Supply Dynamics in the U.S. Hog Industry

A variety of methods and empirical techniques are now available for estimating dynamic economic relationships. Unfortunately, most dynamic modeling procedures rely heavily on the sample data for specification. This is due to a lack of a priori information useful for determining the appropriate lag structure. However, there is frequently a rich source of information that can be used to define lag structures in agricultural supply models. This information is related to the biological and physiological processes characterizing agricultural production. In this paper, a quarterly econometric model of supply response in the U.S. hog industry is specified and estimated. This model incorporates relevant biological features of hog production directly into the specification. The structural integrity of the model is evaluated by examining post-sample predictive ability and mean-path elasticities. The results indicate performance that is consistent with observed behavior in the U.S. hog industry. Nous disposons aujourd'hui de toute une gamme de méthodes et de techniques empiriques pour ?estimation des rapports économiques dynamiques. Malheureusement, la plupart des méthodes de modélisation dynamique dépendent étroitement, pour leurs spécifications, sur des données échantillonnées. Ceci découle ?un manque ?informations a priori utiles pour la détermination de la structure de retard appropriée. Toutefois, on dispose fréquemment ?une riche source ?informations qui peuvent servir à définir les structures de retard dans les modèles de ?offre en agriculture. Cette information est liée aux processus biologiques et physiologiques caractérisant la production agricole. Dans le présent document, nous procédons à la spécification et à ?estimation ?un modèle économétrique trimestriel du comportement de ?offre dans le secteur américain du pore. Ce modèle incorpore directement dans la spécification les caractéristiques biologiques pertinentes de la production porcine. Nous évaluons ?intégrité structurale du modèle en examinant ?aptitude prédictive post-échantillonnage et les valeurs moyennes ?élasticité. Nos résultats laissent conclure à une performance qui vient corroborer le comportement observé dans le secteur américain du porc.     

Short-Run Supply Responses in the U.S. Beef-Cattle Industry

This article investigates the response of beef-cattle producers to changes in the price of cattle. Previous research has suggested that there may be a negative short-run supply response to a permanent increase in the price of cattle. We build a dynamic, rational expectations model that separates the markets for fed and unfed beef. This separation generates predictions that the supply response is generally positive, even for permanent shocks in the short run, and nests the negative supply response as a special case for appropriately restricted demand shocks.     

Analyzing Factors Affecting U.S. Food Price Inflation

Since the summer of 2007, U.S. food price inflation has increased dramatically. Given public anxiety over fast-rising food prices, this study attempts to analyze the effects of market factors—prices of energy and agricultural commodities and exchange rate—on U.S. food prices using a cointegration analysis. Results show that the agricultural commodity price and exchange rate play the key roles in determining the short- and long-run movement of U.S. food prices. It is also found that in recent years, energy price has been a significant factor affecting U.S. food prices in the long run, but has little effect in the short run. This implies the strong linkage between energy and agricultural markets in the long run over the recent years. Depuis l’été 2007, l’inflation des prix des aliments aux États-Unis a augmenté considérablement. En raison de l’anxiété que la hausse rapide des prix des aliments suscite au sein de la population, nous avons tenté d’évaluer, à l’aide d’une analyse de co-intégration, les répercussions de certains facteurs de marché– le prix de l’énergie, le prix des produits agricoles primaires et le taux change – sur les prix des aliments aux États-Unis. Les résultats ont montré que les prix des produits agricoles primaires et le taux de change jouent un rôle important dans la détermination des tendances à court et à long terme des prix des aliments aux États-Unis. Nous avons également constaté que, au cours des dernières années, le prix de l’énergie a eu une forte influence sur les prix des aliments aux États-Unis à long terme, mais peu d’influence à court terme. Cette observation montre l’étroit lien à long terme des marchés de l’énergie et des produits agricoles au cours des dernières années.     

Price Variability and Industrial Concentration in U.S. Food Industries

This paper focuses on the sources of intra‐industry price variability in US food industries during a period of increasing concentration, while accounting for the impact of variations in prices of primary agricultural products. Results suggest that intra‐industry price variability in food industries increases with their respective mean rate of inflation and product heterogeneity. However, industrial concentration lowers the sensitivity of relative prices to changes in the mean rate of inflation. Hence, static welfare losses to consumers from increasing concentration in food industries, a subject of recent and intensive investigation, can partly be offset by gains such as reduced price variability.     

