What will we eat tomorrow? UK food industry and its market

An OECD report on Food Marketing and Economics stated in 1970 that ‘the basic direction of development … is towards a food industry dominated by a limited number of large, efficient, dynamic, market oriented companies’. This is certainly so. In the UK from one to three companies already account for from 60 to 96% of the sales of a wide range of processed foods (biscuits, breakfast cereals, bread, frozen fish, frozen vegetables, ice cream, margarine, potato crisps, sugar, tea, tinned fruit and tinned soups). Out of £362 million spent on advertising in 1973, £88 million was spent on food, more than on any other product category. Undoubtedly the food industry is influencing to an increasing extent what people eat, and their nutrition. An extensive report on the status of the UK food industry and many of its sectors, British Food Profile¹, was released in 1978. The report is discussed below.     

Denmark's contribution to the world food programme: a success story

The Danish government has achieved a six-fold increase in the number of people who could be fed with Danish development food aid from 1990 to 1997, at a reduced total cost. A change in the composition of the Danish food basket from high-value commodities of animal origin toward basic vegetable commodities produced this dramatic increase in the cost effectiveness of Denmark's regular contribution to the World Food Programme. The decision to change the food basket was strongly opposed by the very well organized Danish meat and dairy industries and their interest organizations. Notwithstanding the substantial opposition from these organizations, the Ministry of Foreign Affairs maintained its commitment to phase animal commodities out of the Danish food basket. The World Food Programme was very supportive of Denmark's initiative to promote a more flexible approach to the determination of donor food baskets. The outstanding partnership between the Ministry of Foreign Affairs and the World Food Programme has been instrumental in the successful implementation of the new Danish food aid policy.     

The hidden cost of smoking: Rent premia in the housing market

In this article, we provide novel evidence on the additional costs associated with smoking. While it may not be surprising that smokers pay a rent premium, we are the first to quantify the size of this premium. Our approach is innovative in that we use text mining methods that extract implicit information on landlords’ attitudes to smoking directly from Zoopla UK rental listings. Applying hedonic, matching, and machine-learning methods to the text-mined data, we find a positive smoking rent premium of around 6%. This translates into £14.40 of indirect costs, in addition to £40 of weekly spending on cigarettes estimated for an average smoker in the United Kingdom.     

The political ideology of food

Using data from a survey of over 700 Americans, we sought to measure and investigate the nature of citizen’s political ideologies in relation to food. Results reveal that a majority of respondents can be classified as “food statists,” desiring more government action in the realm food and agricultural relative to the status quo. People’s ideologies with regard to food were multidimensional, falling along lines related to food health and quality, food safety, and farm subsidies. Respondents were most in favor of additional government action related to food safety. Food ideology was related to conventional measures of political ideology with, for example, more liberal respondents desiring more government involvement in food than more conservative respondents, but the relationship was far from determinative, suggesting food ideology represents a unique construct in its own right.     

Consumer satisfaction with food products

An important problem facing public policy makers is how best to measure market performance. Economists have traditionally used criteria such as the existence of monopoly forces, entry barriers, and externalities in production and consumption. Increasingly, however, policy makers are viewing the measurement of consumer satisfaction as an important additional approach to the assessment of market performance, even though consumer attitudes may lack some of the precision and objectivity of the economist's measures.¹ Responding to the growth of the consumer movement, policy makers are assigning a relatively high priority to the development of programmes designed to protect the consumer interest. Effective consumer protection programmes depend on the availability of information which can provide a basis for comparing levels of consumer satisfaction across a range of products and services, for identifying problem areas, and for effectively allocating limited consumer protection resources. Given the number of alternative foods on the market and the central role of food consumption in everday life, effective resource allocation is of special importance to policy makers concerned with food and agriculture.     

