Concentration in cattle slaughter increased dramatical-
ly in the last two decades, and three firms now domi-
nate the industry. Market concentration in hog, chick-
en, and turkey slaughter is not particularly high when
compared with other manufacturing industries, but has
increased over the years. Large plants now dominate
production in all major slaughter sectors, and consoli-
dation among large plants over the past two decades is
a major cause of increased concentration.
Concentration
The four-firm concentration ratio measures the share
of an industry’s output held by the four largest produc-
ers in the industry.9Changes in four-firm ratios are
widely used as summary indicators of structural
change.
Using Census Bureau data, table 3-1 reports concen-
tration ratios for cattle, hogs, chickens, and turkeys.
The ratios measure the four largest firms’ share of the
dollar value of shipments from plants in each slaughter
class.10
Four-firm concentration in cattle slaughter remained
stable from 1963 through 1977, then rose from 25 per-
cent in 1977 to 71 percent in 1992 (table 3-1). The
Census Bureau publishes four-firm concentration
ratios for about 1,000 different product classes, and
many of the series go back to 1947. The change in cat-
tle slaughter concentration is unique: no other product
class shows as dramatic an increase in any 15-year
period.
Concentration in hog slaughter remained stable from
1963 through 1987, but then increased sharply
between 1987 and 1992. Concentration in chicken
slaughter rose sharply from 1977 to 1987, but has
since remained stable. Similarly, turkey slaughter
became much more concentrated between 1963 and
1972, and then stabilized (table 3-1). Of the four class-
es, only cattle could be described as having unusually
high concentration today, when compared with other
manufacturing classes.11
Census data are subject to two potential problems.
First, they measure concentration as the value of plant
(establishment) shipments. But suppose that a firm
operated a plant that only slaughtered cattle and then
shipped the carcasses to a second plant that both
slaughtered cattle and also cut up carcasses into boxed
beef. The Census approach would count the value of
shipments from both the slaughter-only plant and the
fabrication plant. But since fabrication plant shipments
already include the value of shipments from the
slaughter-only plant, the Census measure double-
counts shipments among slaughter plants, and this
approach may overstate the value of shipments from
the combined firm and thus exaggerate industry con-
centration. Second, Census measures may be too
broad. Cattle plants specialize within species; the
largest plants slaughter only steers and heifers, while
other plants specialize in cows and bulls. Not only do
the plants use different techniques, but the meat out-
puts are not ready substitutes: steer and heifer meat is
AER-785 • Consolidation in U.S. Meatpacking USDA/Economic Research Service • 7
Chapter 3
Concentration and Consolidation
in Livestock Slaughter
9There are many potential concentration measures. The four-firm
ratio is easy for statistical agencies to compute and provides confi-
dentiality to individual firms. For those reasons, the measure has
for several decades been calculated for many industries by Federal
statistical agencies.
10 The classes are defined by the Standard Industrial Classification
(SIC), a hierarchical coding for products and establishments in the
economy. Establishments that primarily process food products are
assigned to the two-digit SIC code “20”; those food processors
that specialize in meat slaughter and processing are assigned to the
three-digit class “201.” Establishments that slaughter any live cat-
tle, hogs, horses, or sheep and lambs are then assigned to the four-
digit industry “2011”(those that process or slaughter poultry are
assigned to “2015”). Finally, slaughter products from these plants
are assigned to five-digit product classes: “20111” for cattle,
“20114” for hogs, “20151” for chickens, and “20153”for turkeys.
Our concentration measures are based on shipments from estab-
lishments assigned to the five-digit slaughter product classes.
11 About 10 percent of U.S. manufacturing industries are more
concentrated than cattle slaughter, while the other three slaughter
classes are close to the mean for manufacturing.
