Showing papers in "Choices. The Magazine of Food, Farm, and Resources Issues in 2010"
TL;DR: Onozaka et al. as mentioned in this paper explored the underlying factors that motivate consumers to choose local food and how motivations vary among buyers in different market venues, based on a national survey administered in late 2008.
Abstract: Local Food Consumers: How Motivations and Perceptions Translate to Buying Behavior Yuko Onozaka, Gretchen Nurse, and Dawn Thilmany McFadden JEL Classifications: Q13, D12 Emerging market demand for local foods represents an interesting phenomenon, as small-scale direct markets operate side by side in communities with much larger competitors, such as food supercenters, which also seek to procure locally grown produce. Moreover, the wide spread differentiation of food offerings and venues has allowed consumers to more carefully search out attributes that are important to them. These attributes may include any labels or information on private—such as quality, safety, and health—and public—such as social fairness and sustainability—assurances, some of which may be more closely associated with local foods by consumers. In this article, we explore the underlying factors that motivate consumers to choose local food and how motivations vary among buyers in different market venues, based on a national survey administered in late 2008.
185 citations
TL;DR: In this article, the authors argue that such a merger obscures critical distinctions and fails to provide a meaningful framework upon which to build a more economically viable and environmentally sustainable food system and suggest that a regional food system includes "local" but operates in a larger, more comprehensive scale.
Abstract: The focus on local food systems has been quite strong over the last decade, and the phenomenon has appropriately been given a lot of attention by consumers, researchers, and food supply chain participants. As a complement to the other papers in this issue, we devote our attention here to the concept of regional food systems. While many food system advocates use—and think of—the concepts as synonymous, we argue that such a merger obscures critical distinctions and fails to provide a meaningful framework upon which to build a more economically viable and environmentally sustainable food system. We suggest that a regional food system includes “local” but operates in a larger, more comprehensive scale. Many of our arguments and assumptions have not been tested yet, but offer fruitful opportunities for analysis, ways to work together, and a useful research agenda.
112 citations
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TL;DR: Recent interest in local food suggests that the term “local” is being used in new and different ways, and by people and organizations that would have previously had no interest in movements that challenge the mainstream food system.
Abstract: Food that is locally produced, marketed, and consumed—termed “local food”—is not a particularly new concept in the U.S. food system. Local food and its proponents have origins in the “Slow Food” movement and organic agriculture, and it is common to hear arguments for a relocalization of the food system. Yet recent interest in local food suggests that the term “local” is being used in new and different ways, and by people and organizations that would have previously had no interest in movements that challenge the mainstream food system.
94 citations
TL;DR: The United States has experienced a rapid increase in consumer interest in purchasing locally grown foods as mentioned in this paper and this trend has led to many changes in the food system, such as a 201% increase in the number of operating farmers' markets, with most featuring local products.
Abstract: The United States has experienced a rapid increase in consumer interest in purchasing locally grown foods. This trend has led to many changes in the food system. For one, from 1994 to 2009, there was a 201% increase in the number of operating farmers’ markets, with most featuring local products (USDA, AMS, 2009). Additionally, in 2007, over 12,500 farms marketed products through a Community Supported Agriculture arrangement, where for a predetermined fee consumers receive a portion of the local farm’s total harvest (USDA, NASS, 2007). The emergence of local can even be witnessed in the marketing activities of snack-food giant Frito-Lay, who in 2009 made “Lay’s Local” their primary promotional campaign.
64 citations
TL;DR: In this paper, the authors traced competition issues in the beef industry can be traced to the late 1880s and stemmed in part from market structure changes of an evolving economy, including railroads, improved highways, irrigated grain production, and technological changes within meatpacking plants.
