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Meatpacking consolidated rapidly in the last two decades: slaughter
plants became much larger, and concentration increased as smaller
firms left the industry. We use establishment-based data from the
U.S. Census Bureau to describe consolidation and to identify the
roles of scale economies and technological change in driving
consolidation. Through the 1970's, larger plants paid higher wages,
generating a pecuniary scale diseconomy that largely offset the
cost advantages that technological scale economies offered large
plants. The larger plants' wage premium disappeared in the 1980's,
and technological change created larger and more extensive
technological scale economies. As a result, large plants realized
growing cost advantages over smaller plants, and production shifted
to larger plants.
This report examines the impact of process regulations mandated
under the Pathogen Reduction/Hazard Analysis and Critical Control
Point (PR/HACCP) rule by the Food Safety and Inspection Service of
USDA on food safety process control. The current level of food
safety found in U.S. meat and poultry food products is a result of
process and performance regulations and management-determined
actions brought about by market incentives. Processing regulations
include sanitation and other tasks related to food safety;
management-determined actions include capital investment and other
actions independent of process regulations, but possibly driven by
performance standards. Performance standards-regulations that allow
manufacturers to reach an acceptable level of food safety in any
manner they see fit-are not a subject of this report. This study
used the share of samples testing positive for Salmonella spp. as a
measure of food safety process control in meat and poultry
processing plants and found empirically that management-determined
actions account for about two-thirds of the reduction in samples
testing positive for Salmonella spp., while process regulations
account for about a third of the reduction. The importance of
process regulation varies, but accounts for 50 percent or more of
process control in about a quarter of plants, and in some plants
accounts for the entire process control system.
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