PORK INDUSTRY IN THE U.S.A
Introduction
The pork industry in the U.S has taken a tremendous change in the recent past, especially with the introduction of large-scale fabrication of the produce by a few individuals in the country. However, the shift in the production to include a few players that engage in large scale production is a worry to many people in the country, an aspect that has led to heated debates. The widespread discrimination experienced by consumers is a major aspect that has contributed to the change in production trend. Consumers' taste has significantly changed in the recent past, with increased demand for balanced package (Mathews et al., 2013 p. 34). Moreover, pork producers in the country are turning to innovative production and have also included processing as one of their production strategies. These features were not present in the traditional farming, and they aim at improving the quality of the produce. The purpose of this study is to analyze the pork industry in the U.S, the expected change due to the market forces and the future of the industry.
Key and McBride (2007) assert that tremendous changes have been experienced in the U.S pork industry as mentioned earlier and can be evidenced by increased open market and effort to industrialize the sector.
Customers are slowly changing their eating habits, and this action has played a significant role in the change experienced in the supply chain of the product. Apparently, the U.S pork regulars are becoming more discriminating towards the utilization of pork and other closely related provisions such as poultry products and beef. Some of the significant aspects contributing to the change include changes in lifestyles over time and an increasing concern for the nutritional intake of the people. However, demand for pork products has remained flat for almost three decades now while that of poultry products is rapidly surging. Some of the aspects that have contributed to the shift in consumer needs include the falling price of poultry products in the country and the need to experience healthy lifestyles (Key & McBride, 2007).
However, to counter the new market demands, technological innovation has led to the production of tailored products with lean pork that meets consumer demand. The new innovative techniques are enhancing production of healthy animals that satisfies the needs of the market more effectively and at a cheaper cost. The increase in population and a shift in the ethnic diversity have contributed to an increase in demand for various pork products in the country (US fast food, 2015 p. 1038).
The survey indicates that consumer discrimination had a significant impact on the demand level of the pork products in the country (Mathews et al., 2013, but with the use of technological innovation that contributes healthier lifestyles, this matter has now been resolved.
Supply
The U.S pork supply has drastically changed, and one of the primary reasons is the recent efforts of vertical coordination that is gaining popularity. The marketing strategies currently embraced in the industry are slowly replacing the traditional tactics. The structural changes have led to a decrease in suppliers’ population from 670,000 to about 236,000 producers who engaged in large-scale production of pork, as per the year 2000 (Winkler et al., 2016 p. 86). The trend resulted in a sudden increase in pork production from 7.5 million tons to 8.3 million tons, which were a significant increase despite the noted reduction in some producers (Winkler et al., 2016 p. 86). Moreover, the industry has transformed to supply processed pork that meets the consumer needs more effectively with a few top plants in the country accounting for about 42% of the total output.
Through the concept of innovation and vertical integration, it is evident that increased supply could be achieved despite the decrease in the number of hog farmers in the country. However, due to the nature of externalities that were experienced, it is still important to recognize the fact that policy makers in the country need to weigh options as to either support the new structure or stick to the traditional method of production.
Competition and Market power
It is vital to appreciate that pork products compete with other protein foods such as beef, poultry and fish, which fetch higher prices in the market. However, with large scale production of pork by few farmers, the country risks experiencing monopoly power in the production, an aspect that might constrain supply and result in higher prices for the products (Duggan, 2015 p. 41). Apparently, although the shift in production trend is a gain to consumers, it is important also to recognize that it will adversely affect rural economic activities, due to the eroding effect of the small-scale hog farmers. Only a limited number of large-scale producers will benefit from the strategy, an issue that has both positive and negative externalities to the rural dwellers in the country (Global Hog Production, 2015).
Vertical integration plays a critical role as it results in reduced risks in hog production and the investment in various processing facilities in the country. A common management of the various hog farms and processing plants has played a significant role in enhancing a steady supply of high-quality hogs to the processing plants, an aspect that experiences huge supply of the pork products to the market at a low cost of production. Moreover, the concept of integration has significantly reduced the marketing costs that producers incur, an aspect that has eroded the middlemen (Gerbens-Leenes et al., 2013 p. 28).
Apparently, the producers and packers have entered into a vertical coordination with packers, to enhance the experienced production capacity. In the case of contractual relations, producers are involved in the whole process of producing hogs while the packers supply them with feed and other veterinary supply required in the production process. Apparently, unlike the traditional mode of production, current suppliers pay in terms of the quality of hogs that are obtained, and the terms of contractual agreement vary from place to place. The benefits of contractual production used in the country include the fact that time, price, and other issues such as the various risks experienced are equally shared. Moreover, the long-term contracts between the producers and packers have helped eradicate the middlemen in the industry, which in turn benefits the farmers. Most of the pork is sold through the supermarkets, and the retailers have played a vital role in the supply chain for connecting producers to consumers.
Public policy
The transformation in the structural realignment of the industry has contributed to a need for new public policies, especially in the rural America. Moreover, most farmers in the countryside experience an adverse impact on hog production as a result of the emergence of large-scale production by hog producers. This action has the effect of eroding independent hog producers (Reckmann et al., 2012 p. 104). However, the large-scale production significantly contributes to economic growth of the country, especially due to reduced costs of production as a result of new inventions. However, the policy makers in the country have to balance the impact experienced due to the structural changes in the country, taking consideration of the fact that they have many benefits to consumers as well due to efficient production.
It is imperative to appreciate that consumers will benefit significantly from the structural change in the industry as they will experience a competitive advantage in the food industry. Due to the realized efficiency, the industry will be in a position to produce high-quality pork products and supply it to consumers at a lower cost (Revolve Magazine, 2014).
The intention of enforcing public policy is to protect the interests of the small-scale farmers in the country who are involved in the traditional farming. More importantly, the changing pork industry is a threat to the livelihood of the traditional farmers in the country, an aspect that calls for government intervention to protect the minority groups. Some of the measures include regulation of contractual farming in some districts and vertical integration in some areas. However, the government is in a dilemma, as it should protect the traditional farmers of hog producers who are inefficient or enhance the new pork industry that results in more benefits to consumers as well as encourage the economic growth (Babula & Miljkovic, 2016 p. 24-54).
Conclusion
The pork industry in the U.S has in the past been a matter of considerable discussion as it impacts differently to various stakeholders in the country and, therefore, attracts the intervention of the government to help solve the situation. Therefore, it is justified to study the different aspects that influence the market forces such as supply and demand, and understand the implication of the same.
The new structure realignment in the industry calls for the formation of new policies to safeguard various players in the industry. Also, although the large scale production from hog producers has a positive impact on the economic growth, this initiative adversely affects most farmers. The structure is of more benefits to consumers as it results in high-quality pork products to consumers at a low cost as evidenced by enhanced efficiency in the industry. However, the concept will lead to a few winners and more losers in the industry, an aspect that leads to policy dilemma as the government is divided on whether to protect the traditional farmers or encourage the new structure. The large scale producers of the product have the capacity to experience enhanced production at minimal costs, an aspect that is expected to impact positively on the market growth. However, the negative externality of the move is that most of the small farms involved in the hog production will be crowded out, an aspect that implies that there will be an economic imbalance in the society. Therefore, it is the role of the public policy enforcers to balance the impact created by the new structure to most parts of rural America as well as the positive externality experienced by the consumers.
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