Abstract: Competition issues in the beef industry can be traced to the late 1880s and stemmed in part from market structure changes of an evolving economy. Railroads, improved highways, irrigated grain production, and technological changes within meatpacking plants combined over time to alter cattle feeding and marketing and the market structure of the U.S. meatpacking industry. Along the way, court decisions and Congressional actions altered the regulatory environment. Most notably, the Supreme Court issued the Packers’ Consent Decree in 1920 and Congress passed the Packers and Stockyards Act of 1921. The Act created the Packers and Stockyards Administration, now called the Grain Inspection, Packers and Stockyards Administration (GIPSA), within the U.S. Department of Agriculture (USDA).
27 citations
TL;DR: The supermarket is one of the 20th Century's most important marketing innovations as discussed by the authors, and it is ideally suited for sourcing consistent quality products at low cost from wherever they are available and so has been an integral part of an increasingly national and global food system.
Abstract: The supermarket is one of the 20th Century’s most important marketing innovations. The concept of the supermarket emerged in the 1930s, and supermarkets came to dominate food retailing in the two decades immediately after World War II. Made possible by rapid suburbanization of American cities and expansion of ownership of automobiles and refrigerators, supermarkets transformed business processes and competition for customers at the retail level. They also fostered expansion and new efficiencies for wholesalers and created new opportunities for food manufacturers to develop products for mass audiences. The basic hub and spoke distribution system that has evolved for supermarkets is built around large distribution centers located near interstate highways. These distribution centers receive full semi-trailer loads of product from suppliers and then send full semi-trailers out to individual stores daily or several times per week. Loads sent to stores are comprised of relatively small quantities of thousands of individual SKUs, or stock keeping units, needed to replenish the inventory of tens of thousands of SKUs stored on self-service shelves in a typical store. This system, which is supplemented by deliveries from specialty distributors and direct store deliveries by some suppliers, economizes on transportation and labor. With electronic transmission of orders and payment and computer-based tools that assist with ordering, pricing, and inventory management, this distribution system also keeps transaction costs to a minimum. It is ideally suited for sourcing consistent quality products at low cost from wherever they are available and so has been an integral part of an increasingly national and global food system. This mainstream supermarket distribution system favors large scale suppliers and facilitates long distance movement of products. Supermarket wholesale and retail companies usually prefer to work with a small number of large, reliable suppliers. At the same time, this system is remarkably resilient and quick to adapt. Can it be an effective channel for meeting the rapidly growing demand for local food products? Are there meaningful, long run prospects for a significant “relocalization” of supermarket offerings? While definitive answers to these questions are not yet apparent, there is emerging evidence that helps clarify how the relationship between the local foods movement and the supermarket industry may evolve.
26 citations
TL;DR: In addition to the usual public policy concerns associated with industry consolidation, there are some unique industry characteristics that make for special attention as discussed by the authors, such as the dominance of dairy cooperatives in the marketing of farm milk, daily production of the primary product, a formula based pricing system that determines minimum milk prices for a majority of the milk marketed in the United States and industry use of a thin market in the determination of a major component of this pricing system.
Abstract: Consolidation of the U.S. dairy industry has occurred at every step in which raw farm milk is transformed into finished dairy products and made available to the final consumer. In addition to the usual public policy concerns associated with industry consolidation, there are some unique industry characteristics that make for special attention. These include the dominance of dairy cooperatives in the marketing of farm milk, daily production of the primary product, a formula based pricing system that determines minimum milk prices for a majority of the milk marketed in the United States and industry use of a thin market in the determination of a major component of this pricing system. This article provides an overview of recent consolidation trends of the U.S. dairy industry and highlights industry characteristics that differentiates dairy from other agricultural sub-sectors. Consolidation in the U.S. Dairy Farm Sector The average farm size is increasing, the number of dairy farms is decreasing and the location of production has shifted significantly to nontraditional production areas. The expansion of the dairy industry in such states as Idaho, Texas and New Mexico and concurrent reduction in production in traditional dairy states has resulted in the production by small farms in the historical producing areas being replaced by production originating from significantly larger operations (GAO, 2001).
25 citations
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TL;DR: Richards and Geoffrey Pofahl as mentioned in this paper reviewed the existing literature on market power in food retailing, and described an empirical framework necessary to provide a definitive answer to this question, if indeed one exists.
