Agricultural Economic Report No. (AER-777) 43 pp

April 1999

Vertical Coordination in the Pork and Broiler Industries: Implications for Pork and Chicken Products

This report compares current changes in vertical coordination in the U.S. pork industry with past changes in the U.S. broiler industry. Recent changes in the structure of the U.S. pork industry reflect, in many ways, past changes in the broiler industry. Production contracts and vertical integration in the broiler industry facilitated rapid adoption of new technology, improved quality control, assured market outlets for broilers, and provided a steady flow of broilers for processing. Affordable, high-quality chicken products have contributed to continual increases in U.S. chicken consumption, which has surpassed pork and beef on a per capita basis. Incentives for contracting and vertical integration in the pork industry may yield comparable results.

Keywords: vertical coordination, vertical integration, contracts, transaction costs, technology, chicken, pork

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