Ground beef recalls and subsequent food safety performance

The U.S. Food Safety Inspection Service recalled more than 370 million pounds of meat and poultry products and oversaw 680 Class 1 recalls over 1998–2014. The cost to firms was about $109 million in lost market value (Pozo and Schroeder, 2016). Thomsen and McKenzie (2001) argue that firms internalize the costs of recalls, and Marino (1997) asserts that high food safety costs lead to food safety investment, but no research has examined the impact of recalls on plant food safety performance. Using performance on tests for Salmonella conducted by the Food Safety Inspection Service as a measure of food safety, this article examines the performance on Salmonella tests of ground beef plants with Class 1 recalls. The results show that plants have high Salmonella levels before and during the year of the recall and have much lower levels afterward. The paper also shows that ground beef plants with recalls are less likely to meet the FSIS standard for Salmonella and that the likelihood of failing to meet the standard increases as the standard becomes more stringent.     

Weighing what’s practical: proxy means tests for targeting food subsidies in Egypt

Despite achieving a significant cost reduction over the past two decades, the absolute cost of food subsidies in Egypt is still high relative to the benefits received by the poor. There is scope for better targeting these food subsidies, in particular for targeting cooking oil and sugar ration cards, both because reforms in this area are perceived to be far less politically sensitive than adjusting subsidy policy for bread and wheat flour and because higher income groups presently receive a significant percentage of the benefits. Targeting the high-subsidy green ration cards to the poor and the low-subsidy red ration cards to the nonpoor will require identification of both poor and nonpoor households. An International Food Policy Research Institute research team in Egypt, in collaboration with the Egyptian Ministry of Trade and Supply, developed a proxy means test for targeting ration cards. The paper describes the process of moving from the optimal income-predicting model to the final model that was both administratively and politically feasible. An ex-ante evaluation of the levels of accuracy of the proxy means testing model indicates that the model performs quite well in predicting the needy and nonneedy households. An effective and full implementation of this targeting method would increase the equity in the ration card food subsidy system, and, at the same time, the total budgetary costs of rationed food subsidies would decline. Moreover, the experience gained under this reform would facilitate targeting future social interventions to reduce and prevent poverty in Egypt.     

Traffic lights and food choice: A choice experiment examining the relationship between nutritional food labels and price

In this paper we investigate how consumers respond to the UK nutritional food label Traffic Light System (TLS). Employing a choice experiment (CE) we find that consumers appear to behave in a manner consistent with our expectations regarding the impact of the TLS. We identify a strong preference on the part of respondents to avoid a basket of goods containing a mix of foods with any “Red” lights. In addition, we find that consumers have a hierarchy of importance in terms of perception of the various nutrients examined and there are clear behavioural differences associated with particular socio-economic characteristics confirming early research on the use of nutrition labels. Overall our results indicate significant heterogeneity in the attitudes and responses of consumers to the TLS nutritional food labels within and across socio-economic strata.     

Evaluating the impact of reforming the food subsidy program in Egypt: A Mixed Demand approach

Food subsidy is one of the policies considered to protect consumer welfare against food price increases, in particular when the insufficient local production has to be complemented by food imports with volatile prices. Egypt has experienced several “food crises” (the latest in 2008), which put an halt to attempts to reform in depth the system of food subsidies because of social unrest. In this paper, we use a Mixed Demand approach to analyze the consumption structure of Egyptian households. Our model specification takes into consideration the characteristics of the Egyptian food subsidy system, where some food items have predetermined quotas while others are associated with predetermined (subsidized) prices. Price, income and quota elasticities are estimated from the Egyptian family expenditure survey, and welfare change measures are derived by income class. Simulations of various options to eliminate subsidies on selected food items are conducted. We estimate the negative welfare impact of the reforms, especially in the context of increasing food prices, by comparing welfare effects of policy options by income quartiles and by household category (rural, urban).     

