science

Pork cycle

Pork cycle is a science topic covered in the lgStudy science library. This page brings together a partial reference excerpt, illustrations, worked examples, real-world applications and a short study plan, so you can understand Pork cycle rather than just read about it. In short: In economics, the term pork cycle, hog cycle, or cattle cycle describes the phenomenon of cyclical fluctuations of supply and prices in markets. It was first observed in 1925 in the pig market in the US by Mordecai Ezekiel and in Europe in 1927 by the German scholar Arthur Hanau.

Key takeaways

Pork cycle belongs to science; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect Pork cycle to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of Pork cycle from memory before moving on to harder problems.

Reference excerpt

In economics, the term pork cycle, hog cycle, or cattle cycle describes the phenomenon of cyclical fluctuations of supply and prices in markets. It was first observed in 1925 in the pig market in the US by Mordecai Ezekiel and in Europe in 1927 by the German scholar Arthur Hanau. In short, the pork cycle runs as thus:

As pork, being a rare good, is a high-priced item, a few farmers decide to start raising pigs. While pig supply is limited, prices remain high. More farmers realise the value potential and also begin raising pigs. As more and more piggeries come 'online' and start delivering pigs, the price begins to decrease. At some point, demand and supply equalise. Pig farms are still producing pigs and supply begins to outstrip demand. The prices decrease further. Pork becomes a common commodity, and consumers may get bored of pork. In view of the decrease in prices, farmers turn away from raising pigs, and go back to more valuable crops or livestock. As a result, the pork supply begins to decline, eventually below demand, and then pork goes back to being a high-priced item. The cycle begins all over. While the pork cycle is so named for its genesis in the economic analysis of a livestock market, the phenomenon can be observed on the markets of many goods.

Explanations of cycles in livestock markets

The cobweb model

Nicholas Kaldor proposed a model of fluctuations in agricultural markets called the cobweb model, based on production lags and adaptive expectations. In his model, when prices are high, more investments are made. However, the effect of these investments is delayed due to the breeding time - the production lag. Eventually, the market becomes saturated, leading to a decline in prices. Production is thus decreased and again, this takes time to be noticed, leading to increased demand and again increased prices. The cycle continues to repeat, producing a supply-demand graph resembling a cobweb. The model has also been applied in certain labour sectors: high salaries in a particular sector lead to an increased number of students studying the relevant subject; when these students enter the job market at the same time after several years of studying, their job prospects and salaries are much worse due to the new surplus of applicants. This in turn deters students from studying this subject, producing a deficiency and higher wages once again.

An alternative model Kaldor's model involves an assumption that investors make systematic mistakes. In his model, investing (i.e. breeding cattle rather than slaughtering them) when prices are high causes future prices to fall - foreseeing this (i.e. slaughtering more when prices are high) can yield higher profits for the investors. Sherwin Rosen, Kevin M. Murphy, and José Scheinkman (1994) proposed an alternative model in which cattle ranchers have perfectly rational expectations about future prices. They showed that even in this case, the three-year lifetime of beef cattle would cause rational ranchers to choose breeding versus slaughtering in a way that would cause cattle populations to fluctuate over time.

See also Feedback Hog/corn ratio Kitchin cycle Oscillation

References

Further reading Harlow, Arthur A. (1960). "The Hog Cycle and the Cobweb Theorem". Journal of Farm Economics. 42 (4): 842–853. doi:10.2307/1235116. JSTOR 1235116.

Illustrations

Worked examples

Example 1 — a first encounter with Pork cycle

Start with the simplest possible case. Write down what Pork cycle claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In science, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to Pork cycle before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about Pork cycle ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of Pork cycle

In research: Pork cycle appears in science research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses Pork cycle in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: Pork cycle is common in secondary-school and first-year university syllabi. It links to neighbouring topics Agricultural economics, Business cycle theories, Market (economics), so understanding it makes those chapters shorter.
In everyday life: Look for Pork cycle outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

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How to study Pork cycle in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what Pork cycle means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain Pork cycle out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is Pork cycle in simple terms?

Why does Pork cycle matter?

Because it connects several science ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study Pork cycle?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on Pork cycle.