Contracting in the U.S. Pork and Beef Industries: Extent, Motives, and Issues

Contracting has increased significantly in the US livestock-meat sector. Over half of finished hogs and about a third of fed cattle are marketed under some form of contract. Contracting motives vary by type of contract, whether buyer or seller, and by commodity. Several motives for buyers and sellers of finished hogs and fed cattle are identified and discussed. Issues related to contracting per se and the trend toward increased contracting have been raised by contracting opponents, politicians, and economists. Several of these issues are discussed under six headings. Lastly, agricultural economists are encouraged to become actively involved in addressing these issues, especially providing pragmatic education and assistance to those involved in contracting.     

Evolving Marketing Channels for Beef and Lamb in the United Kingdom-

This paper investigates the effects of: (1) recent changes to food safety legislation; (2) increasing consumer concerns over animal welfare; and (3) further market integration in the European Union on British agribusiness firms involved in marketing beef and lamb. It is hypothesized that these changes will alter the transaction costs associated with marketing these products. As a result, there is likely to be a reduction in the number of animals sold for slaughter through traditional auction markets and an increase in direct contracting or strategic alliances between supermarkets and farmers' marketing cooperatives.     

The Canadian Beef and Pork Sectors: New Found Relevance of Live Market Information

The structure of price transmission both vertically (between links in the market channel) and horizontally (between market areas) for beef and pork in Canada is examined. The analysis of vertical price transmission indicates that farmgate prices lead retail prices. The hypothesized relationship between retail and farmgate prices is that the farmgate demand curve is shifted by wholesaler anticipation of the retail price changes. Such a situation would place greater importance on the live markets since prices determined in these markets would eventually be reflected in the retail market. The results have further implications for the determination of price margins and related policy issues.     

Agricultural Growth and Inter‐Sectoral Linkages in a Developing Economy

Does growth in the manufacturing sector of an economy spillover to agriculture, or do sectors share similar growth rates only when they share some common exogenous stimuli? The limited number of investigations of this issue, for cross‐sections of countries, have found some evidence in favour of spillovers, though the methodologies used cannot readily separate correlation from causation. Adapting the Feder (1982) model of sectoral externalities to a time‐series context, we examine how far agricultural output in Malaysia has been affected by inter‐sectoral spillovers. Our results suggest that expansion of manufacturing output, though associated with reduced agricultural output in the short‐run, is associated with agricultural expansion over the long‐run. Service output growth on the other hand seems to have been inimical to agricultural growth in both the short‐ and long‐runs, while causality testing supports the case for spillovers rather than “common causes”. Evidence on sectoral productivity is consistent with neoclassical arguments suggesting that the benefits of higher productivity in manufacturing tend to spill over to agriculture, encouraging productivity convergence.     

Vertical Integration in the Pork Industry

This article provides an economic explanation regarding why the share of U.S. pork raised on company-owned farms with hired management (integration) is increasing relative to production through independently owned-and-operated contract growers (contracting). The article develops a property rights model that shows how in certain circumstances production contracts do not transfer sufficient control over the use of production assets to intermediaries. On the other hand, integration removes certain grower incentives, with the result that production on company farms tends to be relatively costly. Practical examples of factors that influence the likelihood of full integration are emphasized.     

Effects of the Private–Label Invasion in Food Industries

Using supermarket scanner data, we test a variety of hypotheses from trade journals about the invasion of private–label food products. According to conventional industry wisdom, name–brand firms defended their brands against new private–label products by lowering their prices, engaging in additional promotional activities, and increasingly differentiating their products. Our empirical evidence is inconsistent with these beliefs.     

Processor Pressures for Change in Pork Marketing Organizations in Ontario and in Québec

This paper reviews some of the economic and political forces that are causing processors to seek changes in pork marketing organizations in Ontario and in Québec. It is argued that those forces have been arising all at once from a very wide variety of sources, the most important of which have been structural in nature and external to the local industry. As a consequence, processors find themselves in the position of pushing strongly for further major moves towards a better vertically coordinated system of marketing slaughter hogs with perhaps new forms of chain supply risk management and lower transaction costs.
L'article traite des changements économiques et politiques qui incitent les industriels de l'abattage et de la charcuterie à revendiquer des modifications aux systèmes de mise en marché des porcs d'abattage en Ontario et au Québec. Il s'agit d'une vaste combinaison de forces, y affirme-t-on, qui se sont manifestées parallè lement, et dont les plus importantes sont d'ordre structurel et sont causées par des facteurs externes à l'industrie locale. Il en résulte en bout de ligne que l'industrie de la transformation porcine revendique trés fortement, dans ces provinces, l'amorce de modifications majeures aux systèmes actuels de mise en marché des porcs d'abattage. L'objectif dominant de ces industriels consiste à renforcir les liaisons de coordination verticale dans l'industrie, y inclus celles concernant la mise en marché des porcs d'abattage, sans exclure la possibilité de créer une chaîne d'approvisionnement encore plus étroitement coordonnée et au sein de laquelle les éléments de partage de risques seraient redéfinis, tout en y réduisant les coûts de transaction par animal.     

