NCPA - National Center for Policy Analysis

Vertical Integration is No Pork Project

March 10, 2004

Allowing meat-packing companies to own livestock -- also known as vertical integration -- is a contentious issue. Opponents claim the practice degrades the environment, hurts consumers and allows companies to profit on the backs of family farms.

Despite these objections, proponents claim that vertical integration of the pork industry will allow companies to provide consumers with a variety of products and compete in a global market where profit margins are slim.

Researchers with the Heartland Institute found:

  • Animal waste is easier to manage in confinement facilities than spread out on pastures, where it has the potential to be washed by rainfall into water supplies; the Environmental Protection Agency has found no evidence that hog farms cause health problems.
  • Through vertical integration of beef producers and meat-packers, 490 new beef products have been added over the past 10 years.
  • On average, contract hog production raises total productivity on average by 20 to 23 percent and by as much as 50 percent.

Proponents of vertical integration argue that pork producers must compete in the global market, as well as manage risk and quality control. A ban on packer ownership would result in lost market share globally for pork producers and provide less product variety to consumers.

Source: John W. Skorburg, "Packer Ownership of Hogs: Economic and Political Ramifications," Heartland Institute, December 18, 2003.

 

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