Idle capacity in packers drives competition for cattle, according to industry association

The Paraguayan Meat Chamber (CPC) stated that idle industrial capacity in packers does not respond to anti-competitive practices, but, on the contrary, reinforces competition for cattle. According to the association, this is a characteristic of a capital-intensive industry.

In a release distributed this week, the CPC explained that, with high fixed costs already assumed, packers seek to maximize the use of their plants to improve profitability. In that context, available capacity creates incentives to capture greater slaughter volume.

The entity maintained that each additional ton processed allows costs to be diluted and operational efficiency to be increased. Therefore, far from restricting supply, idle capacity pressures the industrial sector to compete more actively for cattle.

Under this logic, the CPC concludes that the business dynamic tends to favor a more competitive market in cattle purchasing.

Source: Valor Agro