Pork Quality and the Role of Market Organization

by Stephen Martinez and Kelly Zering

This study addresses changes in the organization of the U.S. pork industry, most notably marketing contracts between packers and producers, by exploring their function in addressing pork quality concerns. A number of developments brought quality concerns to the forefront. These include health concerns and corresponding preferences for lean pork, growing incidence of undesirable quality attributes (e.g., pale, soft, and exudative (PSE) meat, a result of breeding for leanness), heightened concerns over food safety and related regulatory programs, and expansion into global markets. Organizational arrangements can facilitate industry efforts to address pork quality needs by reducing measuring costs, controlling quality attributes that are difficult to measure, facilitating adaptations to changing quality standards, and reducing transaction costs associated with relationship-specific investments in branding programs.

Keywords: contracts, transaction costs, measuring technology, measuring costs, pork, quality, leanness, safety, carcass pricing, vertical integration

In this publication...

• Entire Report
• Research Brief
• Abstract, Acknowledgments, Contents, and Summary
• Introduction
• Product Quality and Market Organization: Two Theoretical Perspectives
• Changing Emphasis on Pork Quality
• Role of Contracts in Reducing Measuring Costs Associated With Carcass Pricing Grids
• Marketing Contract Design to Reduce Transaction Costs and Control Quality Attributes
• Organization of Packer Branding Programs That Use Specific Genetics
• Conclusions
• References
• Appendix A: Inventory of Long-Term Contracts: General Contract Provisions
• Appendix B: Contract Clauses Related to Input Requirements and Monitoring
• Appendix C: An Example of Reduced Incentives For Leaner Hogs
• Appendix D: Packer Branding Programs That Rely on a Specific Type of Genetics