Abstract: Pricing Power by Supermarket Retailers: A Ghost in the Machine? Timothy J. Richards and Geoffrey Pofahl JEL Classifications: L13, L66, Q13 During periods of rising prices, consumers, policymakers and media reporters alike tend to place the blame on food retailers (Boyle, 2009). Retail stores represent the final stop for most products on their way through manufacturers, distributors, brokers and wholesalers, so it is perhaps understandable why consumers tend to associate higher prices with profiteering, price-gouging and other nefarious conduct by retailers. Witness the well-publicized attempts to “cure” inflation in Zimbabwe and Venezuela by directly controlling retail prices, or the retailers themselves. Retailers represent a particularly easy target (no pun intended) because of their visibility and ubiquity. Indeed, the largest firm in the United States also happens to be the largest retailer— Wal-Mart Stores, Inc. It is not hard to understand, therefore, why retailers are often asked to explain why they are not trying harder to keep prices down, and why they need to be so big. Whether the perception that retailers possess excessive pricing power is consistent with reality, however, remains an important academic question. In this article, we review the existing literature on market power in food retailing, and describe an empirical framework necessary to provide a definitive answer to this question, if indeed one exists.
25 citations
TL;DR: For example, according to the cost and returns survey of USDA's Economic Research Service, variable costs of corn production have declined on a real basis from $0.94 per bushel in 1975 to an estimated $ 0.63 in 2005 as discussed by the authors.
Abstract: • Concentration has been on a steady rise for several decades. Today, 75% of the value of primary field crop production—corn, soybeans, wheat, cotton, rice, sorghum, and barley oats—is produced by 40% of U.S. farms (USDA-NASS, Census of Agriculture, 2007). • Productivity increases have been significant. Corn yields increased from an average of 55 bushels per acre in 1960 to 165 bushels in 2009—a 300% increase in 50 years. Wheat and soybean yields have seen 215% and 169% increases, respectively, over the same period. Meanwhile, according to the cost and returns survey of USDA's Economic Research Service, variable costs of corn production have declined on a real basis from $0.94 per bushel in 1975 to an estimated $0.63 per bushel in 2005. • Producers are adopting larger pieces of equipment and more sophisticated technologies. Some estimate the time to plant and harvest the crop, two of the most time consuming operations, has been cut in half in the last decade, allowing producers to effectively manage more acres within one operation (Table 1).
24 citations
TL;DR: The High Plains aquifer is considered a fossil aquifer; it was formed around 10 million years ago and recharge to its southern portion is extremely low, making it an essentially nonrenewable resource.
Abstract: The High Plains (Ogallala) Aquifer is the largest freshwater aquifer system in the world. It is considered a fossil aquifer; it was formed around 10 million years ago and recharge to its southern portion is extremely low, making it an essentially nonrenewable resource. The region has experienced a decline in the level of the water table since intensive irrigation became widespread in the 1970s, and currently, agriculture accounts for 99% of the over 20 million acre-feet of annual groundwater withdrawals. In parts of southwestern Kansas and in the Texas panhandle, the water table has declined by more than 150 feet. These declines are expected given current rates of extraction, but concerns that the aquifer is being depleted too rapidly have become common. Similar discussions have arisen in many of the world's most productive agricultural basins. In many places, policymakers have attempted to decrease rates of extraction through incentive-based measures that encourage the conversion to more efficient irrigation technology.
23 citations
TL;DR: The 2008 Farm Bill as mentioned in this paper was an affirmation of local food advocates' belief of the inseparability of U.S. agricultural and food policies, and they had argued that buying local provides a variety of benefits, including support for small farmers, increased economic activity in rural communities, reduced energy consumption and pollution, and improved human health.
