STRUCTURE AND PERFORMANCE OF THE UK FOOD AND DRINK INDUSTRIES

This paper analyses the structural characteristics of the food and drink industries and assesses their recent economic performance. Although classified among the less technologically intensive group of British manufacturing industries, the food and drink industries are found to share many of the features of the more technologically intensive group, such as product differentiation, product diversification and advertising intensity. They are also found to have achieved above-average growth in labour and total factor productivity through expansion in size, capital accumulation and shedding of labour.     

Empirical testing of alternative price spread models in the South African maize market

Reduced-form price spread models have been recently utilized by Wohlgenant and Mullen, and Thompson and Lyon to evaluate the economic factors affecting the marketing margins for agricultural products. Drawing on Gardner, Heien, Buse and Brandow, Waugh, Tomek and Robinson, and others they specify alternative retail-farm price spread models and attempt to determine which best fit the data in the context of underlying theoretical rationale. This paper continues in the spirit of Wohlgenant and Mullen, and Thompson and Lyon by evaluating alternative specifications of the retail-farm price spread for white maize in South Africa. However, several important differences do remain. Wohlgenant and Mullen analyzed the price spread for beef using annual data, while Thompson and Lyon modeled the price spread for oranges using weekly data. The time period under consideration can be expected to affect the choice of model because fixed markup rules that might be evident using a short-run period of analysis (e.g., Thompson and Lyon) become untenable over the long run with underlying supply and demand shifts. In this paper, monthly data, which may be interpreted as an intermediate-run period, are used along with dichotomous supply-demand shifters. In addition, Brorsen et. al. have shown that price uncertainty affects the price spread in the marketing channels of agricultural commodities. Thus, the analysis in this paper extends the framework of Wohlgenant and Mullen, and Thompson and Lyon to include measures of price risk. Finally, like Brorsen et. al. this study pertains to the grain market, while Wohlgenant and Mullen, and Thompson and Lyon studied the marketing margin for non-storable commodities.     

Impacts of price and exchange rate policies on pesticide use in the Philippines

Pesticide prices can influence producer decisions to apply pesticides as opposed to nonchemical means of pest control. Those prices are are turn influenced by price and exchange rate policies. The effective rate of protection for nine pesticides commonly applied to vegetables in the Philippines was calculated to determine whether government policies are creating incentives or disincentives to adopt more integrated pest management methods. Calculations found that direct price policies, primarily through an import tariff, tax pesticide use while an overvalued exchange rate subsidizes pesticide use. The net effect is a 6 to 8% pesticide subsidy. This subsidy results in economic surplus gains to vegetable producers and consumers when negative externalities associated with pesticide use are not accounted for. However, recent analysis of human health effects of pesticide use on rice in the Philippines demonstrates that these externalities can be substantial.     

Adjustment costs and dynamic factor demands for U.S. cigarette manufacturing

Following the approach of Berndt, Fuss, and Waverman, a dynamic model for U.S. cigarette manufacturing is developed and factor demands estimated. Tobacco and capital stocks are treated as quasi-tixed inputs. The results indicate that there are significant adjustment costs associated with adjusting tobacco stocks, but not with adjusting the capital stock. Short-run, intermediate-run, and long-run output constant elasticities are estimated for inputs in cigarette production. Demand for U.S. tobacco by U.S. cigarette manufacturers is found be more inelastic than shown by previous studies using static models. Cigarettes produced for export appear to differ in their marginal cost of production from cigarettes produced for the sale in the U.S. market.     

Measuring the social costs of suboptimal combinations of policy instruments: A general framework and an example

Since most agricultural programs employ two or more policy instruments simultaneously, it is notable thai little research has attempted to find optimal instrument combinations and no research exists which evaluates the social costs (unrealized benefits) of combining instruments suboptimally. In our paper we report a simple and feasible method to find optimal policy instrument combinations, and we provide the first general, formal approach to measuring the social costs of suboptimal policy instrument combinations. Our approach is illustrated in an analysis for live major U.S. crops (corn, feed grains, wheat, rice, cotton). The simple model we employ for the illustration suggests that except lor the feed grains program, the observed programs combined policy instruments quite suboptimally. We conclude that agricultural economics research now can and should begin placing increased emphasis on studying optimal policy instrument combinations.     