Farm subsidies and obesity in the United States: National evidence and international comparisons

Many commentators have claimed that farm subsidies have contributed significantly to the “obesity epidemic” by making fattening foods relatively cheap and abundant. But U.S. farm policies have generally small and mixed effects on farm commodity prices, which in turn have even smaller and still mixed effects on the relative prices of more- and less-fattening foods. Other factors have had much more influence on reducing the farm prices of food commodities and the consumer prices of food such that any effects of U.S. farm policies on U.S. obesity patterns must have been negligible. Moreover, while many arguments can be made for changing U.S. farm subsidies, even entirely eliminating the current programs could not be expected to have a significant influence on obesity rates. International evidence reinforces this finding. The countries that support their farmers most strongly tend to have relatively low obesity rates. In these countries the main support for farmers comes through trade barriers and higher consumer prices, which—like U.S. policies for sugar, dairy, orange juice, and beef—discourage consumption and reduce obesity. In contrast with agricultural subsidies, agricultural R&D has had a significant effect in the past on the relative price of food commodities and food, and has the potential to influence obesity patterns in the future, but R&D policy is a very blunt instrument for pursuing public health policy objectives.     

Traceability adoption at the farm level: An empirical analysis of the Portuguese pear industry

Traceability is becoming a condition to operate in European food markets. Retailers impose more stringent standards than what is mandatory. An example is EurepGAP, a quality standard for good agricultural practices that imposes traceability as a main obligation. This research investigates the choice of traceability at the farm level in the Portuguese pear industry. Results suggest that in this industry farm-level adoption of EurepGAP traceability is best explained by the choice to sell to the United Kingdom (UK). For farmers selling to the UK, the odds of choosing the EurepGAP traceability level are significantly linked to membership in particular producer organizations, farm productivity, producing products under a protected designation of origin (PDO), and farmer’s age. While retailers and farmer organizations seem to drive traceability, policy adjustments may be required to reduce adoption costs upstream and extend compliance among producers that sell directly to consumers and market independently.     

Assessing the extra-commercial food needs of low-income countries

The principal US government report on the food needs of low-income countries which cannot be met through commercial trade, is World Food Needs and Availabilities, prepared by the Economic Research Service, USDA.¹ This article presents the genesis of the report, the methodology (through a case study), the 1985 findings and some implications of food needs analysis for food aid programming.     

NEGATIVE EXTERNALITIES,COMPETITION AND CONSUMER CHOICE*

Consumers sometimes make choices that impose greater external costs on those who do not make the same choice. This paper examines how the selectivity of negative externalities in such situations affects the competitive equilibrium and the desirability of an externality‐reducing public policy. Selective negative externalities create network externalities, but outcomes may differ greatly from typical network effects. Price effects may cause the imposing product's sales to decline with the size of the negative externality. Consequently, a positive competitive effect may overwhelm the externality's negative direct effects on welfare, such that a policy that enlarges the externality may improve welfare.     

