[go: up one dir, main page]
More Web Proxy on the site http://driver.im/
IDEAS home Printed from https://ideas.repec.org/a/wly/apecpp/v43y2021i1p4-23.html
   My bibliography  Save this article

Beef and Pork Marketing Margins and Price Spreads during COVID‐19

Author

Listed:
  • Jayson L. Lusk
  • Glynn T. Tonsor
  • Lee L. Schulz
Abstract
COVID‐19‐related disruptions led to a historic rise in the spread between livestock and wholesale meat prices. Concerns about concentration and allegations of anticompetitive behavior have led to several inquiries and civil suits by the U.S. Department of Agriculture and the U.S. Department of Justice, with increases in price differentials serving as a focal point. This article notes the difference between price spreads and marketing margins, outlines corresponding economic theory, and describes the empirical evidence on wholesale meat and livestock price dynamics in the wake of COVID‐19 disruptions. At one point during the pandemic, beef and pork packers were both operating at about 60% of the previous year's processing volume. We explore how such a massive supply shock would be expected to affect marketing margins even in the absence of anticompetitive behavior. Moreover, we document how margin measurements are critically sensitive to the selection of data and information utilized. Finally, we conclude with some discussion around policy proposals that would pit industry concentration against industry coordination and economies of scale.

Suggested Citation

  • Jayson L. Lusk & Glynn T. Tonsor & Lee L. Schulz, 2021. "Beef and Pork Marketing Margins and Price Spreads during COVID‐19," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(1), pages 4-23, March.
    • Handle: RePEc:wly:apecpp:v:43:y:2021:i:1:p:4-23
    DOI: 10.1002/aepp.13101
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/aepp.13101
    Download Restriction: no
    File URL: https://libkey.io/10.1002/aepp.13101?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Mathews, Kenneth H., Jr. & Hahn, William F. & Nelson, Kenneth E. & Duewer, Lawrence A. & Gustafson, Ronald A., 1999. "U.S. Beef Industry: Cattle Cycles, Price Spreads, and Packer Concentration," Technical Bulletins 33583, United States Department of Agriculture, Economic Research Service.
    2. B. Wade Brorsen & Jean-Paul Chavas & Warren R. Grant & L. D. Schnake, 1985. "Marketing Margins and Price Uncertainty: The Case of the U.S. Wheat Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(3), pages 521-528.
    3. James M. MacDonald & Michael E. Ollinger, 2005. "Technology, Labor Wars, and Producer Dynamics: Explaining Consolidation in Beefpacking," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 1020-1033.
    4. Wohlgenant, Michael K., 2001. "Marketing margins: Empirical analysis," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 16, pages 933-970, Elsevier.
    5. Alston, Julian M., 1991. "Research Benefits in a Multimarket Setting: A Review," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 59(01), pages 1-30, April.
    6. Michael K. Wohlgenant, 1993. "Distribution of Gains from Research and Promotion in Multi-Stage Production Systems: The Case of the U.S. Beef and Pork Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(3), pages 642-651.
    7. Lusk, Jayson L. & Marsh, Thomas L. & Schroeder, Ted C. & Fox, John A., 2001. "Wholesale Demand For Usda Quality Graded Boxed Beef And Effects Of Seasonality," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(1), pages 1-16, July.
    8. Charles C. Martinez & Joshua G. Maples & Justin Benavidez, 2021. "Beef Cattle Markets and COVID‐19," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(1), pages 304-314, March.
    9. Brester, Gary W. & Marsh, John M. & Atwood, Joseph A., 2009. "Evaluating the Farmer’s-Share-of-the-Retail-Dollar Statistic," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(2), pages 1-24, August.
    10. Joshua G. Maples & Jada M. Thompson & John D. Anderson & David P. Anderson, 2021. "Estimating COVID‐19 Impacts on the Broiler Industry," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(1), pages 315-328, March.
    11. James M. MacDonald & Michael E. Ollinger, 2000. "Scale Economies and Consolidation in Hog Slaughter," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 334-346.
    12. Michael K. Wohlgenant, 2013. "Competition in the US Meatpacking Industry," Annual Review of Resource Economics, Annual Reviews, vol. 5(1), pages 1-12, June.
    13. Tonsor, Glynn & Schulz, Lee, 2020. "Assessing Impact of Packing Plant Utilization on Livestock Prices," ISU General Staff Papers 20200404070000, Iowa State University, Department of Economics.
    14. Lusk, Jayson L. & Roosen, Jutta & Shogren, Jason (ed.), 2011. "The Oxford Handbook of the Economics of Food Consumption and Policy," OUP Catalogue, Oxford University Press, number 9780199569441.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Meilin Ma & Jayson L. Lusk, 2022. "Concentration and Resilience in the US Meat Supply Chains," NBER Chapters, in: Risks in Agricultural Supply Chains, National Bureau of Economic Research, Inc.
