» CASE STUDY: Australia's Halal Food Industry
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The wider Halal food industry in Australia
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Food Industry Mergers and Acquisitions Lead to Higher Labor ...
Source: www.ers.usda.gov
Topic: Food Industry
Sort Desciption: Mergers and acquisitions in the U.S. food industry have provoked controversy ... such as the entire food industry. Studies at the individual-industry level ...
Content Inside: R eport Summar y ERS Mergers and acquisitions in the U.S. food industry have provoked controversy for many years. Critics are concerned that mergers, by reducing the numbers of firms and increasing industry concentration, make it easier for firms to increase output prices and lower wages and input prices. Others argue that M&As increase efficiencies and boost productivity by allowing companies to lower costs and provide consumers with goods at lower prices. What Is the Issue? Until 1977, consolidation was not much of an issue for most food industries. At that time, the average four-firm-concentration ratios for eight food industries—meatpacking, meat processing, poultry slaughter and processing, cheese making, fluid milk processing, flour milling, feed processing, and oilseed crushing (soybean, cottonseed, and corn)—were about 31 percent. A wave of mergers and acquisitions led to a jump in average concentration to about 44 percent by 1992. Were these M&As efficient, and did they foster productivity in “acquired†companies? What Did the Study Find? Labor productivity, or output per worker, is one measure of production efficiency. Using U.S. Census Bureau plant-level data to examine processing plants in eight food industries, ERS and Census researchers found that processing plants in eight major food industries were highly pro- ductive before being acquired and they significantly improved their labor productivity afterward. The analysis suggests that mergers and acquisitions contributed to the general improvement in labor productivity, echoing an earlier ERS study. These results for M&As and labor productivity are not entirely consistent with other previous research. Other researchers found that large acquired plants had below-average productivity prior to their acquisitions, but the ERS and Census researchers found that both large and small plants had above-average labor productivity before their mergers. Productivity growth resul ...
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