Start Consolidating pdfs into one

Consolidating pdfs into one

Using data for the largest 50 cooperatives and the amount of farm milk marketed by all U. dairy cooperatives over the 1987-2008 period we obtained HHI values that increased from 472 in 1992 to 924.3 in 2008 (Figure 4).

In addition to the usual public policy concerns associated with industry consolidation, there are some unique industry characteristics that make for special attention.

dairy industry has occurred at every step in which raw farm milk is transformed into finished dairy products and made available to the final consumer.

Similar to the marketing of farm milk, there has been significant consolidation in dairy manufacturing.

During the 1990’s a dominant method to expand was via the purchasing of regional manufacturing firms.

Unlike the CR value, the HHI will change if there is a shift in market share among the larger firms.

Given the formulation of the HHI, if there were only one firm in the industry that firm would have 100% market share implying an HHI of 10,000 which is the monopoly HHI value. Department of Justice (DOJ) uses the HHI in guidelines for evaluating mergers.

Alternatively, if there were a very large number of firms competing, each of which having nearly zero market share, then the HHI would be close to zero, indicating nearly perfect competition. An HHI of less than 1000 represents a relatively unconcentrated industry/market.

The DOJ would usually not be concerned with a merger that leaves an industry with an HHI less than this value.

We apply this measure to the market share of the 2, 4, 8, 10 and 20 largest dairy cooperatives with respect to the marketing of all U. The two largest cooperatives accounted for approximately 30% of U. This implies that the regional CR values are likely to be much greater than the national values.

A second measure of industry concentration that has been developed by economists is known as the Herfindahl-Hirschman Index (HHI).

For example, over 1997-2000 more than 60 dairy processors were purchased by Suiza and Dean Foods.