Multi-plant Coordination in the Beef Packing Industry: Why it Matters, and What Questions Remain?

Abstract

The spread between fed cattle prices and wholesale beef values made headlines when it widened dramatically, albeit temporarily, following the August 2019 fire at the packing plant near Holcomb, Kansas, and again in 2020 due to packing plant disruptions in the wake of COVID-19 (Lusk et al. 2021; USDA-AMS 2020). Though seemingly paradoxical, these divergent price movements had a straightforward economic explanation and were consistent with perfect competition in the marketplace (Lusk et al. 2021; Azzam and Dhoubhadel 2022).