Abstract: To many local food advocates, the passage of the 2008 Farm Bill was an affirmation of their belief of the inseparability of U.S. agricultural and food policies. They had argued that “buying local” provides a variety of benefits, including support for small farmers, increased economic activity in rural communities, reduced energy consumption and pollution, and improved human health. The final legislation, titled the Food, Conservation and Energy Act of 2008, includes policies and programs designed specifically to increase the supply of and demand for local food. In September, 2009, local food advocates cheered again when Agriculture Secretary Tom Vilsack and Deputy Secretary Kathleen Merrigan announced USDA’s “Know Your Farmer, Know Your Food” (KYF) initiative.
TL;DR: In many ways, farm-direct marketing channels are the simplest and most transparent part of the food system: products go straight from producers to consumers, and money travels back in the other direction as mentioned in this paper.
Abstract: In many ways, farm-direct marketing channels are the simplest and most transparent part of the food system: products go straight from producers to consumers, and money travels back in the other direction. Often these exchanges take on a meaning that far transcends the simple financial transactions. On U-pick operations, consumers become farm laborers as they harvest their own food. In community supported agriculture (CSA), consumers and producers establish season-long contracts with the farmers having the final say on what gets included in the weekly food boxes. Farm stands and farmers’ markets provide consumers with a sense of the people and production processes behind their food.
TL;DR: In this paper, the authors highlight the main issues concerning current and future investments in advanced telecommunications infrastructure; emphasizing the geographic and socio-economic digital divide, the benefits of rural broadband, and policy options for improving both the supply of and demand for broadband technology.
Abstract: Rural America stands to be left behind much of the developed world without substantial investments in advanced telecommunications infrastructure. Communities require core infrastructure to attract and retain firms and to meet the needs of local businesses and entrepreneurs. Today, communities should consider robust and affordable Internet access a critical component of core infrastructure along with more traditional elements of water, sewer, power, transportation networks, and educational services. The rapid pace of technological change and globalization has forever changed the necessary infrastructure requirements for businesses and individuals to stay competitive. Competitive businesses and productive people increasingly need access to the most up-todate, high-speed telecommunications networks to ensure on-demand access to suppliers, customers, branch plants, and others. As a result, communities and businesses without the most up-to-date advanced telecommunications infrastructure will likely suffer economically and socially. Improving the supply of, and demand for, broadband Internet access in rural America is crucial for future economic development opportunities. This article highlights some of the main issues concerning current and future investments in advanced telecommunications infrastructure; emphasizing the geographic and socio-economic digital divide, the benefits of rural broadband, and policy options for improving both the supply of and demand for broadband technology.
TL;DR: The exclusivity granted by patents naturally creates market power positions and raises difficult and unresolved competition issues in an antitrust context as discussed by the authors, which is why strong intellectual property rights, such as patents, are necessary.
Abstract: Research and Development (R&D) and innovation are crucial features of the seed industry. To support large R&D investments by the private sector, strong intellectual property rights, such as patents, are necessary. The exclusivity granted by patents naturally creates market power positions and raises difficult and unresolved competition issues in an antitrust context. (This abstract was borrowed from another version of this item.)
TL;DR: The most recent estimates available in the literature are presented of the per capita and aggregate direct and indirect costs of obesity from an annual and lifetime perspective and the implications for government and employers are discussed.
Abstract: Because of the health consequences resulting from excess weight, the increase in obesity prevalence has profound economic consequences on employers, insurers, and government. Not only are employers and government finding it increasingly difficult to finance the high costs of obesity-related medical treatments, but also obese individuals are more likely to be absent from work and be less productive while on the job—termed presenteeism, further adversely affecting firm profitability. In this article, we present the most recent estimates available in the literature of the per capita and aggregate direct and indirect costs of obesity from an annual and lifetime perspective. We then discuss the implications of these costs for government and employers, the two groups that finance the majority of health expenditures.
TL;DR: The U.S. Departments of Justice and Agriculture (DOJ, USDA) have signaled a renewed interest in the competitiveness of food and agricultural markets, and have organized a series of public workshops held across the country to stimulate discussion of the economic and legal issues.
