Moreover, this market failure is entirely predictable . It is a direct result of dramatic market power imbalances between agri-food industry multinational corporations and the family farm that must do business with these firms. IBP and Cargill, two of the big four U.S. packers, are considered to control the Canadian cattle market. Thus, these companies dominate the entire North American beef packing sector. Their profit levels reflect this dominance.
Many packer promoted studies show there is no problem with captive supplies.
Any feedlot manager with a Monday morning showlist knows this is untrue. The relationship between supply and demand is diminished as competition is reduced. In about 1950, economists and econometricians started doing statistical studies relating the level of concentration to the level of profits. Some of the studies related concentration to the level of prices, and others to price-cost margins computed by the Bureau of the Census. The studies were also interested in looking for critical levels of concentration.