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Abstract

Real livestock prices and farm-wholesale marketing margins have steadily declined over the past 20 years. Many studies have examined the effects of increasing packer concentration on these declines. However, most have generally failed to account directly for technological change in livestock production and red meat slaughtering. We estimate reduced form models for beef and pork farm-wholesale marketing margins and cattle and hog prices that specifically include measures of technological change. Empirical results indicate that meat packing technology has reduced real margins and technological change embodied in cattle and hog production accounts for substantial declines in real slaughter cattle and hog prices. When technological change is explicitly considered, we find that increasing packer concentration: (1) does not affect real farm-wholesale marketing margins, (2) positively affects real slaughter cattle prices, and (3) does not affect real slaughter hog prices.

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