Abstract: The U.S. Departments of Justice and Agriculture (DOJ, USDA) have signaled a renewed interest in the competitiveness of food and agricultural markets, and have organized a series of public workshops held across the country to stimulate discussion of the economic and legal issues. A main concern is whether producers are harmed by ongoing changes in the structure of agricultural and food markets, including consolidation in farm inputs, processing, and food retailing, as well as increased coordination along the vertical supply chain. As Secretary of Agriculture Vilsack put it in his opening statements to the workshop held in Iowa in March of this year, “...the central question is, are the farmers and ranchers of this country currently getting a fair shake?”
TL;DR: The rapid spread of supercenters and deep discount food retailers illustrates Porter's threat of the entry of new competitors, after supermarkets had been the predominant food retail format for several decades as discussed by the authors.
Abstract: The rapid spread of supercenters and deep-discount food retailers illustrates Porter’s threat of the entry of new competitors, after supermarkets had been the predominant food retail format for several decades. The growth of private-label products reflects both Porter’s risk of substitute goods and the power of product buyers. In terms of technology, the analysis of the point-of-sale (POS) data generated by checkout scanners and barcodes has helped shift bargaining power from the product suppliers to the increasingly-concentrated retailers. The next major technological innovations may be the use of radio frequency identification, with substantial effects on the food retail value chain, and mobile-marketing coupon distribution through cellular phones. Finally, the deep recession caused households to economize on their food spending, which may have longer term impacts on consumer food purchasing behavior.
TL;DR: The economic impact of genetically engineered (GE) crops at the farm level has been studied by Zilberman, Sexton, Marra, and Fernandez-Cornejo.
Abstract: The Economic Impact of Genetically Engineered Crops David Zilberman, Steve E. Sexton, Michele Marra, and Jorge Fernandez-Cornejo JEL Classifications Q160, Q240, Q420 Since the 1990s, genetic plant engineering has yielded a variety of applications for agricultural production, including traits intended to improve the shelf-life of produce, improve crop nitrogen fixation, and bolster control of agricultural pests. However, only two traits achieved commercial success. One trait confers insect resistance (IR) to crops by programming the crop plant to produce a naturally occurring chemical that is toxic to common insects. The other trait confers herbicide-tolerance (HT) and permits farmers to spray broad-spectrum chemicals to kill weeds without killing the crop plant. These traits have been widely adopted in production of corn, canola, cotton, and soybean. The adoption of genetically engineered (GE) crops has significantly affected the economics of these crops and the welfare of farmers and consumers. It has also had spillover effects on other crops and markets. In this paper, we present findings of economic research on the impacts of GE crops at the farm level, factors that explain their adoption, impacts on prices, and effects on welfare of various segments in the economy. We rely on the findings of a new and thorough report by the National Research Council (NRC) (2010), a recent survey of agricultural biotechnology by Qaim (2009), and a new study by Sexton and Zilberman (2010).
TL;DR: The authors discusses the fundamental forces creating change in the agribusiness industries, and how companies and decision-makers are being affected by, and adapting to, changes in these forces.
Abstract: Agribusiness industries are facing numerous challenges and opportunities resulting from various fundamental forces. An understanding of the forces that are shaping and shifting the competitive landscape is useful to not only understand the strategic positioning decisions of the firms in these industries, but also the dramatic structural changes that are occurring in the food production, processing and distribution sector. This series of articles discusses the fundamental forces creating change in the agribusiness industries, and how companies and decision-makers are being affected by, and adapting to, changes in these forces.
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TL;DR: Some low-income neighborhoods in the United States have been dubbed food deserts because there are few sources of healthy and affordable foods as discussed by the authors, often these neighborhoods are served by convenience stores or fast food restaurants but are far from grocery stores that offer a full range of healthy foods.
