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REGIONAL COMPETITIVE POSITION OF PORK INDUSTRY

Bishwa B. Adhikari, Stephen B. Harsh and Gerald Schwab

No 20057, 2004 Annual meeting, August 1-4, Denver, CO from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: In the recent past U.S. pork industry experienced geographical shifts in its production and processing. Some geographical areas have competitive advantages over the areas in raising pigs. Costs of raising pigs vary by type and size of operations, and other location specific factors. We used enterprise budgeting approach to estimate the profitability of representative feeder to finishing operations in different geographical regions in U.S. We obtained data from the United States Department of Agriculture databases, costs and returns survey and various university sources. The cost differences were not due to the unit prices of inputs but were largely driven by the differences in their efficiencies. Overhead costs varies by locations and size of operation. Pork feeding operations of all sizes operate at a loss if we account for all the cash expenses and opportunity costs given the prices of all inputs and output. However, producers got positive profits over the variable costs. The Eastern Corn belt regions' pork producers reap the highest operating profit ($1,861 per 100 hogs) followed by the Western Corn Belt region and the West region ($1,661). The results of production systems analyses as outlined here suggest that smaller firms have limited ability to compete with larger firms on the basis of cost of production. The key to keeping hog business competitive is higher production efficiency. Feed, labor, and building and equipment efficiencies were potential means of cutting production costs. Smaller producers who do not attain strong efficiencies in production are at a disadvantage relative to larger producers.

Keywords: Livestock; Production/Industries (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea04:20057

DOI: 10.22004/ag.econ.20057

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