Investment and Productivity in Canadian and U.S. Food Manufacturing

A restricted cost function model of Canadian and US. food manufacturing shows that productivity growth rates in Canada have remained well below those in the United States for the past decade and a half_: At mean factor prices, output, and capital quantities, processing costs would be 22% lower in the U.S. than in Canada. Technical change in both countries has been labor-saving and material-using, although slightly more so in the US. than in Canada. The labor-saving bias of technical improvements puts Canada at a disadvantage to its southern neighbor, since food manufacturing wages in Canada tend to be lower and material prices higher than in the United States. Enhancing its competitiveness will require that Canada reduce raw food and packaging costs or invest more in research and development .
L'estimation d'une function constraint de coût démontre que le taux de productivité du secteur de la transformation des aliments et boissons au Canada est demeuré inférieur à celui des Etats-Unis depuis une quinzaine d'années. En effet, à la moyenne du prix des intrants, du stock de capital et de la quantité produite, le coût de production américain est de 22 % inférieur à celui du Canada. Dans les deux pays, le changement technologique a permis de substituer le matériel à la main-d'oeuvre, et ceci de façon plus prononcée aux Etats-Unis. En bout de ligne, ceci désavantage le secteur canadien des aliments et boissons puisque les salaires sont généralement inférieurs au Canada alors que le matériet est plus coûteux. Le Canada pourrait améliorer sa compétitivité face aux Etats-Unis en réduisant le prix des denrées et des entrées intermédiaires ou en augmentant l'investissement dans la recherche et le développement .     

Community Attributes Influencing Local Food Processing Growth in the U.S. Corn Belt

This paper examines local and regional attributes associated with growth in the food processing industry. The paper uses industrial location studies to develop a model of food processing plants'growth. Ordinary least squares (OLS) models are estimated to analyze which local, regional and state attributes are associated with county level growth, measured by a change in the number of establishments. The results suggest that food processing growth is associated with factors similar to those influencing the location of footloose manufacturing plants. However, growth in food processing sectors is associated with different local attributes depending on a firm's industry type (demand-oriented, supply-oriented, footloose).     

Factors Affecting the Allocation of Trade Promotions in the U.S. Food Distribution System

Although many have proposed theories explaining trade promotion (TP) behavior by manufacturers, lack of data has prevented empirical assessment. We employ survey data to explore the effect of manufacturer and retailer bargaining power on the allocation of TPs in the U.S. food sector. The survey respondents consist of retailers controlling 40% of retail sales in U.S. supermarkets. Retailer bargaining power increases the allocation of funds to off-invoice TPs through higher share of private label and retailer size. Manufacturer bargaining power decreases the allocation of funds to off-invoice TPs by establishing formal policies of negotiation.     

Does Food Safety Information Impact U.S. Meat Demand?

A theoretical model of consumer response to publicized food safety information on meat demand is developed with an empirical application to U.S. meat consumption. Evidence is found for the existence of pre-committed levels of consumption, seasonal factors, time trends, and contemporaneous own- and cross-commodity food safety concerns. The average demand response to food safety concerns is small, especially in comparison to price effects, and to previous estimates of health related issues. This small average effect masks periods of significantly larger responses corresponding with prominent food safety events, but these larger impacts are short-lived with no apparent food safety lagged effects on demand.     

Trade Liberalization,Policy Reform and the U.S. Sugar Industry

This study examines the prospects for and potential impacts of liberalized international trade in sugar. It utilizes a state specific, cost of production based estimate of U.S. sugar supply to examine producer surplus under the current sugar policy regime and under a free trade scenario. It also evaluates the long-term viability of sugar production in individual states at free market prices.     

Issues Affecting the U.S. Poultry Industry and International Poultry Trade

Abstract

This study was conducted to examine issues and concerns that may affect the future direction of the U.S. poultry industry and international poultry trade. Given the economic contribution of the poultry industry, it is important to have some understanding about the future direction of the industry, both at the national and international levels. To generate the information required, this study surveyed the top poultry producers in the country as well as specialists and experts in the industry. Although both the producers and specialists believe that the industry has a bright future, they also think that the rapid production growth experienced by the poultry industry in the past two decades cannot be sustained. Growth restrictions in the industry will come from a variety of sources such as environmental waste management, food safety, labor shortages, animal welfare, and increased foreign competition.     

Productivity Growth and Environmental Regulation in Mexican and U.S. Food Manufacturing

Many argued during the NAFTA debate that trade liberalization would favor Mexican over U.S. food processors, especially because of lax environmental laws south of the border. We find through an examination of profit functions that productivity growth in Mexico has outstripped that in the United States, suggesting free trade indeed will benefit Mexican suppliers. U.S. pollution regulations have had no impact on the profitability or productivity of U.S. food manufacturing. In contrast, Mexico's swiftly rising environmental standards have enhanced food processors' productivity growth, corroborating the Porter hypothesis. Pollution law, therefore, has favored Mexican over U.S. food processing, but for reasons few had anticipated.     