Abstract: Some low-income neighborhoods in the United States have been dubbed “food deserts” because there are few sources of healthy and affordable foods. Often these neighborhoods are served by convenience stores or fast food restaurants but are far from grocery stores that offer a full range of healthy foods. Some residents of these neighborhoods that lack transportation or have low incomes may be more reliant on smaller neighborhood stores that do not carry a full range of groceries and may not offer them at the most competitive prices. Some concerned groups have argued that the lack of healthy options leads to poor diets and to diet-related conditions such as obesity.
TL;DR: The major structural changes influencing world agri cultural markets include increasing consolidation and market domination by large processing, trading, and retailing firms, disappearance of traditional auction or spot market s for exchange of farm products and their replacement by various forms of contracts and verti cal control, and a growing emphasis on product differentiation and increasingly broad definition of product and selling-firm quality.
Abstract: The major structural changes influencing world agri cultural markets include increasing consolidation and market domination by large processing, trading, and retailing firms, disappearance of traditional auction or spot market s for exchange of farm products and their replacement by various forms of contracts and verti cal control, and a growing emphasis on product differentiation and increasingly broad dime nsions of product and selling-firm quality. None of these changes is consistent with the tenets of traditional models of competitive agricultural markets. Despite consolidation throughout the food market system, grocery retailers, oftentimes with international scope, have emerged as the domin ant players in the food chain in most parts of the world. These retailers through marketing contra cts exercise considerable vertical market control over upstream suppliers in terms of varieti es produced, inputs utilized, production schedules, etc. Yet we know little about grocery re tailer pricing and promotion strategies or how these strategies affect both the level and variabil ity of prices at the farm level. This paper describes these key trends and their implications f or farmer welfare and the analysis of agricultural markets.
TL;DR: One approach to combating obesity is to educate the public about nutrition and the nutritional components of the food they purchase, and nutrition labeling of foods sold in stores and in restaurants, when available, is designed to provide the public with information to make informed choices about food purchases.
Abstract: Current estimates of obesity in the United States indicate that 68% of adults (Flegel et al. 2010) and 32% of children (Ogden et al. 2010) are overweight or obese. The incidence of obesity has risen dramatically over the past two decades. Obesity in an individual is the result of an energy imbalance in intake and output, but the cause of this imbalance on a population level is not fully understood. Changes in the food environment, including the proliferation of convenience and fast foods high in energy and fat content, have paralleled the obesity epidemic. One approach to combating obesity is to educate the public about nutrition and the nutritional components of the food they purchase. Nutrition labeling of foods sold in stores and in restaurants, when available, is designed to provide the public with information to make informed choices about food purchases. The presumption for an obesity impact is that knowledge about the calorie content of foods will motivate and/or guide individuals to consume the appropriate amount of calories for proper weight management.
TL;DR: The authors summarizes recent trends in hog marketing practices using USDA data and explores the motivations for increased reliance on procurement contracts, and a description of recent important research results is set out, follo wed by a brief discussion of the implications of their implications.
Abstract: Hog production and marketing practices in the U.S. pork industry have changed dramatically over the past two decades. In the early 1990s, near ly 90% of hogs were purchased in the spot market through auctions, dealers or directly by pac kers. By early 2010, the percent of spot market hogs had fallen to 5-7%. Approximately 25% of hogs are owned and processed by packers in their own plants and 70% of hogs are tra ded between seller and buyer through marketing contracts. The contracts vary in duration and specification but are similar in that the transaction price is derived by a formula based on another market, often the now very thin spot market. The motivations of sellers and buyers to ab andon the spot market may still exist, but the thin spot market raises concerns. Prices in these t hin markets potentially may become highly volatile, subject to manipulation, and less represe ntative of competitive market equilibrium (Martinez, 1999). Some producers and Congress are looking to reverse the trend by requiring packers to purchase a percentage of their needs in the spot market (Taylor, Muth and Koontz, 2007). Yet, other producers that value contracting are evolving to the next generation of contracts and alternative methods of price discover y. This paper summarizes recent trends in hog marketing practices using USDA data and explores the motivations for increased reliance on procurement contracts. Next, a description of recent important research results is set out, follo wed by a brief discussion of the implications of
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TL;DR: This article examined the consequences of U.S. farm subsidies, including indirect subsidies provided by trade barriers as well as direct subsidies, for prices of farm commodities and thus food products and caloric consumption patterns in the United States.
