Structural change in the hog/pork subsector: Coordinating roles of livestock farmer cooperatives. (Volumes I and II)

The hog/pork subsector is undergoing structural change driven by new technologies and consumer demands for lean pork and convenient food products. The number of hog farmers continues to decrease while the average size of hog farms continues to increase. The number of hog slaughter plants is decreasing while the average plant size is increasing. Fresh pork has begun to be differentiated by branding. Assets are becoming more specialized in the subsector. Confinement facilities for farrowing and finishing, hybrid hog breeds, specialized feeds and skilled hog farm managers are examples of specialized assets.;The research used a case-study approach and transactions cost analysis to determine roles livestock farmer cooperatives can take to improve coordination in the hog/pork subsector. Coordination problems at each transaction level of the subsector were determined. Alternative institutions and coordination mechanisms were analyzed that reduced the coordination problems. Specifically, hog farmer cooperatives were analyzed as an alternative institution to improve coordination.;A model of vertical coordination by hog farmer cooperatives was developed that incorporated the institutions and coordination mechanisms the analysis concluded were most likely to dominate the hog/pork subsector. Analysis of advantages and disadvantages of farmer cooperatives distinguished the costs and benefits to subsector participants of farmer cooperatives versus investor-owned firms as coordinating institutions.;The research showed that hog farmer cooperatives have the capacity to improve vertical coordination and benefit hog farmers. Farmer cooperatives maintain hog farmers' decision making power and can be more efficient at reducing transactions costs than investor-owned firms.;The hog/pork subsector is characterized by quantity and price instability which leads to profit instability. Increasing asset specialization means greater losses are sustained when participants in the subsector exit or cut back production. Start up costs are also higher. As a result, subsector participants are taking actions to improve coordination and reduce the uncertainty of prices and profits.