While managerial ability may be useful in explaining the cost competitiveness of small hog farms, it is not easily measurable. In this report it suggests that another potential source of cost-competitiveness – which is measurable but
remains virtually unexplored in the literature on hog production, is vertical scope economies. It was found that farrow-to-finish benefited both large and small, depending on the farrow-to-feeder and feeder-to-finish mix. This result partially supports Ikerd’s claim that “family hog farms are as cost efficient as are the large-scale, corporate hog operations.” I say partially because, although vertical scope economies are positive for all the farrow-to-feeder and feeder-tofinish mix, they may be offset at some point by stage specific diseconomies. That is the subject of future
research.