Abstract: Many commentators—including prominent economists, nutritionists, journalists, and politicians—have claimed that American farm subsidies have contributed significantly to the “obesity epidemic” by making fattening foods relatively cheap and abundant, and that reducing these subsidies will go a long way towards solving the problem. These commentators often treat the issue as self-evident, and do not present either details on the mechanism by which farm subsidies are supposed to affect obesity, or evidence about the size of the likely impact. In this article we examine the consequences of U.S. farm subsidies—including indirect subsidies provided by trade barriers as well as direct subsidies—for prices of farm commodities and thus food products and caloric consumption patterns in the United States. We show that U.S. farm subsidies have had generally modest and mixed effects on prices and quantities of farm commodities, with negligible effects on the prices paid by consumers for food and thus negligible influence on dietary patterns and obesity. This result is consistent with some previous work by economists on the issue (see Alston, Sumner, and Vosti, 2008 and the papers they cite), but contradicts the mainstream view in the media.
TL;DR: Evidence that consumer demand has led to markets for products differentiated on some basis of GE status, and that maintaining the integrity of those differentiated product markets relies on interventions such as physical distancing or product segregation, is reviewed.
Abstract: Can Genetically Engineered and Organic Crops Coexist? Catherine Greene and Katherine Smith JEL classification: Q01; Q13; Q57 Over the last decade, American consumers fueled a fast-growing market for organic food and U.S. farmers flocked to genetically engineered (GE) varieties of several major U.S. crops. The potential for GE crop production to impose costs on organic production, via accidental pollination and other mechanisms, underscores the problem of coexistence between GE and organic crops. Here we review evidence that consumer demand has led to markets for products differentiated on some basis of GE status, and that maintaining the integrity of those differentiated product markets relies on interventions such as physical distancing or product segregation. Further, at present, the costs required to support the coexistence of all markets is borne disproportionately by producers and consumers of organic food in the United States.
TL;DR: The plant input industry has seen a dramatic reduction in the number of competitors but the lower absolute number of suppliers has not diminished the price competition between industry players as discussed by the authors, which gives existing competitors a strong economic incentive to strive for market share more aggressively than if they had low fixed costs.
Abstract: The plant input industry has seen a dramatic reduction in the number of competitors But the lower absolute number of suppliers has not diminished the price competition between industry players Most of the plant input suppliers have high fixed cost structures in land, capital equipment, and significant permitting, approval, and regulatory costs This gives existing competitors a strong economic incentive to strive for market share more aggressively than if they had low fixed costs Each additional percent of the market allows them to spread their fixed costs and brings a better net margin Given the regulatory and technological requirements to stay competitive in these sectors, the high fixed cost aspect of market share competitiveness will only continue to be a prominent feature
TL;DR: Despite the food programs’ goal of reducing hunger and improving nutrition, rising concern about overweight and obesity for all Americans has triggered arguments that targeted food benefits could be counter-productive.
Abstract: For decades, from the 1940s to the 1970s, the goal of U.S. food and nutrition assistance programs seemed clear: to make sure low-income Americans could afford enough food. By pursuing this goal, the programs would protect program participants from hunger and also support demand for farm products. Today, about one in five Americans receives benefits from at least one of the U.S. Department of Agriculture’s (USDA) food programs. The major programs include the Supplemental Nutrition Assistance Program (SNAP), Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), school meals programs—lunch and breakfast, and the Child and Adult Care Food Program. Despite the food programs’ goal of reducing hunger and improving nutrition, rising concern about overweight and obesity for all Americans has triggered arguments that targeted food benefits could be counter-productive. As a recent retrospective on a century of food and consumer economics explained, “The policy context for food assistance programs has changed in the past three decades.” (Unnevehr et al. 2010, p. 512).
