Political Economy of the U.S. Cattle and Beef Industry: Innovation Adoption and Implications for the Future

By Bailey, DeeVon | Journal of Agricultural and Resource Economics, December 2007 | Go to article overview

Political Economy of the U.S. Cattle and Beef Industry: Innovation Adoption and Implications for the Future


Bailey, DeeVon, Journal of Agricultural and Resource Economics


Market innovation and investment are key elements contributing to the health and success of any industry. However, U.S. cattle and beef interests appear to be resisting some of the market innovations that are occurring in their industry. This includes resisting innovations designed to provide more information and transparency in the marketing chain, such as additional traceability provided by animal identification systems. This paper discusses how institutions supporting the U.S. cattle and beef industry may be failing the industry in terms of helping it adjust to new market conditions, including failing to help the industry foster market innovation. Recommendations are given relating to the first steps government and the land-grant system can take to change research and extension agendas relating to the beef industry.

Key words: competition in world beef markets, market innovation, U.S. beef industry

Introduction

Successful marketing is typically predicated on successful market development, and market development is typically driven by product or market innovation. Market development, led by product and market innovation, has been a key factor in developing the world's capacity to market and distribute food and fiber.

During the past 20-30 years, U.S.-led innovation in the livestock industry at the production level has included such important achievements as highly productive crossbreeding programs, genetic engineering, and integrated production practices, especially in the swine and poultry industries.1 Historically, American firms have also developed many important innovations in processing and marketing. Examples from the beef industry include animal carcass disassembly plants, boxed beef, and more recently caseready meat packaging and instrument grading. However, one could argue that relatively fewer innovations have been incorporated in the past two decades in processing and marketing beef compared to the number of ground-breaking innovations at the production level.2

The adoption of appropriate technologies and innovations is a critical element in economic development because of the investment and economic activity it attracts (Courvisanos, 2006). Without new investment, industries tend to stagnate and even slowly the. This paper focuses primarily on the U.S. beef industry-how agricultural marketing innovations are either being embraced or resisted by the industry and how such practices might play into the future of the industry. While I focus on international trade issues and in what ways these issues are shaping the U.S. competitive advantage in world beef markets, the conclusions may also eventually encompass the domestic market.

Influence of International Beef Trade on the U.S. Beef Industry

Unnevehr (2004) describes the forces leading to global market integration and how these forces are driving markets toward standardizing expectations and requirements related to food quality and food safety across national boundaries. These forces include growth in world trade, especially in food and other agricultural products, and also innovation at the production level that is patented and offered by a limited number of firms worldwide (Unnevehr, 2004; Zilberman et al., 2004).

These same pressures are being exerted on U.S. cattle and beef industries. Total world beef trade is increasing and adding pressure for beef market integration in terms of quality and food safety requirements. But disagreements among trading partners about risk assessment (e.g., sound-science argument vs. precautionary principle), levels of required transparency and information (e.g., disputes about traceability and food labeling), approaches to risk management, and animal and plant health standards have led to significant trade frictions, also referred to as market fragmentation (Unnevehr, 2004; Bailey, Jones, and Dickinson, 2002).

Beef exports have become important to the U.S. beef industry only in the relatively recent past. …

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