Away-from-Home and At-Home Beef Consumption in the United States

Logit models are developed to measure the effect of socioeconomic and demographic factors on the probability of consuming beef in the United States. The analyses are done in both the away from home and at home markets using the 1987-88 National Food Consumption Survey of the U.S. Department of Agriculture. Factors that significantly affect the likelihood of eating beef include: race, seasonality, urbanization, ethnicity, household size, sex, age, and income.     

Product Differentiation in the Spanish Beef Industry

Abstract

This paper aims to investigate changes in the structure of the Spanish quality beef industry in response to the significant decline in beef consumption happened over the last few decades. The role of product differentiation, mechanisms and factors involved in it, are specially studied. We use focus groups and a survey to examine the outlook for the organization of the beef industry, and trends in the development of product differentiation mechanisms and vertical co-ordination strategies.

Results reveal the existence of a restructuring process that is being implemented in two ways: Protected Geographical Indications (PGI) and Quality Certified Brands (QCB). Each strategy forms its own entry barriers: the origin of calves in the case of PGI and farm size in QCB; they are therefore complementary rather than competitive.     

大城市高档猪肉供应链问题及发展途径

一、高档猪肉的产品和需求特性　　所谓高档猪肉是指按照“绿色食品”标准生产的 ,以大城市高收入理性消费者为目标客户 ,由配送中心配送 ,在专卖店和超市销售的猪肉。高档猪肉之所以受到高收入理性消费者的青睐 ,主要是因为它具有以下产品特性 :从核心产品来看 ,具有安全性好、营养丰富、口味独特、食用品质好等特征。这些特征使产品提供的核心利益与高收入理性消费者所追求的利益相一致 ;使产品在提供使用价值的同时 ,又能满足消费者的心理需要。从形式产品来看 ,高档猪肉具有标志明显、品质好、包装精细等特征。在保证品质的前提下 ,高档…     

Investment Under Uncertainty and Dynamic Adjustment in the Finnish Pork Industry

A stochastic dual model of investment under uncertainty is used to investigate structural adjustment in the Finnish hog industry. Value function restrictions are found to be comparable to those in existing dual models assuming deterministic state variables. The model also allows for an asymmetry in investment response during capital expansion and contraction phases. Empirical results show that investments respond negatively to increased uncertainty and that labor adjusts more slowly during contraction phases than during expansions. Results on economies of size, uncertainty effects, and adjustment rigidities have important implications for hog industry response to Finland's entry into the EU.     

An Econometric Model of the Colombian Beef Sector: 1950–1970

Recent theoretical and empirical studies of beef cattle producers by Barros, Jarvis, Nores, Reutlinger, and Yver have focused on producers' supply response assuming cattle represent consumption goods and capital goods. To differentiate producer price response for cattle sold as consumption goods and cattle retained as capital goods requires data on herd and slaughter age-sex structure. This has limited the range of econometric work which could be carried out in many developing countries. This study utilizes a time series of the Colombian cattle herd which was recently constructed by Rivas and Valdes and which has the necessary age-sex and slaughter data to develop a complete system of structural equations representing the simultaneous determination of demand and supply for Colombian cattle over the 1950–1970 period.     

