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Please use this identifier to cite or link to this item: http://purl.umn.edu/46022

Title: Positive Market Effects from a Meatpacking Plant Opening: Perceptions and Reality
Authors: Hornung, Jonathan T.
Ward, Clement E.
Issue Date: 2005-03-09
Series/Report no.: Number 6
2005
Abstract: Economic theory suggests that adding a competitive buyer to a market should have positive effects on competition and prices, ceteris paribus. An additional buyer increases market demand, shifting demand to the right, and expands the number of active buyers, reducing average market shares of existing buyers while intensifying bidding competition. Whether or not these positive impacts occur in reality is an empirical question. The largest pork processor in Canada, Maple Leaf Foods Inc., opened a 45,000 head/week hog processing facility in August 1999 in Brandon, Manitoba. The plant opened during a period of expanding hog production in Canada, of increasing hog exports to the United States, and of increasingly tight processing capacity in the United States (Luby, 1999; Parcell, Mintert, and Plain, 2004). Most previous research on the impacts of meat processing plants has focused on plant closings, and none has estimated the effects of a plant opening under conditions of expanding production and tight processing capacity. Research reported here expands previous work by taking a dual approach to the question. First, two models were used to estimate market price impacts from the plant opening. Second, a survey of Manitoba pork producers provided insight into the perceived market dynamics of the plant opening.
URI: http://purl.umn.edu/46022
Institution/Association: CAFRI: Current Agriculture, Food and Resource Issues>Number 06, 2005
Total Pages: 10
From Page: 40
To Page: 49
Collections:Number 06, 2005

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