The Cost of Food Safety Technologies in the Meat and Poultry Industries.

There are few comparable studies of the processing industries but its estimates can be
compared to those for slaughter. More processing requires more labor and capital inputs and less
meat, suggesting that the labor shares should be higher and the meat/materials share lower for
meat processing. Results show that the labor and capital shares are much higher and the
meat/materials share much lower for meat processing relative to meat slaughter. The meat
processing labor share is about the same as that for chicken slaughter but this makes sense
because chicken slaughter plants cut up whole chickens into parts and debone parts into boneless
cuts and processing plants need worker for cutting, cooking, and packing finished processed
products - all of which require more labor inputs than required for meat slaughter.

Recall that the coefficient on the output term indicates economies of scale at sample
mean prices and output, i.e. whether average costs were declining for plants at the sample mean
size. Values of the coefficient that are greater than one suggest diseconomies of scale while
values less than one indicate greater scale economies. Since the first order coefficient for output
varies from 0.721 to 0.921, there are economies of scale at sample mean prices in 2002. The
coefficient for meat slaughter (0.921) is nearly the same as that reported for cattle slaughter and
somewhat below that for hog slaughter (MacDonald and Ollinger, 2000, 2005). The size of the
chicken slaughter coefficient is below that reported in Ollinger, MacDonald, and Madison
(2005). There are no comparable economies of scale measures for meat processing.

The interaction terms show how elasticities and cost shares vary with movement away
from sample means. The interaction of the price of labor with output shows how labor share
changes with output. Table 2 shows a decline of 0.7- to 3.5 percent in the labor share for each
100 percent change in output; the meat shares, in contrast, rose by 0.9 to 3.4 percent. These

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