Author Information

Juana Sanchez

Abstract

This paper analyzes three hypotheses concerning supply in the U.S. chicken broiler industry: (a) there has been a cycle in the industry of approximately 27-36 months length; (b) the seasonal and other periodic components, as well as relations between variables, have changed as a result of vertical integration in the industry; (c) the effects of vertical integration in the industry were counteracted in the early seventies by such forces external to the industry as domestic and international economic conditions .

The hypotheses are analyzed using new monthly, non-seasonally adjusted time series data for chick placement, wholesale broiler prices, chicks hatched and net returns. Exploratory analysis using three different spectrum analysis methods, shows that there is evidence to confirm those hypotheses. Using that information, forecasting models are constructed, and their performance is compared to the performance of the standard distributed-lag models used by analysts of the industry .

The paper then offers robusts results concerning hypotheses that have occupied the interest of analysts of the industry for a very long time. These results indicate that as vertical integration reached maturity, broiler suppliers tended to become sales maximizers .

Keywords

periodogram, autoregressive spectrum, Bayesian, demodulation, forecasting, distributed-lag, vertical integration, sales maximization

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Apr 24th, 9:30 AM

VERTICAL INTEGRATION IN THE CHICKEN BROILER INDUSTRY

This paper analyzes three hypotheses concerning supply in the U.S. chicken broiler industry: (a) there has been a cycle in the industry of approximately 27-36 months length; (b) the seasonal and other periodic components, as well as relations between variables, have changed as a result of vertical integration in the industry; (c) the effects of vertical integration in the industry were counteracted in the early seventies by such forces external to the industry as domestic and international economic conditions .

The hypotheses are analyzed using new monthly, non-seasonally adjusted time series data for chick placement, wholesale broiler prices, chicks hatched and net returns. Exploratory analysis using three different spectrum analysis methods, shows that there is evidence to confirm those hypotheses. Using that information, forecasting models are constructed, and their performance is compared to the performance of the standard distributed-lag models used by analysts of the industry .

The paper then offers robusts results concerning hypotheses that have occupied the interest of analysts of the industry for a very long time. These results indicate that as vertical integration reached maturity, broiler suppliers tended to become sales maximizers .