Characteristics of Market Structure and Locational Shift in the U. S. Livestock Industry

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Purporses of research project is to analyze characteristics of market structure and locational shift in the U. S. livestock industry.In broiler industry as well as egg industry, the locational advantage existing nearby the Cornbelt expanded by the rising of long-distance transportation cost and the procurement of corn in the '80s. But the limiting factors that shift from the South to the Cornbelt was the transfer cost in response of the increment of capital requirements and the absence of production innovation such as in-line systems in the case of the egg industry. But the disadvantage with relation to location do not becme a prime problem because integrators are willing to establish the marketing strategy to develop value-added products and expand market power. It is difficult for integrators to operate a complete ownership integration because of the limits of capital investment in contract with the increment of capital requirements. As turkey processing, (slaugfiter) and further pro … More cessing plant could increased uniform volme and utilized full plant capacity, concentration ratios by leading firms increased until the eight largest firms slaughtered 60 percent over in 1988.The hog production in corn-belt states used to be of smaller scales, and the management of the hog industry in these areas used to be combined with self-supplied feedstuff from farms. This advantage can be claimed to be attributable to the fact that the operations in the corn-belt states are based on diversified sources, whereas those in the Southeastern states are based on family-owned intensive style which is more dependent upon the self-supplied feedstuff. Contracting firm can not compensate in longrun producer's facilities Use under contract, because contract length is too short for producer to make a capital investment.New type packers such as IBP, ConAgra and B(cel entered into beef packing industry without facing high barrier to entry and expanded market power. The factors that realized their market power arised from both spurring scale economy in Large slaughtering and processing plants and driving down wage rates. After old packers exited frm beef because of intense competition, they must specialized hog slaughtering and pork processing. on the other hand, new type packers entered into hog industrj in order to decrealse excess capacity of plants and decentralize malrket risk. After fourfirm concentration ratios for beef slaughtering have increased from Z5.2% in 1976 to 69.7% in 1988, new packer's concentration ratios for hog have increased from 21.41. in 1987 to 29.49, in 1990 in spite of constant concentration rate in fourfirm level. Issues about market structure change from viewpoint of industrial organization theory attributed price down in the fed-cattle market to structural measure, especially concentration. "Emprirical" research in U. S. that put much emphasis on the structure-conduct-performance paradigm underling the Harbard school thought contrast with the Chicago school thouth that efficiency stemed from cost saving by means of consolidation and scale economy do not necessitate the regulation of public policy. Because packer's market conduct contain captive supply such as packer feeding, contracting and exclusivc purchasing and the increment of production contract and forward contract will change pricing of fedcattle market as well as concentration in hog farming, the dispute of theoritical fram about relation structure with conduct from longrun aspect will necessitate in order to develop emprical industrial organization research. Less