Testing for Asymmetric Pricing in the Alberta Pork Market

Asymmetry tests have been used by agricultural economists to determine if the effects of price changes in one region or level in the marketing channel are transmitted to other regions or levels in the marketing channel in an identical manner for price increases and decreases. Two tests are normally conducted: sum of coefficients tests and speed of adjustment tests. In this analysis, these two tests are conducted on weekly price response equations that relate Alberta and Ontario price changes. Six separate periods of analysis are used to reflect institutional changes in the Alberta market. Evidence of asymmetrical price response is detected for the period immediately preceding the establishment of the Alberta Pork Producers Marketing Board.
Les spécialistes en économie rurale vérifient i'asymétrie des prix pour voir si la fluctuation des cours dans une région ou un élément du circuit se transmet aux autres régions ou éléments de la même façon pour les hausses et les baisses de prix. On effectue habituellement deux épreuves: (1) somme des résultats des épreuves sur les coefficients et (2) vérification de la rapidité d'ajustement. Les auteurs ont appliqué ces deux épreuves aux équations qui mesurent la réaction des prix hebdomadaires et relient les fluctuations des prix entre l'Ontario et l'Alberta. lis se sont servis de six périodes d'analyse distinctes pour tenir compte des changements institutionnels survenus sur le marché albertain. Les résultats indiquent une réaction asymétrique des prix pour la période qui a immédiatement précédé la création de l'Office de commercialisation des producteurs de pores de l'Alberta.     

生鲜猪肉流通环节利益分配机制研究

本文基于利益相关者等理论,分析了生猪流通各环节的利益分配机制。在此基础上,构建VAR模型,通过格兰杰因果关系检验以及方差分解进一步验证猪肉流通各环节的利益分配机制。研究结果表明,生鲜猪肉流通的各环节利益分配不均,其中生产环节所得的利益较低;各环节的利益波动具有传导性,以批发环节为中心向生产和零售环节两端传导,但是由于各环节的市场联动性不强,其利益波动传导效率较低,相对独立性较强。因此,实现生猪流通环节利益分配均衡是保证猪肉安全供给和价格稳定的一个重要举措。     

农业龙头企业与农户利益联结机制调查与分析——以广东省为例

笔者通过深入调研掌握了第一手资料,在分析利益联结机制建设中存在问题、联结模式异同、联结模式归属利益联结机制的类型后,提出了引导农业龙头企业与农户之间建立紧密型的利益联结机制的对策。     

E-Business in the Agricultural Input Industries

A variety of factors are creating pressure for increased use of information technologies and e-business concepts in the agricultural input industries. Understanding where information technology and e-business concepts will add value to the distribution channels for agricultural inputs requires an understanding of the needs of the two primary agents in the channel: agricultural producers and manufacturers. In this paper, a framework for understanding the changes information technology and e-business may bring to the distribution channel is developed. In addition, some of the attitudes of managers toward e-business and the impacts of information technologies for the agricultural inputs industries are considered.     

Prospects and Potentials in Canadian Beef Production*

The production technology available to the Canadian beef industry comprises a much broader range than is generally recognized. It includes forest and pasture improvement, new grading standards, cross breeding, performance testing, use of bull and dairy beef, artificial insemination, introduction of new breeds, use of new physiological and nutritional knowledge, environmental control, and others. This article appraises the prospect for Canadian beef production moving onto a new technology base, and combining this technology with competent management and promotion in order to meet the demands for beef in the 1980“s. PERSPECTIVES ET POSSIBILITÉS DE PRODUCTION DU BOEUF AU CANADA–La technologie de production à la disposition de l'industrie canadienne du boeuf comprend une gamme beaucoup plus et éndue qu'on le pense en général. Elle comprend ‘amélioration des forêts et des pâturages, les nouvelles normes de classification, le métissage, les assais de rendement, l'usage de la viande de taureaux et de vaches laitières, l'insémination artificieile, l'introduction de nouvelles races, l'utilisation de nouvelles connaissances physiologiques et nutritives, le contrôle écologique et autres. Cet article évalue les perspectives du déplacement de la production canadienne de boeuf à une nouvelle base technologique, et la combinaison de cette technologie à une gestion et promotion compétentes pour répondre à la demande en boeuf au cour des années 1980.     

A Case Study in the Marketing of Wolf-Friendly Beef

This study examines an effort in New Mexico to establish a niche within the domestic beef market. The beef was marketed under environmental attributes with the slogan Wolf-Friendly. Two environmental groups, Defenders of Wildlife and Forest Service Employees for Environmental Ethics, endorsed the management practices of the ranch producing the beef. A kick-off event for the Wolf-Friendly Beef was held at the Albuquerque Zoo at the onset of the market test. Two retail grocery stores and the zoo participated in a month-long market test. A survey was conducted at the zoo kick-off to determine participants' views on public land use, riparian protection, and predator preservation issues, and consumer willingness to pay for beef products that foster these environmental attributes. Sales and survey data from the market test were analyzed.