    2. A. Ford Ramsey & Barry Goodwin & Mildred Haley, 2021. "Labor Dynamics and Supply Chain Disruption in Food Manufacturing," NBER Chapters, in: Risks in Agricultural Supply Chains, National Bureau of Economic Research, Inc.
    3. Anna Zielińska-Chmielewska & Dobrosława Mruk-Tomczak & Anna Wielicka-Regulska, 2021. "Qualitative Research on Solving Difficulties in Maintaining Continuity of Food Supply Chain on the Meat Market during the COVID-19 Pandemic," Energies, MDPI, vol. 14(18), pages 1-19, September.
    4. Jayson Beckman & Amanda M. Countryman, 2021. "The Importance of Agriculture in the Economy: Impacts from COVID‐19," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(5), pages 1595-1611, October.
    5. Mindy L. Mallory, 2021. "Impact of COVID‐19 on Medium‐Term Export Prospects for Soybeans, Corn, Beef, Pork, and Poultry," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(1), pages 292-303, March.
    6. Padilla, Samantha & Schulz, Lee L & Vaiknoras, Kate & MacLachlan, Matthew, 2021. "COVID-19 Working Paper: Changes in Regional Hog Slaughter During COVID-19," Administrative Publications 327340, United States Department of Agriculture, Economic Research Service.
    7. Erdal Erol & Sayed H. Saghaian, 2022. "The COVID-19 Pandemic and Dynamics of Price Adjustment in the U.S. Beef Sector," Sustainability, MDPI, vol. 14(8), pages 1-14, April.
    8. Christopher C. Pudenz & Lee L. Schulz, 2024. "Multi‐plant coordination in the U.S. beef packing industry," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(1), pages 382-415, January.
    9. Azzam, Azzeddine & Gren, Ing-Marie & Andersson, Hans, 2023. "Comparative resilience of US and EU meat processing to the Covid19 pandemic," Food Policy, Elsevier, vol. 119(C).
    10. Peter B. Dixon & Maureen T. Rimmer, 2021. "Who will pay for improved health standards in U.S. meat-processing plants? Simulation results from the USAGE model," Centre of Policy Studies/IMPACT Centre Working Papers g-314, Victoria University, Centre of Policy Studies/IMPACT Centre.
    11. Jill E. Hobbs, 2021. "Food supply chain resilience and the COVID‐19 pandemic: What have we learned?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(2), pages 189-196, June.
    12. Getu Hailu, 2021. "COVID‐19 and food processing in Canada," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(2), pages 177-187, June.
    13. Arita, Shawn & Grant, Jason & Sydow, Sharon & Beckman, Jayson, 2022. "Has global agricultural trade been resilient under coronavirus (COVID-19)? Findings from an econometric assessment of 2020," Food Policy, Elsevier, vol. 107(C).
    14. Ken McEwan & Lynn Marchand & Max Zongyuan Shang, 2021. "The Canadian pork industry and COVID‐19: A year of resilience," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(2), pages 225-232, June.
    15. Richard Volpe & Maiah Alman & Xiaowei Cai & Alexander Stevens, 2022. "Retail Mergers and Acquisitions, and Specialty Crop Producers: Evidence from California," Sustainability, MDPI, vol. 14(7), pages 1-13, March.
    16. Arita, Shawn & Grant, Jason & Sydow, Sharon & Beckman, Jayson, 2021. "Has Global Agricultural Trade Been Resilient Under Coronavirus (COVID-19)? Findings from an Econometric Assessment," Working Papers 311216, International Agricultural Trade Research Consortium.
    17. Bir, Courtney & Peel, Derrell & Holcomb, Rodney & Raper, Kellie & Jones, J.J., 2021. "The Impact of COVID-19 on Meat Processing, and the Renewed Interest in Local Processing Capabilities," Western Economics Forum, Western Agricultural Economics Association, vol. 19(1), June.
    18. Jayson L Lusk & Ranveer Chandra, 2021. "Farmer and farm worker illnesses and deaths from COVID-19 and impacts on agricultural output," PLOS ONE, Public Library of Science, vol. 16(4), pages 1-12, April.
    19. Charles C. Martinez & Joshua G. Maples & Justin Benavidez, 2021. "Beef Cattle Markets and COVID‐19," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(1), pages 304-314, March.
    20. repec:ags:aaea22:341195 is not listed on IDEAS
    21. Azzam, Azzeddine & Dhoubhadel, Sunil, 2022. "COVID-19, Beef Price Spreads, and Market Power," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 47(2), May.
    22. A. Ford Ramsey & Barry K. Goodwin & William F. Hahn & Matthew T. Holt, 2021. "Impacts of COVID‐19 and Price Transmission in U.S. Meat Markets," Agricultural Economics, International Association of Agricultural Economists, vol. 52(3), pages 441-458, May.
    23. Padilla, Samantha & Schulz, Lee & Vaiknoras, Kate A. & MacLachlan, Matthew J., 2022. "The Resiliency of Pork Processing Plants during the COVID-19 Pandemic," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322448, Agricultural and Applied Economics Association.
