Study focuses on pork industry marketing
In conjunction with a Research Triangle Institute livestock marketing study, Dr. Michael Wohlgenant, Dr. Nick Piggott and Dr. Tomislav Vukina (left to right) of the Department of Agricultural and Resource Economics are studying the swine industry.
(Photo by Daniel Kim)
(Photo by Daniel Kim)
College of Agriculture and Life Sciences agricultural economists have embarked on a study that should provide a much better understanding of the factors involved in putting bacon, pork chops or a ham on a supermarket shelf.
The study is funded by a $465,000 grant, which is part of a $4.3 million contract from the U.S. Department of Agriculture's Grain Inspection, Packers and Stockyards Administration to study livestock marketing.
Research Triangle Institute is leading the study, which will look at marketing arrangements for pigs, cattle and sheep. College of Agriculture and Life Sciences faculty will study the swine industry, while researchers at the Wharton School at the University of Pennsylvania will tackle cattle and researchers at the University of Montana will look at sheep.
Work in the College of Agriculture and Life Sciences will be coordinated by Dr. Tomislav Vukina, professor of agricultural and resource economics. Two other faculty members in the Department of Agricultural and Resource Economics, Dr. Michael Wohlgenant, William Neal Reynolds professor, and Dr. Nick Piggott, associate professor, will also be involved in the study.
Vukina said RTI will collect data on livestock marketing, and researchers at the three universities will then analyze the information.
The Grain Inspection, Packers and Stockyards Administration is responsible for regulating the meat packing industry, and Vukina said the analysis he and his colleagues provide will be used in making policy decisions about the industry.
Vukina explained that meat packers are required to keep information on all transactions: the purchase of animals by the packer and the sale of processed meat products. This information will be collected by RTI, which will also conduct surveys in an effort to determine all the different ways meat makes its way from growers to consumers.
These data, which probably won't be available until well into 2005, will then be analyzed by the research teams at the three universities.
The study is designed to help explain how markets function and how the players interact. The primary research objective is to develop an industry conduct model that could be used to simulate various "What if?" regulatory and policy scenarios.
The study should be particularly interesting to the swine industry. In North Carolina, the industry is dominated by two companies - Smithfield Foods and Premium Standard Farms. Many of North Carolina's hogs are produced on company-owned farms, while the companies also contract with private growers for hog production.
In other parts of the country, notably Iowa and the Midwest, markets are less concentrated, and many pigs are sold through auctions or other forms of cash markets. Contracts are also used in the Midwest, but marketing of live animals is dominated by procurement or purchasing agreements rather than the production contracts that characterize the North Carolina market. The model that Vukina and his colleagues plan to develop will allow the comparison of efficiency gains associated with various organizational and marketing designs.
"This study is an attempt to cast some scientific light on controversial issues such as contracting," Vukina said. "What does contracting mean for producers and for consumers, and also what does it mean for integrators and contract growers?" The study should also allow regulators to make more informed policy decisions.
-Dave Caldwell
The study is funded by a $465,000 grant, which is part of a $4.3 million contract from the U.S. Department of Agriculture's Grain Inspection, Packers and Stockyards Administration to study livestock marketing.
Research Triangle Institute is leading the study, which will look at marketing arrangements for pigs, cattle and sheep. College of Agriculture and Life Sciences faculty will study the swine industry, while researchers at the Wharton School at the University of Pennsylvania will tackle cattle and researchers at the University of Montana will look at sheep.
Work in the College of Agriculture and Life Sciences will be coordinated by Dr. Tomislav Vukina, professor of agricultural and resource economics. Two other faculty members in the Department of Agricultural and Resource Economics, Dr. Michael Wohlgenant, William Neal Reynolds professor, and Dr. Nick Piggott, associate professor, will also be involved in the study.
Vukina said RTI will collect data on livestock marketing, and researchers at the three universities will then analyze the information.
The Grain Inspection, Packers and Stockyards Administration is responsible for regulating the meat packing industry, and Vukina said the analysis he and his colleagues provide will be used in making policy decisions about the industry.
Vukina explained that meat packers are required to keep information on all transactions: the purchase of animals by the packer and the sale of processed meat products. This information will be collected by RTI, which will also conduct surveys in an effort to determine all the different ways meat makes its way from growers to consumers.
These data, which probably won't be available until well into 2005, will then be analyzed by the research teams at the three universities.
The study is designed to help explain how markets function and how the players interact. The primary research objective is to develop an industry conduct model that could be used to simulate various "What if?" regulatory and policy scenarios.
The study should be particularly interesting to the swine industry. In North Carolina, the industry is dominated by two companies - Smithfield Foods and Premium Standard Farms. Many of North Carolina's hogs are produced on company-owned farms, while the companies also contract with private growers for hog production.
In other parts of the country, notably Iowa and the Midwest, markets are less concentrated, and many pigs are sold through auctions or other forms of cash markets. Contracts are also used in the Midwest, but marketing of live animals is dominated by procurement or purchasing agreements rather than the production contracts that characterize the North Carolina market. The model that Vukina and his colleagues plan to develop will allow the comparison of efficiency gains associated with various organizational and marketing designs.
"This study is an attempt to cast some scientific light on controversial issues such as contracting," Vukina said. "What does contracting mean for producers and for consumers, and also what does it mean for integrators and contract growers?" The study should also allow regulators to make more informed policy decisions.
-Dave Caldwell