Vertical coordination in the US pork industry: Status, motivations, and expectations

Contracting for Consistency: Hog Quality and the Use of Marketing Contracts

“…The US pork industry has experienced significant changes on both the supply and demand sides during the past three decades (Lawrence, et al, 1997;Martinez and Zering, 2004;Vukina, 2007). On the demand side, increased competition among pork packers in downstream product design has added to the traditional type of price competition.…”

“…Martinez (1999) and Lawrence et al (1997) claim that a processor that locates in a geographic region with a few large hog producers is more likely to be subject to opportunistic behavior by the producers.…”

“…While the existing literature links the emergence of hog marketing contracts to pork packers' needs to procure hogs of high quality in general (Kliebenstein and Lawrence, 1995;Lawrence, et al, 1997;Vukina, et al, 2007), it fails to explain the need for marketing contracts to attain high quality. We argue that packers' downstream product competition strategies affect the relative costs of spot markets versus long-term contracts in upstream hog procurement.…”

Policy Implications of Trends in Agribusiness Value Chains

“…Second, close coordination with suppliers helps to improve quality. Improved quality or reduced risk of poor quality is the benefit of contracts most cited by processors, and working with larger suppliers with long-term contracts provides greater opportunities for rewarding and securing higher quality inputs (Lawrence et al, 1997). Third, turning independent producers into contracted pig farmers allows processors (should they wish to do so) to profit from the supply of inputs into the production processes of their captive suppliers.…”

Building Channel Strategies and Alliances in Food Distribution

“…The key members of a marketing channel are manufacturers, intermediaries (wholesale, retail, and specialized), and consumers. The variety of channel participants can be combined in many ways to create effective marketing channels (Brown, Lusch, & Nicholson, 1995;Cichy & Elsworth, 2007;Gorchels, Marien, & West, 2004;Kasturi, 2006;Lawrence, Rhodes, Grimes, & Hayenga, 1997;Weber, 2007). The range and number of channel members is affected by the nature of demand by end users, and the leadership of the channel can vary from situation to situation.…”