This blog contains posts and comments written by students in Dr. Tufte's economics classes at Southern Utah University.
3/15/2008
Where's the beef?
The US beef industry is becoming an oligopoly. According to the article "Brazil beef giant buys American" JBS SA, which is a Brazil-based beef producer, has been buying out other beef producers. Recently JBS SA announced it would aquire the 4th and 5th leading US beef producers. If the aquisition is completed, JBS SA will become the #1 US beef producer. The players of this industry are being eaten up by a select few. As these aquisitions occur, the industry becomes closer to an oligopoly. As we know in an oligopoly one firm, dominant in size (JBS SA in the USA possibly), can set the price and others will follow. Will we see beef prices increase soon? Will those delicious Junior Bacon Cheese Burgers sore off the $0.99 menu? It's hard to say, but the it looks like US beef consumers will soon be in the hands of JBS SA.
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2 comments:
The price on the beef industry has seemed to always be a roller coaster ride. I assume this can be attributed to all the competition. Maybe a big player like JBS SA having such a big chunk of the market could be good for the industry. If this deal goes through it might bring a little more stability to the pricing not having it jumping up and down dramatically.
I'm not sure how much I'd worry about this. Agricultural subsidies are so thick, and so distorting, that this sort of change is probably unimportant.
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