    24. James Rude, 2021. "COVID‐19 and the Canadian cattle/beef sector: A second look," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(2), pages 233-241, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Meilin Ma & Jayson L. Lusk, 2022. "Concentration and Resilience in the US Meat Supply Chains," NBER Chapters, in: Risks in Agricultural Supply Chains, National Bureau of Economic Research, Inc.
    2. Lana Awada & Peter W. B. Phillips, 2021. "The distribution of returns from land efficiency improvement in multistage production systems," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(1), pages 73-92, March.
    3. Hanbin Lee & Richard J. Sexton & Daniel A. Sumner, 2023. "National and subnational regulation of farm practices for consumer products sold within a jurisdiction: California's Proposition 12," Agricultural Economics, International Association of Agricultural Economists, vol. 54(6), pages 838-853, November.
    4. Carambas, Maria Cristina D.M., 2005. "Analysis of Marketing Margins in Eco-Labeled Products," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24600, European Association of Agricultural Economists.
    5. Christopher C. Pudenz & Lee L. Schulz, 2024. "Multi‐plant coordination in the U.S. beef packing industry," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(1), pages 382-415, January.
    6. Jayson Beckman & Amanda M. Countryman, 2021. "The Importance of Agriculture in the Economy: Impacts from COVID‐19," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(5), pages 1595-1611, October.
    7. Ollinger, Michael, 2009. "The Cost of Food Safety Technologies in the Meat and Poultry Industries," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 48783, Agricultural and Applied Economics Association.
    8. Vaiknoras, Kate & Hahn, William & Padilla, Samantha & Valcu-Lisman, Adriana & Grossen, Grace, 2022. "COVID-19 Working Paper: COVID-19 and the U.S. Meat and Poultry Supply Chains," USDA Miscellaneous 319353, United States Department of Agriculture.
    9. Padilla, Samantha & Schulz, Lee L. & Vaiknoras, Kate & MacLachlan, Matthew, 2021. "COVID-19 Working Paper: Changes in Regional Hog Slaughter During COVID-19," USDA Miscellaneous 316501, United States Department of Agriculture.
    10. Christopher N. Boyer & Dayton M. Lambert & Charles C. Martinez & Joshua G. Maples, 2023. "Beef and pork processing plant labor costs," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 691-702, July.
    11. Minseong Kang & Byeong‐Il Ahn, 2023. "Market power and cost‐efficiency effects: Broiler packing industry in South Korea," Agribusiness, John Wiley & Sons, Ltd., vol. 39(4), pages 1157-1172, October.
    12. Lusk, Jayson L. & Norwood, F. Bailey, 2009. "Some Economic Benefits and Costs of Vegetarianism," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 38(2), pages 1-17, October.
    13. Alston, Julian M. & Carman, Hoy F. & Chalfant, James A., 1994. "EVALUATING PRIMARY PRODUCT PROMOTION: The Returns to Generic Advertising by a Producer Cooperative in a Small, Open Economy," Promotion in the Marketing Mix: What Works, Where and Why, April 28-29, 1994, Toronto, Canada 279601, Regional Research Projects > NECC-63: Research Committee on Commodity Promotion.
    14. Holderieath, Jason, 2016. "Valuing the Absence of Feral Swine for US Corn, Soybean, Wheat, Rice, and Peanut Producers and Consumers. A Partial Equilibrium Approach," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235867, Agricultural and Applied Economics Association.
    15. Ambarawati, I Gusti Agung Ayu & Zhao, Xueyan & Griffith, Garry R. & Piggott, Roley R., 2003. "Distribution of Gains from Cattle Development in a Multi-Stage Production System: The Case of the Bali Beef Industry," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 57829, Australian Agricultural and Resource Economics Society.
    16. Ying Lin & Henry W. Kinnucan, 2020. "The optimal export tax for a primary commodity in a vertical market," Agricultural Economics, International Association of Agricultural Economists, vol. 51(6), pages 909-922, November.
    17. James M. MacDonald, 2024. "Introduction: The Industrial Organization of Food and Agriculture," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 64(1), pages 1-9, February.
    18. Zhao, Xueyan & Mullen, John D. & Griffith, Garry R. & Griffiths, William E. & Piggott, Roley R., 2000. "An Equilibrium Displacement Model of the Australian Beef Industry," Research Reports 28007, New South Wales Department of Primary Industries Research Economists.
    19. Nishant Saravanan & Jessica Olivares-Aguila & Alejandro Vital-Soto, 2022. "Bibliometric and Text Analytics Approaches to Review COVID-19 Impacts on Supply Chains," Sustainability, MDPI, vol. 14(23), pages 1-33, November.
    20. A. Ford Ramsey & Barry K. Goodwin & William F. Hahn & Matthew T. Holt, 2021. "Impacts of COVID‐19 and Price Transmission in U.S. Meat Markets," Agricultural Economics, International Association of Agricultural Economists, vol. 52(3), pages 441-458, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:apecpp:v:43:y:2021:i:1:p:4-23. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2040-5804 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.