BOOK REVIEWS

Books reviewed: Employment with Human Face: Balancing Efficiency, Equity, and Voice by John W. Budd. ILR Press, an imprint of Cornell University Press, Ithaca and London, 2004, xiv + 263 pp., ISBN 0 8014 42087, US$39.95/£22.95.
Reviewed by Laurie Hunter
School of Business and Management, University of Glasgow Workplace Justice Without Unions by Hoyt B. Wheeler, Brian S. Klaas and Douglas M. Mahony. W.E. Upjohn Institute for Employment Research, Kalamazoo, Michigan, 2004, xii + 229 pp., ISBN 0 88099 313 8, $40.00.
Reviewed by Alexander J. S. Colvin
The Pennsylvania State University The Blue Eagle at Work: Reclaiming Democratic Rights in the American Workplace by Charles J. Morris, with a foreword by Theodore J. St. Antoine. Cornell University Press, Ithaca and London, 2005, 315 pp., ISBN 0 8014 4317 2, $35.00/£20.50/EUR28.95.
Reviewed by John W. Budd
University of Minnesota Reorganizing the Rust Belt — An Inside Study of the American Labour Movement by Steven Henry Lopez. University of California Press, Berkeley and Los Angeles, CA, USA, 2004, xxii + 292 pp., ISBN 0 520 23280 1, $21.95/£14.95, paper.
Reviewed by Sean Safford
London School of Economics Corporate Governance and Labour Management: An International Comparison edited by Howard Gospel and Andrew Pendleton. Oxford University Press, Oxford, 2005, xvi + 384 pp., ISBN 0 19 9263671, £55.00.
Reviewed by Suzanne Konzelmann
Department of Management, Birkbeck, University of London European Integration and Industrial Relations: Multi‐level Governance in the Making by Paul Marginson and Keith Sisson. Palgrave MacMillan, Basingstoke, UK, 2004, xxii + 360 pp., ISBN 0333968662, £60.00.
Reviewed by Bob Hancké
London School of Economics and Political Science Institutions and Wage Formation in the New Europe edited by Gabriel Fagan, Francesco Paolo Mongelli and Julian Morgan. Edward Elgar, Cheltenham, UK and Northampton, MA, USA, 2003, xi + 256 pp., ISBN 1 84376 432 6, £59.95.
Reviewed by Michael Neugart
Wissenschaftszentrum Berlin für Sozialforschung (WZB) Working Parents and the Welfare State: Family Change and Policy Reform in Scandinavia by Arnlaug Leira. Cambridge University Press, Cambridge, 2002, vii + 182 pp., ISBN 0 521 57129 4, $65.00/£40.00.
Reviewed by Birgit Pfau ‐Effinger
Institute for Sociology, University of Hamburg Paradise Laborers: Hotel Work in the Global Economy by Patricia Adler and Peter Adler. ILR Press, an imprint of Cornell University Press, Ithaca and London, 2004, xiii + 296 pp., ISBN 0 8014 41897 7, $49.95/£29.95, paper.
Reviewed by Dennis Nickson
Scottish Hotel School, University of Strathclyde How Political Parties Respond: Interest Aggregation Revisited edited by Kay Lawson and Thomas Poguntke. Routledge, London and New York, 2004, viii + 271 pp., ISBN 0 415 34797 1, £65.00.
Reviewed by Kerstin Hamann
Department of Political Science, University of Central Florida Cross‐cultural Management — Foundations and Future edited by Dean Tjosvold and Kwok Leung. Ashgate, Aldershot, UK, 2003, viii + 180 pp., ISBN 0 7546 1881 1, £45.00.
Reviewed by Mary Logan
London School of Economics New Frontiers of Democratic Participation at Work edited by Michael Gold. Ashgate, Aldershot, UK, 2003, xv + 236 pp., ISBN 0 75460924 3, £49.95.
Reviewed by Jeff Hyman
University of Aberdeen     

Market failures and the additionality effects of public support to private R&D: Theory and empirical implications

We extend the theoretical basis of the empirical literature on the effects of R&D subsidies by providing an estimable model of strategic interaction among subsidy applicants, and public and private sector R&D financiers. Our model incorporates fixed R&D cost and a cost of external finance. We derive the optimal support rule. At the intensive (extensive) margin the costs of external funding reduce (increase) the optimal subsidy rate. We also establish necessary and sufficient conditions for the existence of additionality. It turns out that additionality at the intensive margin is less likely with higher spillovers. Our results suggest that the relationship between additionality and welfare may not be straightforward.     

Local food,food miles and carbon emissions: A comparison of farm shop and mass distribution approaches

This paper provides a critical commentary on the conception of food miles followed by an empirical application of food miles to two contrasting food distribution systems based on carbon emissions accounting within these systems. The comparison is between the carbon emissions resultant from operating a large-scale vegetable box system and those from a supply system where the customer travels to a local farm shop. The study is based on fuel and energy use data collected from one of the UK’s largest suppliers of organic produce. The findings suggest that if a customer drives a round-trip distance of more than 6.7 km in order to purchase their organic vegetables, their carbon emissions are likely to be greater than the emissions from the system of cold storage, packing, transport to a regional hub and final transport to customer’s doorstep used by large-scale vegetable box suppliers. Consequently some of the ideas behind localism in the food sector may need to be revisited.     

