Changing consumer preferences will disrupt future agricultural markets, write agricultural economists - Entrepreneur Generations

The recent chicken shortage, spurred by pandemic shortages and consumer demand, prompted two agricultural economists to wonder whether the "high prices will cure high prices," as happens in grain markets. 

"But there are significant differences. In the case of grain markets, farmers have little pricing power because a large number of producers face a relatively small number of buyers. As farmers respond to high grain prices by producing more, prices fall quickly. But with low prices farmers seek to maintain or increase production levels in hopes of reducing their per unit cost of production," Harwood Schaffer and Daryll Ray of the University of Tennessee's Agricultural Policy Analysis Center write in their latest "Policy Pennings" column. "In the chicken industry, the landscape looks quite different. On the supply side, a handful of very large firms control a significant portion of total production and on the demand side a relatively small number of firms account for a large percentage of wholesale poultry purchases, giving them a countervailing pricing-power that independent grain farmers lack."

Long-term rends show chicken becoming more popular than beef over the past 50 years because of chicken's "healthier" reputation and lower cost. Plant-based "meats" are gaining in market share as well. But rising concerns about animal welfare and the environment will increasingly drive protein sourcing decisions in the U.S., Schaffer and Harwood write.

"Farmers who factor health, environmental, and animal welfare concerns into their production decisions are more likely to maintain their markets than those who don’t. We already see that happening in egg and milk markets. Consumers will pay double or more for products that address their health and ethical concerns," Schaffer and Harwood write.

from The Rural Blog https://ift.tt/3fpwuAw Changing consumer preferences will disrupt future agricultural markets, write agricultural economists - Entrepreneur Generations

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