Why factory farms may be less economical than we think
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There may be an optimal size for farms. Costs go up in steps, so any economies of scale get lost when new infrastructure, technology and people are needed.
Economies of scale may not be passed on to consumers.
From 2016 onward, the spread between cattle and beef prices has increased significantly, even as industry concentration remains high, indicating packers may now be able to increase their margins without passing on savings.
Reading
- https://countinganimals.com/factory-farming-and-the-price-of-meat/
- https://www.johnikerd.com/sustainable-agriculture/feeding-the-world-without-industrial-agriculture
- https://www.semanticscholar.org/paper/THE-ECONOMIC-PAMPHLETEER%3A-Economies-of-scale-in-Ikerd/02f7dd1e446906924e1797bd9155d31743ece6e3
- https://ikerdj.mufaculty.umsystem.edu/presentation-papers/factory-farms-cafos/economic-realities-of-cafos
Factors that mean animal products may not be subject to market forces
- Massive concentration of the US agricultural market
- large subsidies
- environmental externalities