Transforming Commodity Animal Agriculture: How Easy?

Abstract

Relentless technological change and intermediate market failure are re-shaping the supply chain for fresh meat. Investment over the last twenty years has primarily been in fixed assets that lower the shutdown price point and lead to structuralized overproduction of commodities. To avoid the non-sustainable approach of a single minded strategy focused on cost reduction, firms are focusing on value-added and branding approaches which present problems with search costs and supply risk. A coordination phase is emerging where firms are experimenting with both contractual and integrated approaches to acquire large supplies of raw materials that support branding attributes. Information sharing is crucial to overcome these problems but oligopoly competitors resist it due to the potential for competitive disadvantage. A new supply chain is beginning to emerge, focused on consumer demand but its implementation is proceeding slowly.