The Location of Fed Cattle Slaughtering and Processing: An Application of Mixed Integer Programming
Faminow, Merle Douglas
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https://hdl.handle.net/2142/69850
Description
Title
The Location of Fed Cattle Slaughtering and Processing: An Application of Mixed Integer Programming
Author(s)
Faminow, Merle Douglas
Issue Date
1982
Department of Study
Agricultural Economics
Discipline
Agricultural Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, Agricultural
Abstract
The fed cattle slaughtering and processing industry is dynamic. During the last decade major shifts in the structure and location have occurred, creating debate by economists and public policy makers about the causes and consequences of the changes. Concern has been expressed that smaller firms will be forced out of business with the development of plants with annual capacity in excess of one million head, leading to patterns of regional monopsony. Other attention has focused on a potential decrease in fed cattle production in the southwest plains states due to decreased feedgrain production (as a result of possible declines in the availability of groundwater for crop irrigation).
This study proposed to determine the optimal number, size, and location of fed cattle slaughtering and processing plants in the United States for 1980 and projected to the year 2000. The study was limited to consideration of the major cattle and beef producing states. The model 1980 was used to simulate the effects of a hypothetical policy to restrict regional market shares of individual firms. The study used a mixed integer programming model to determine the optimal number, size and location of fed cattle slaughtering plants.
The results of the study indicated that the number of slaughtering and processing plants would decline in a region with the entrance of a high capacity plant (over one million head per year capacity). The larger plants were found to have lower unit operating costs due to lower unit fixed cost (if capacity was utilized), lower unit variable costs, and scale economies. The simulation of the hypothetical policy to restrict firm shares resulted in a small increase in total system costs, but was effective at lowering the four-firm concentration ratio resulting from the solution of the model. A shift in fed cattle production from the southwest plains to the upper midwest, in the model, resulted in a shift in slaughtering and processing activity to the midwest.
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