The price of hogs effectively went to zero for a period of time, and it is estimated by some of the largest lenders in the industry that more equity was lost in 1998 than existed when prices rebounded in mid-1999. Such catastrophic events need coordinated risk management to prevent them from happening in the future. In order to have competitive markets and competitive market solutions a number of buyers and sellers are needed. In addition, all buyers and sellers need equal access to high quality information. Typically homogeneous products characterize competitive markets.
Firms are able to enter and exit a competitive industry easily.
Today, all of these conditions fail for production agriculture. Agricultural commodity markets are oligopolistic, there is unequal access to information, products are differentiated, and because of excess fixed assets easy entry and exit is a thing of the past. How we begin to handle such market structures from a policy point of view is part of the question facing US livestock production now and into the future. The problem of thin markets . Changing market structures have led to concerns about firm integration, concerns about how contracts are coordinated, and price discovery in thin markets.