Specialization in Livestock Projection Continues

Trend likely to continue due to economy of scale.

A study released by USDA's Economic Research Service shows that in the past 20 years livestock production has undergone a series of striking transformations. The study found that today's livestock farms on average are much larger and production has become more specialized as farmers more routinely confine and feed a single species of animal and focus on a specific stage of production.

As part of this transformation, livestock farms have become more tightly linked to other stages of production and processing through formal contracts, and hired labor is becoming increasingly important to the industry. The USDA report found about 40 major livestock integrators coordinate production of 75% of the 100 million hogs marketed annually in the United States.

The authors of the USDA report stated, - larger operations are able to realize lower costs and higher returns, while tighter coordination among firms at different processing stages can reduce financial risks.

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