DiamondSCattleCo said:~SH~ said:1) The packing industry has never been more concentrated and cattle prices have never been higher?
2) Want to lower cattle prices? Break up the large packers and create more smaller less efficient packing companies.
1) SH, you're attributing today's higher prices with packer concentration, and I truly believe you are in error. If you take a look at long term demand, you'll see its been steadily increasing over the years, as such, prices have went up.
2) Thats speculation. My own beliefs, backed by sound economic theory, but also speculation, says that if we had another 10 or 12 equal sized players in the market, we'd be much further ahead. We'd have the increased demand of today's market, combined with the increased competition from multiple packers bidding on our animals.
The biggest benefits of economies of scale come from making individual plants larger and more efficient, not from one company owning several plants. You may see some benefit on the administration side, but thats insigificant, and not able to offset the reduced competition on the bidding side.
Rod
We would probably see a more stable market with less highs and less lows. It would be a more efficient market.