Volume 17, Issue 2 -

Beef is a highly protected commodity in Japan and the number of studies on the impact of beef import tariff reduction has increased in light of the controversy over the Trans-Pacific Partnership Agreement (TPPA), in which the gains from freer trade in beef was a major point of discussion. We estimate that an 11% tariff reduction for Japanese imports of both Australian and U.S. beef can generate a net welfare gain to Japan of between US$92 million and US$915 million. These results are not overly sensitive to whether beef is treated as homogeneous or heterogeneous. A more significant determinant of welfare gains is the extent to which farm policy would be decoupled along with tariff reductions. Under a decoupled farm program, producer welfare can remain unchanged while the net gain from freer trade is identical to that of complete removal of price supports with no compensation to producers. Therefore, negotiators for U.S. and Australian beef interests should lobby for both lowered tariffs and a decoupling of domestic farm policy within the importing country. This seems to have been the case as Japan was willing to move toward a more decoupled farm program under the TPPA.

This paper explores the WIC infant formula rebate program, which awards a single-source contract to the firm that offers the lowest net bid price. We study spillover mechanisms derived from instances when an infant formula manufacturer displaces another as a WIC supplier. The analysis compares three types of product segments: infant formula (where WIC is the main player), non-WIC infant formula, and toddler formula. We find that, immediately after the contract displacement, there is a significant increase in market share for all three types of formula for the winning manufacturer and that this effect increases overtime. These market share effects are likely explained by greater shelf space, better product placement, and the advantages of carrying WIC labels, as well as by a combined impact of recommendations from physicians and WIC participants. More interestingly, we observe that winning manufacturers increase the price of WIC and non-WIC infant formula over time. Back-of-the-envelope calculations show that the profit that the WIC-contract manufacturer derives from these spillovers in other product segments more than dominates the losses associated to selling the WIC product below cost. We also discuss the implications that the spillover effects have on displaced (former WIC) manufacturers.

Fish sustainability raises many questions regarding the impact of both generic information and ecolabels on citizens’ consumption. An experiment was conducted in France to evaluate the impact of different types of information on participants’ WTP for canned fish. For starting the experiment, participants bid for canned tuna and sardines, sold without any quality labels. Explanatory messages on health and sustainability were delivered by balancing positive and negative information, and varying the order of information across subgroups. It is shown that only negative descriptions, including the ones on sustainability, lead to significant reductions in WTP for both tuna and sardines. In the second part of the experiment, participants received a new set of canned tuna, with or without quality labels. We observe a significantly higher WTP for canned tuna sold with the Marine Stewardship Council (MSC) label compared to the WTP for canned tuna sold without any label. This positive premium for such a label indicating the fish sustainability differs from results in the first part of the experiment, in which, for sardines, the only significant message leads to a reduction in WTP, even if sardines are relatively healthy and sustainable.

In the last two decades the Italian food retail industry has changed considerably also thanks to the liberalization process started with the 1998 retail regulation reform. In this study, we investigate the impact of such reform on the food and beverage consumer price index, controlling for the endogenous nature of the policy adoption across regions, and addressing what changes in food retail structure may have driven those effects. We find that the policy had a mitigating effect on food prices, which can be explained by the change in the number and composition of food stores operating in the Italian market, rather than by the changes in store size and in-store services. We find the policy effects not to be statistically different across regions characterized by different levels of liberalization.

The 2003 CAP Reform commenced a liberal shift on the policies designed to protect farmers across Europe. The CAP Health Check of 2008 and the 2013 CAP Reform confirmed this change, adopting measures including the further decoupling of production, the abolishment of set-aside and the phasing-out of milk quotas. It is therefore expected that price transmission has been affected radically. This study investigates the price transmission mechanism along the European food supply chain, based on an asymmetric panel vector error correction model (VECM). Panel data on agricultural commodity (farmer), producer (processor) and consumer (retailer) prices from nineteen European countries are considered. The sample is split into two sub-periods, before and after the CAP Health Check, to examine how the price transmission mechanism has been affected. Cointegration is confirmed among the price series through the Pedroni tests and the long-run relationship is obtained with two estimation methods (i. e. fully modified OLS and dynamic OLS). Prior to the CAP Health Check, positive asymmetry is detected from farmer to processor and from processor to retailer. However, after the CAP Health Check price transmission becomes symmetric, thus suggesting that decreased support has resulted in a more efficient price transmission mechanism.

Russia has emerged as a major wheat exporter since the beginning of the 2000s, and today, it possesses high market shares in several wheat-importing countries in the Middle East and North African region. This has raised concerns that Russia might abuse its dominant market position by pricing above marginal cost. Using a novel dataset with weekly information on Russian wheat exports, we apply the residual demand elasticity method to analyze the pricing behavior of Russia in its two most important export markets, i. e. Egypt and Turkey. Our estimation results reveal that Russia behaves competitively in Egypt while it exerts market power in Turkey with an estimated mark-up of 13.5 %.

We use patent data to study product, process, and marketing innovation in the food and drink industry. From 1994 to 2005, only 61 of 194 U.S. public food and drink manufacturers patented some type of innovation. Furthermore, we find patent ownership is most common to large corporations, and most patented innovations relate to new designs and processes as opposed to new products. According to our empirical panel analysis, however, stock market investors find patent ownership of new product innovations the most valuable, although the intensity of patent ownership is not of utmost importance. Instead, we conclude patent quality is better able to explain variability in the stock market valuation of U.S. food and drink manufacturers. Specifically, a one-percent increase in the quality of patented innovations in food and drink products facilitates a 0.07 % increase in firm value, corresponding to almost $6 million for the mean innovating firm in the U.S. public food and drink industry.