The Evolution and Implications of the U.S. Food Security Act of 1985

The Food Security Act of 1985 sets the United States (U.S.) policy course for the five years, 1986–1990, in the areas of farm product prices and farmer incomes, agricultural production, food aid, and trade in agricultural products. It is clearly an evolution of past policy, deeply rooted in the institutional processes of participatory policymaking. The Act will have important implications for not only domestic producers, consumers, agribusinesses, and taxpayers, but alto product agricultural exporters and importers around the world. Just as it was substantially, affected by the current loss of export markets and the economic crisis in the U.S. agricultural sector, its implementation and impacts will be affected in the future by the unpredictable weather, macroeconomic conditions around the world, and international trading policies. This article examines the development of the policy embodied in the Act and analyzes its primary economic implications. Although most provisions of the U.S. agricultural price and income policy that had evolved over the past half century were continued, important changes were made. The resulting policy closely mirrored the preferences revealed from research concerning farmers and leaders of national agricultural and food interest groups. Primary changes from the previous 1981 Act were: lengthening the duration to five years; substantial lowering of the minimum price support levels; permitting a gradual decline in the minimum target prices; providing for a whole dairy herd buyout program; establishing export enhancement initiatives through credit, promotion, and export payment-in-kind (PIK); and initiating major efforts to increase farmland conservation and withdrawal of fragile lands from production. Likely implications of the new Act include: (1) lower product prices for agricultural producers around the world, and also farmer incomes if there is no income protection from national policies; (2) a similar but a less proportionate impact on consumers; (3) a substantial burden on the U.S. Treasury, and possibly those of the other nations as well, depending upon the type of policies followed; and (4) likely intensification in the immediate future of the economic conflicts and negotiations between major agricultural trading nations of the world. Research played a vital role in the development of the U.S. 1985 Act. Given the turbulent, uncertain, and important nature of the agricultural and food sector in the world, research is challenged to provide more and better knowledge for future policymaking.     

Food Waste Avoidance Actions in Food Retailing: The Case of Denmark

Food waste occurs throughout the entire food supply chain, from production to consumption of food in households. Retailers are in a unique position to contribute to food waste avoidance, not only by minimizing the amount of waste in their distribution channels but also by influencing consumer attitudes and behaviors. This explorative study aims to identify which food waste avoidance actions are conducted by retailers in Denmark, to which extent, and how they vary across food categories and supermarket chain. Based on an analysis of secondary and empirical data collected via observations at retail stores, the authors identify 22 food waste avoidance actions in Danish retail. The results provide new insights into food waste avoidance in retail. Based on the findings, suggestions for further research directions are developed that should serve to identify the most efficient customer targeted actions in the in-store setting and marketing of suboptimal foods.     

U.S. National Economic Contribution of Generic Food and Agricultural Product Advertising

Agricultural promotion groups (APGs) promote the economic welfare of agricultural producers by financing generic advertising and promotion activities intended to expand demand for their commodities in hopes that the benefits will more than cover the cost. A review of the most recent evaluations of 27 major U.S. APG generic advertising and promotion programs conducted by many different researchers using widely different techniques concludes that that those programs have effectively enhanced the profits of their respective stakeholders and generated high rates of returns to the dollars invested in those programs. Importantly, this study finds that the success of those programs in supporting and growing their respective sectors of agriculture has spilled over to the general economy. The programs have created an important multiplier effect through the economy. In the process, jobs have been created; income has been generated; and economic growth has occurred.     

The Nested PIGLOG Model: An Application to U.S. Food Demand

A new demand system is introduced, the Nested PIGLOG model, nesting thirteen other demand systems including five that are also new. This new model and its nested special cases are applied to models of U.S. food demand that include food-at-home (FAH), food-away-from-home (FAFH), and alcoholic beverages. Although nested tests and out-of-sample forecasting performance favor generalizing models to a certain degree, statistically insignificant improvements to in-sample-fit and even poorer out-of-sample forecast accuracy undermine further generalizations. Based on a subset of preferred models, FAFH is found to be price and income elastic compared to FAH which is price and income inelastic.     

Market and Cost Structure in the U.S. Beef Packing Industry: A Plant-Level Analysis

A resurgence of consolidation in the U.S. meat packing industry in the past few decades has stimulated academic and policy debate. Issues raised include the role of cost economies in driving these patterns, and the effects on the agricultural sector (cattle producers) from market power. Here, plant level cost and revenue data for U.S. beef packing plants are used to estimate a cost-based model incorporating cattle- and output-market pricing behavior. The robust results indicate little market power exploitation in either the cattle input or beef output markets, and that any apparent evidence is counteracted by cost efficiencies such as utilization and scope economies.     

The Effects of NAFTA on Trade and Welfare in the U.S. Fresh Tomato Industry

Abstract

The purpose of this study was to measure NAFTA's impact to date and quantify how the producers and consumers of fresh tomatoes in the United States, Canada and Mexico have benefited or lost. Changes in consumer and producer surpluses were calculated in 2001 US dollars based on simulations of two scenarios. The analysis found that U.S. consumers captured $12.1 billion more surplus than they would have captured had NAFTA not been enacted. Mexican fresh tomato producers gained an additional $2.08 billion in surplus due to NAFTA. In contrast to Mexican growers, U.S. and Canadian producers appear not to have benefited economically from NAFTA. Findings suggest that U.S. producers would have earned $3.29 billion more if NAFTA had not gone into effect. Canadian producer surplus with NAFTA was estimated to be approximately $20 million less with NAFTA, and the total net benefit from NAFTA was found to be a positive $10.87 billion.