Structure, conduct, performance as determinants of the price of beef in Rio Grande do Sul State

Abstract

In Rio Grande do Sul, an state of southern Brazil occurred an increase in the competitiveness and in the input prices demanded by beef production, without the alteration in the price per kilogram paid to producers. This imbalance decreased the income of farmers, unaccustomed to a rational management of their rural properties, leading many rural managers to sell part of their land or abandon the activity. Faced with this problem, the paper seeks to understand the pricing in beef cattle industry, according to the paradigm Structure-Conduct-Performance. The number of producers involved in beef cattle and the number of slaughterhouses were established according to statistics of the Brazilian institute of statistic and geography (IBGE) and categorized according to the official inspection department, respectively. A large number of actors involved in the production of three cattle's stages was found, as a result of the free entry and exit of rural establishments or agents that compose the supply chain, constantly changing this industry structure. Since the main objective of a firm is setting the price, the structuring of the state's cattle combined with the weak capacity for innovation and lowering transaction costs, does not allow pricing by this farmers.