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When Small Is Big

When Small Is Big

Although livestock economists downplay the power that market power has, it can have a life-and-death impact on producers. According to an Oklahoma State University livestock economist, "the small negative impact of captive supplies is 3% of the gross sale price of slaughter cattle. The 3% goes to the packer but should go to the producer. 3% of a $1,000 animal is $30." When you factor in inflation, a relatively small 3 percent in captive supply actually equates to downward losses near 71 percent. As you can see, "small" often has a very large impact. Among other mistakes being made by livestock economists, the SSNIP test does not actually apply to the Packers & Stockyards Act (PSA).

To read the rest of the OCM article by David A. Domina and C. Robert Taylor PhD, visit: When Small Is Big.