Packer Integration into Hog Production: Current Status and Likely Impacts of Increased Vertical Control on Hog Prices and Quantities

In a survey conducted three years ago by the staff of Pork \u2788, it was found that some of the major players in the pork industry, like Smithfield foods, for example, have either integrated into hog production or have all the requirements for vertical integration in place. The move toward internalizing the exchange process in the hog/pork sector through vertical integration has raised several questions ranging from its impact on prices and quantities to its impact on individual hog producers. This report is a first step toward studying these issues. Its specific objectives are a) to provide some insights into the nature and determinants of vertical integration, b) to describe the current status of packer integration into hog production, and c) to provide a theoretical and empirical assessment of the likely impact of increased vertical control in the hog industry on hog prices and quantities