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TL;DR: In this article, the authors conduct an industry analysis of the U.S. plant and plant products sector of the food economy with a focus on processors and handlers, and provide an overview of issues that impact the competitive situation in these industries.
Abstract: By the end of December 2010, the U.S. Department of Justice and U.S. Department of Agriculture will have held five hearings on competition and regulation in agriculture. The objective of the workshops is to “address the dynamics of competition in agriculture markets, including buyer power (monopsony) and vertical integration. They will examine legal doctrines and jurisprudence, as well as current economic learning, and will provide an opportunity for farmers, ranchers, consumer groups, processors, agribusiness, and other interested parties to provide examples of potentially anticompetitive conduct and to discuss any concerns about the application of the antitrust laws to the agricultural sectors.” The purpose of this article is to conduct an industry analysis of the U.S. plant and plant products sector of the food economy with a focus on processors and handlers. It provides an overview of issues that impact the competitive situation in these industries as noted by the U.S. Department of Justice and U.S. Department of Agriculture. Figure 1 provides an overview of how the data was collected that was used to analyze the five forces and drivers of change since 1997.
TL;DR: For example, the authors found that people use heuristics, or rules of thumb, to make choices in a wide variety of settings, leading to errors that are suboptimal from the viewpoint of a self-interested decision maker.
Abstract: Neoclassical or traditional economics is based on models about how people should behave when acting in their own best interests. Empirical observations are then fit to these models. In contrast, behavioral economics has been based primarily on observations of how people do behave. This new stream of thought has focused in large part on how individual behaviors deviate from the predictions of more traditional economic approaches. To accomplish this, behavioral economics utilizes a set of tools drawing on approaches from both psychology and economic decision models. Much of the literature in behavioral economics boils down to two main results. The first is that people use heuristics, or rules of thumb, to make choices in a wide variety of settings. Second, these heuristics often lead to errors, in the sense of outcomes that are suboptimal from the viewpoint of a self-interested decision maker. These errors, however, are generally predictable through both observation and understanding of the decision rules employed. Dieting is a useful example to illustrate the differences between the two approaches. Many people do not think their future health is based on their present food choices. A traditional economics approach, based on assumptions of perfect information and maximization of utility or personal well-being, would explain this behavior as being evidence of people not valuing their future much. After all, dieting involves giving up some enjoyment today in order to have a better tomorrow. While discounting of future outcomes is certainly an important part of the story, it does not fully explain individual behavior. When asked, many people would say they do care about their future health more than their actions seem to indicate and that they actually would like to make better food choices. By their own reckoning though, they are failing to meet their goals. Behavioral economics seeks to explain the phenomena that would cause these individual shortcomings. Such errors might have played an important role during the recent obesity crisis, which is a large part of why behavioral economics became such a hot topic in Washington.
TL;DR: In this paper, the authors consider the case of California as an example of the likely effect of climate change on agriculture in an arid region with a postindustrial economy and show that parallel changes in technology and markets will partially or totally offset the negative effects.
Abstract: Take the case of California as an example of the likely effect of climate change on agriculture in an arid region with a postindustrial economy. California agriculture is heavily dependent on irrigation so it may offer lessons for adaptation to climate change that can be applied to irrigated agriculture in other arid regions. Climate change will have negative effects on California's irrigated agriculture in terms of increased water scarcity, more variation in water supply, and lower yields due to heat stress. Parallel changes in technology and markets will partially or totally offset the negative effects. Technological advances such as fertilizers, disease resistant crops, and mechanical improvements have increased crop yields in California by an average of 1.4% per year (Brunke, Sumner, and Howitt, 2004). While increased yields will help dampen the negative effect of a warm-dry climate, continued growth of 1.4% per year is likely not sustainable and is expected to level off in the future (Alston and Pardey, 2009). Even so, technological change will offset climate related yield reductions for some California crops.