Agriculture Reference
In-Depth Information
12
Economic Sustainability
in Animal Agriculture
S.C. Blank*
Department of Agricultural and Applied Economics,
Virginia Polytechnic Institute,Virginia, USA
Introduction
focusing on an old issue: 'sustainability'. Both
natural and social scientists are now focusing
much attention on this issue, yet those efforts
are rarely coordinated because the underlying
problems and components are not yet well
understood because they reflect complex sys-
tems and phenomena. As a result, progress
toward sustainability has been very limited
(Toman, 1994).
The general objective of this chapter is to
contribute to the understanding of both the
economic issues behind the changing structure
of livestock industries and the likely implica-
tions of those changes for the sustainability of
food animal agriculture as it will exist in the
future. In this effort, two specific objectives are
pursued. First, the limited amount of data avail-
able at this early stage in the trend toward
increased use of market power are summarized;
pointing to an explanation for what is driving
that trend. The second specific objective is to pre-
sent the implications of the trends in industry
structural changes. Based on a discussion of pre-
vious research results, preliminary inferences
are drawn on the future of animal agriculture
in America - its potential for success as well as
the fundamental limitations for livestock pro-
ducers as they pursue economic sustainability.
Food animal producers are in the middle of a
dynamic economic sector that is undergoing sig-
nificant changes, which will continue for dec-
ades. Livestock producers are between suppliers
of feed (and other inputs) and animal processors
in the flow of products within the 'meat product'
sector, and all of the industries in this sector are
shifting in structure. Structural shifts cause
changes in both the conduct and performance
of an industry, thus many changes will occur
in food animal agriculture in the near future.
Probably the most important shift is the ongoing
concentration of animal processing firms. The
structural shifts caused by the concentration of
buyers for livestock (i.e. animal processing firms)
are enabling the exercise of market power, which
hastens the shifts in structure, thus the shifts are
inevitable. The ultimate result of these changes
is that integrated vertical supply chains will
grow more common and stronger over the
next decade. This could have serious implica-
tions for US livestock producers and, possibly,
consumers.
As agribusiness firms, agricultural produc-
ers and policy makers have become aware of the
expanded scope of change, a new debate is