Les avantages comparatifs dans I'agriculture canadienne et le partage interprovincial des quotas laitiers

L'objectif de cet article est d'utiliser la théorie des avantages comparatifs pour éclairer le débat sur la question du partage interprovicial des quotas laitiers. Une mesure des avantages comparatifs dans I'agriculture canadienne est effectuée pour la période 1958–1987. La méthodologie utilisée est similaire à celle d'autres travaux non spécifiquement reliés à la production agricole. IIs'agit d'une mesure indirecte des avantages comparatifs révélés par les flux de commerce. Ceci nous a permis d'établir un classement des productions indiquant où se trouvent les avantages comparatifs de chaque province et du pays. On peut en conclure que les ajustements qui ont été faits ces dernières années au niveau du partage des quotas entre les provinces ne reflètent pas les avantages comparatifs de production.
The objective of this paper is to use comparative advantage theory to discuss the question of interprovincial milk quota allocation. Comparative agricultural production advantage in various Canadian provinces is measured for the 1958-87 period. The methodology used is similar to that in other studies not specifically related to agricultural production. This indirect assessment measures revealed comparative advantage by means of trade flows. This allows a ranking of the products according to comparative advantage in each province and for the country. One conclusion of this study is that adjustments in interprovincial allocation of quotas over the past few years do not reflect comparative advantage in production.     

ECONOMIC EFFECTS OF RESEARCH INTO TRADED GOODS: THE CASE OF AUSTRALIAN WOOL

The final incidence of benefits and costs of wool industry research and development (R&D) undertaken in Australia depends greatly on the nature of the R&D and the way it is funded. Using preferred parameter values, the Australian share of benefits from farm-level R&D is 58 per cent (falling to 40 per cent if there is 50 per cent adoption of the new technology by producers overseas); the Australian shares of benefits from wool-processing R&D ere 24 per cent (topmaking) and 27 per cent (textile-processing). Under current funding arrangements, an Australian wool tax provides about one-eighth of total R&D funds, a matching government grant provides another one-eighth, and other public sector funds make up the remaining three-quarters. Under these arrangements, the final incidence of the costs is 95 per cent on Australians (mostly taxpayers at large), and the wool industry bears only 12.5 per cent of the costs of its R&D. One implication is that a wool tax alone is a more equitable and efficient means of financing wool-industry R&D than the current arrangements.     

EFFECTS OF ALTERNATIVE CHINESE POLICIES ON THE WORLD GRAINS MARKET

The implications for the world grains market of a reduction in China's domestic absorption, and of the removal of its key manufacturing protection, are analysed in this paper. These policy changes are modelled both alone and together with grain self-sufficiency in China and with reduction in farm support in the US and EC. In themselves, the reduction in absorption and removal of manufacturing protection in China would have only marginal effects on the world grains market. If, however, China were to achieve grain self-sufficiency while adopting these macroeconomic and trade policies, world grain prices and trade would fall considerably. In contrast, even a partial removal of protection in the US and EC, simultaneously with the above Chinese macroeconomic and trade policy changes, could substantially increase world grain prices and trade. These positive effects would be considerably reduced if at the same time China were to become self-sufficient in grain.     

OVER-REACTIONS IN US AGRICULTURAL COMMODITY PRICES

The purpose of this paper is to test rationality in agricultural commodity markets. We investigate the price-adjustment process after significant events using abnormally large cash commodity price changes as proxies for the arrivals of significant events in the markets. The evidence suggests that market rationality is violated. Generally, agricultural commodity prices tend to reverse after significant events. This is consistent with the over-reaction hypothesis which maintains that traders in spot commodity markets over-weight more recent information and under-weight prior information in their expectations.