Is failure good?

Approximately 80–90 percent of new firms ultimately fail. The tendency is to think of this failure as wasteful. We, however, examine whether there are economic benefits to offset the waste. We characterize three potential mechanisms through which excess entry affects market structure, firm behavior, and efficiency, then test them in the banking industry. Results indicate that failed firms generate externalities that significantly and substantially reduce industry cost. On average these benefits exceed the private costs of the entrants. Thus failure appears to be good for the economy. Copyright © 2005 John Wiley & Sons, Ltd.     

BOOK REVIEWS

Books reviewed: Marx's Revenge by Meghnad Desai. Verso, London and New York, 2002, xi + 372 pp, ISBN 1‐8598‐4644‐0, £19/$27.
Reviewed by Andrew Glyn
University of Oxford
Bob Sutcliffe
Bilbao United We Stand: A History of Britain's Trade Unions by Alastair J. Reid. Allen Lane, London, 2004, xvii + 471 pp., ISBN 0‐7139‐9758‐3, £25.
Reviewed by David Metcalf
London School of Economics Personnel Economics edited by Edward P. Lazear and Robert McNabb, 2 vols. Edward Elgar, Cheltenham, UK and Northampton, Mass., 2004, 1040 pp., ISBN 1‐8406‐4892‐9, £240.
Reviewed by Martin J. Conyon
Wharton School, University of Pennsylvania Industrial Relations in China by Bill Taylor, Chang Kai and Li Qi. Edward Elgar, Cheltenham, UK, and Northampton, Mass., 2003, x + 267 pp., ISBN 1‐8406‐4578‐4, £59.95.
Reviewed by Jackie Sheehan
Nottingham University The Other Women's Movement: Workplace Justice and Social Rights in Modern America by Dorothy Sue Cobble. Princeton University Press, Princeton and Oxford, 2004, xiv + 315 pp., ISBN 0‐6910‐6993‐X, £19.95.
Reviewed by Mary Margaret Fonow
Arizona State University What's Class Got to Do With It? American Society in the Twenty‐First Century edited by Michael Zweig. ILR Press, Ithaca, NY, and London, 2004, vii + 211 pp., ISBN 0‐8014‐4259‐1, $37.50/£21.50; ISBN 0‐8014‐8899‐0, $17.95/£10.50.
Reviewed by Dan Clawson
University of Massachusetts Amherst Creating Cooperation: How States Develop Human Capital in Europe by Pepper D. Culpepper. Cornell University Press, Ithaca and London, 2003, xvi + 239 pp, ISBN 0‐8014‐4069‐6, US$35/£23.50.
Reviewed by David Finegold
Keck Graduate Institute, Claremont, CA Leadership in Organizations: Current Issues and Key Trends edited by John Storey. Routledge, Taylor & Francis, London/New York, 2004, xiii + 349 pp., ISBN 0‐4153‐1033‐4, £22.99 paper.
Reviewed by Mary S. Logan
London School of Economics Culture and Management in Asia edited by Malcolm Warner. Routledge Curzon, Taylor & Francis Group, London and New York, 2003, xiii + 266 pp., ISBN 0‐4152‐9727‐3, £65.
Reviewed by Jackie Sheehan
Nottingham University     

Lesotho's food priorities

Lesotho is a small independent nation completely surrounded by South Africa. Of its 33000 km², 87% is peaks and high mountain pastures, leaving only one km² of arable land for each 325 people. Low yields on limited arable land leave the country serious food deficit. Production shortfalls are overcome with large commercial imports and substantial concessional food aid. Commercial imports through retail channels are financed by migrant remittances. Nearly half of the male labour force work in South Africa. Their repatriated wages contribute 40% of gross national income and 63% of rural household income.¹ Thus consumer markets are relatively well monetized and 55% of migrant remittances is spent on food.²