U.S. beef packer procurement practices and cattle producer returns: Theory and empirics

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2023-05
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Pudenz, Christopher
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Schulz, Lee L
Hart, Chad E
Hayes, Dermot J
Moschini, GianCarlo
Thomson, Daniel U
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Economics
Abstract
This dissertation explores theoretically and empirically how beef packer procurement practices impact fed cattle producer returns in the United States. The first essay estimates the upper Midwest fed dairy cattle basis impacts of one beef packer’s decision to cease procurement of fed dairy cattle. The second essay utilizes a Salop Circular City framework to demonstrate that multi-plant coordination in the U.S. beef packing industry leads to wider spreads between downstream beef prices and upstream fed cattle prices if multi-plant coordination markdowns outweigh multi-plant coordination efficiencies. The third essay shows that, after accounting for changes in underlying data such as diesel fuel prices and an estimate of beef packer wages, the period after the 2015 closure of a packing plant in Iowa is associated with an increase in estimated packer markdowns expressed through transaction costs in Iowa and Minnesota. This research constitutes an important contribution to the robust literature evaluating the structure, conduct, and performance of the U.S. beef supply chain.
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