Economic Analysis of Technology in the Meat Products Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(4), pages 699-709.
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    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. Jan Schiefer & Monika Hartmann, 2008. "Determinants of competitive advantage for German food processors," Agribusiness, John Wiley & Sons, Ltd., vol. 24(3), pages 306-319.
    4. Parcell, Joseph L. & Schroeder, Ted C. & Dhuyvetter, Kevin C., 1997. "The Effect of Captive Supply Cattle on Live Cattle Basis," 1997 Annual Meeting, July 13-16, 1997, Reno\ Sparks, Nevada 35911, Western Agricultural Economics Association.
    5. Morrison, Catherine J., 1997. "Economic performance, cost economies and pricing behaviour in the US and Australian meat products industries," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 41(3), pages 1-23.
    6. Blank, Steven C. & Saitone, Tina L. & Sexton, Richard J., 2014. "Seller-Offered Forward Contracts: An Additional Benefit to Cattle Producers from Satellite Video Auctions," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162323, Southern Agricultural Economics Association.
    7. Parcell, Joe & Mintert, James & Plain, Ron, 2004. "An Empirical Investigation of Live-Hog Demand," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 36(3), pages 773-787, December.
    8. Siebert, John W. & Nayga, Rodolfo M., Jr. & Thelen, Gina C. & Kuker, Don, 2000. "Enhancing The Financial Performance Of Small Meat Processors," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 3(3), pages 1-12.
    9. Han, Chaodong & Porterfield, Tobin & Li, Xiaolin, 2012. "Impact of industry competition on contract manufacturing: An empirical study of U.S. manufacturers," International Journal of Production Economics, Elsevier, vol. 138(1), pages 159-169.
    10. Schroeder, Ted C., 1997. "Fed Cattle Spatial Transactions Price Relationships," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 29(2), pages 1-16, December.
    11. Stephen R. Koontz & John D. Lawrence, 2010. "Impacts of alternative marketing agreement cattle procurement on packer costs, gross margins, and profits: evidence from plant-level profit and loss data," Agribusiness, John Wiley & Sons, Ltd., vol. 26(1), pages 1-24.
    12. Koontz, Stephen R. & Muth, Mary K. & Lawrence, John D., 2007. "Impacts of Alternative Marketing Agreement Cattle Procurement Volumes on Packer Costs: Evidence from Plant-Level P&L Data," 2007 Conference, April 16-17, 2007, Chicago, Illinois 37559, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    13. Barkley, Andrew P. & Schroeder, Ted C., 1991. "The Use Of Forward Contracts In Fed Cattle Markets," 1991 Annual Meeting, August 4-7, Manhattan, Kansas 271280, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    14. MacDonald, James M. & Ollinger, Michael & Nelson, Kenneth E. & Handy, Charles R., 2000. "Consolidation In U.S. Meatpacking," Agricultural Economic Reports 34021, United States Department of Agriculture, Economic Research Service.
    15. Christopher N. Boyer & Dayton M. Lambert & Charles C. Martinez & Joshua G. Maples, 2023. "Beef and pork processing plant labor costs," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 691-702, July.
    16. Eunchun Park & Christopher N. Boyer & Clinton L. Neill, 2025. "A Markov regime-switching event response model: beef price spread response to processing capacity shocks," Empirical Economics, Springer, vol. 68(3), pages 1039-1071, March.

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