CONCENTRATION IN AGRIBUSINESS

Industrial Organization,

The Economic Organization of U.S. Broiler Production

Broiler production in the United States is coordinated almost entirely through systems of production contracts, in which a grower’s compensation is based, in part, on how the grower’s performance compares with that of other growers. The industry is undergoing a gradual structural change as production shifts to larger broiler enterprises that provide larger shares of an operator’s household income. Larger enterprises require substantially larger investments in broiler housing, and new or retrofitted houses are also an important source of productivity growth in the industry. This report, based on a large and representative survey of broiler operations, describes the industry’s organization, housing features, contract design, fees and enterprise cost structures, and farm and household finances.broilers, chickens, production contracts, broiler grower financial performance, chicken housing, chicken litter, poultry, Farm Management, Production Economics,

How do retail prices react to minimum wage increases?

Wages ; Prices

Local Monopsony Power in the Market for Broilers - Evidence from a Farm Survey

The exercise of monopsony power by broiler processing firms is plausible because production occurs within localized complexes, which limits the number of integrators with whom growers can contract. In addition, growers face distinct hold-up risks as broiler production requires a substantial investment in specific assets and most production contracts do not involve long-term purchasing commitments by integrators. This paper provides an initial exploration of the links between the local concentration of broiler integrators and grower compensation under production contracts using data from the 2006 broiler version of USDA’s Agricultural Resource Management Survey. Results of this preliminary study, which accounts for characteristics of the operation and specific features of the production contract, suggest a small but economically meaningful effect of concentration on grower concentration. Limitations of the current analysis and future possible model extensions are discussed.poultry, broilers, market power, monopsony, production contracts, Livestock Production/Industries, Marketing,

Agricultural Contracting Update: Contracts in 2008

Marketing and production contracts covered 39 percent of the value of U.S. agricultural production in 2008, up from 36 percent in 2001, and a substantial increase over 28 percent in 1991 and 11 percent in 1969. However, aggregate contract use has stabilized in recent years and no longer suggests a strong trend. Contracts between farmers and their buyers are reached prior to harvest (or before the completion stage for livestock)and govern the terms under which products are transferred from the farm. Contracts are far more likely to be used on large farms than on small farms, and they form one element in a package of risk management tools available to farmers. Production contracts are used widely in livestock production, while marketing contracts are important to the production of many crops.Production contracts, marketing contracts, farm structure, farm size, farm income, contracting, Agricultural Resource Management Survey, ARMS, risk analysis, Agribusiness, Farm Management, Livestock Production/Industries, Risk and Uncertainty,

Agricultural Contracting Update: Contracts in 2003

Marketing and production contracts covered 39 percent of the value of U.S. agricultural production in 2003, up from 36 percent in 2001 and a substantial increase over estimated values of 28 percent for 1991 and 11 percent in 1969. Large farms are far more likely to contract than small farms; in fact, contracts cover over half of the value of production from farms with at least $1 million in sales. Although use of both production and marketing contracts has grown over time, growth is more rapid for production contracts, which are largely used for livestock.contracts, contracting, marketing contracts, production contracts, vertical integration, vertical coordination, market structure, risk analysis, price signals, Industrial Organization, Marketing,

MODELING THE COSTS OF FOOD SAFETY REGULATION

Food safety, regulatory costs, cost/benefit analysis, Food Consumption/Nutrition/Food Safety,

The Transformation of U.S. Livestock Agriculture: Scale, Efficiency, and Risks

U.S. livestock production has shifted to much larger and more specialized farms, and the various stages of input provision, farm production, and processing are now much more tightly coordinated through formal contracts and shared ownership of assets. Important financial advantages have driven these structural changes, which in turn have boosted productivity growth in the livestock sector. But structural changes can also generate environmental and health risks for society, as industrialization concentrates animals and animal wastes in localized areas. This report relies on farm-level data to detail the nature, causes, and effects of structural changes in livestock production.Livestock, dairy, broilers, hogs, fed cattle, farm structure, scale economies, contract agriculture, CAFOs, growth-promoting antibiotics, Farm Management, Livestock Production/Industries,

Market Competition, Institutions, and Contracting Outcomes: Preliminary Model and Experimental Results

Contracts, Competition, Market Power, Enforcement, Institutions, Agribusiness, Industrial Organization, Institutional and Behavioral Economics, Production Economics, C91, D02, D43, D86,

TRACING THE EFFECTS OF AGRICULTURAL COMMODITY PRICES ON FOOD PROCESSING COSTS

Although food processing sector production is inherently linked to the availability and prices of agricultural materials (MA), this link appears to be weakening due to adaptations in input costs, technology, and food consumption patterns. This study assesses the roles of these changes on food processors costs and output prices, with a focus on the demand for primary agricultural commodities. Our analysis of the 4-digit U.S. food processing industries for 1972-1992 is based on a cost-function framework, augmented by a profit maximization specification of output pricing, and a virtual price representation for agricultural materials and capital. We find that falling virtual prices of MA and input substitution have provided a stimulus for MA demand. However, scale effects have been MA-saving relative to intermediate food products, and disembodied technical change has strongly contributed to declining primary agricultural materials demand relative to most other inputs.Demand and Price Analysis, Industrial Organization,