Volume 18, Issue 2

The COVID-19 crisis created large economic losses for corn, ethanol, gasoline, and oil producers and refineries both in the United States and worldwide. We extend the theory used by Schmitz, A., C. B. Moss, and T. G. Schmitz. 2007. “Ethanol: No Free Lunch.” Journal of Agricultural & Food Industrial Organization 5 (2): 1–28 as a basis for empirical estimation of the effect of COVID-19. We estimate, within a welfare economic cost-benefit framework that, at a minimum, the producer cost in the United States for these four sectors totals $176.8 billion for 2020. For U.S. oil producers alone, the cost was $151 billion. When world oil is added, the costs are much higher, at $1055.8 billion. The total oil producer cost is $1.03 trillion, which is roughly 40 times the effect on U.S. corn, ethanol, and gasoline producers, and refineries. If the assumed unemployment effects from COVID-19 are taken into account, the total effect, including both producers and unemployed workers, is $212.2 billion, bringing the world total to $1266.9 billion.

The COVID-19 pandemic has exposed multiple vulnerabilities in the U.S. lettuce value chain. Restaurants and other food service operations closed almost overnight, leaving farmers with millions of dollars of excess lettuce. Because of the rigid value chain, farmers were forced to decide whether to harvest their crops for donation, try to find new customers, or plow their crops under. Close working and living conditions increase farmworkers’ risk of contracting COVID-19. Though many operations have implemented safety measures to protect farmworkers from COVID-19 in the short-term, larger structural changes must be made to provide workers with fair wages, access to health insurance and paid time off, and affordable housing. This review outlines the current value chain of lettuce in the U.S. and the disruptions caused by COVID-19, analyzes the impacts on farmworker health and safety, and offers recommendations for a more resilient lettuce value chain.

The divergence in approaches to regulation of genetically modified organisms (GMOs) among countries is a contentious policy issue that has externalities that inhibit trade in agricultural products. One result is that approvals of GMO events is internationally asynchronous. Countries whose approval processes are slower or more stringent often impose import bans or other non-tariff barriers on imports of GM products they have rejected or have yet to approve. These trade barriers have been the subject of considerable investigation. As more and more GMO events are approved in some countries, but not in others, the probability of unintended mingling of GM crops in shipments of non-GM crops increases. Shipments of non-GM crops with a low level presence of non approved GM crops are routinely rejected by importing countries. This growing disruption to trade has not received a great deal of attention. This paper uses information from the GMO research and commercialization pipeline to estimate the potential impact of increases in mingling on international trade flows using a CGE model – GTAP. The results suggest that the growing potential for mingling will have a considerable detrimental impact on trade flows and, hence, tolerance levels should be an important question for multilateral trade negotiations.

Imperfect competition in the agricultural input procurement market is prevalent, especially at the local and regional scale. While there is much theoretical work on the positive effect of cooperatives on spatial competition, applied research is relatively scarce. We address the gap in the literature with an empirical study of cash prices in the Iowa corn market. With 589 observations from the 2018 harvest season, we construct a spatial model of price competition among grain handlers within a 20-mile radius. Among other findings, we conclude the ownership structure of Iowa grain handlers is important to explain the spatial dependence in corn cash prices. On average, cooperative grain handlers offer a lower corn cash price as compared to corporate grain handlers (¢1.20–1.72 per bushel), which is likely offset by refunds and dividends at the end of the fiscal year. At the same time, cooperative grain handlers force an adjustment in the behaviour and pricing strategy of nearby competitors. Cooperative grain handlers on average facilitate a significant increase of ¢0.65–2.08 per bushel in the corn cash price of competitors within a 5–17 mile radius. Our novel findings inform recommendations in terms of spatial entry and location decisions by cooperative grain handlers.

In this work, we analyse EU soybean and maize imports using a demand system borrowed from the differential approach to firm theory. Alongside providing own-price and cross-price (i. e. cross-country) elasticities for these two products, we test whether source-specific characteristics exert any influence on complementarity and substitution patterns between international exporters. Specifically, we look at country differences stemming from supply chain efficiency and the asynchronous approval of Genetically Modified (GM) varieties. We do so by introducing two measurements for such features into a linear demand model specified by Laitinen and Theil (1978). Estimation results suggest that the EU import structure is not affected by differences in supply chain efficiency between overseas suppliers while, depending on the product, asynchronous approval does seem to have an influence. We find that imports of maize are more sensitive than those of soybeans to differences in approval statuses between international exporters and the EU. Since soybean availability is a limiting factor for the EU feed industry, avoiding stock shortages may be a priority for European importers, hence the weaker effect of asynchronous approval. On the other hand, the substantial EU self-sufficiency for maize places more emphasis on product characteristics and prices.

We build upon existing theories of merger and acquisition (M&A) to examine the differences in environmental performance between targets and acquirers in the Food and Beverage processing (F&B) industry. In a cream-skimming strategy, acquiring a firm with better environmental performance may add to the acquirer’s existing green efforts and improve their environmental capabilities. In a turnaround strategy, an acquirer may buy businesses from a dirtier firm and later bring them up to the buyer’s environmental standard. Among a set of 13 M&A deals in the F&B industry, we identify deals where targets have poorer or better environmental performance (toxic chemical management) than their acquirers. Our finding suggests that, among the given set of firms, there is some evidence of improvements in the toxic chemical management rate of targets and acquirers.

The present study investigates the underlying factors of price stickiness in German food retailing using fluid milk as a case study. We distinguish the duration between two actual price changes and two regular price changes as measures for price stickiness. Especially in the case of private labels, the choice of proxy for price rigidity has important implications. If we consider (regular) price changes, private label products are more (less) rigid than national brands. Price rigidity increases in the product’s average price. Prices of low priced private labels are rather flexible. Price adjustment of high priced private labels is similarly sluggish compared to national brands. We rationalize this finding with variable mark-ups under imperfect competition. In line with previous research, we find that price stickiness also depends on product attributes, retail formats, menu costs, psychological price points, and time-varying market conditions.

Online reviews influence consumer decision making, retrieving valuable information about consumers to the companies. We investigate how review valence, platform type, and review credibility affect purchase intention (visit to restaurants). We use an experimental 2 × 4 between-subjects factorial design with two platforms (company websites and independent websites) and four types of review valences (neutral, negative, positive and balanced), with data of 256 respondents. Results show that purchase intentions are influenced by review valence. The effect is moderated by perceived review credibility. Review platform has no moderating effect on the influence of review valence. Results provide practical information for marketers in the service industry.

This article provides a conceptual framework to understand benefits and costs of private minimum quality standards, increasing seller reputation or warranties when there is a collective reputation for online platforms. Our framework uses a dual reputation model where consumers have a quality expectation based on the reputation of the platform and the reputation of the seller. We also analyze the benefits and costs of various types of fees associated with online platforms and find that the optimal fee structure depends on whether quality concerns or market power concerns are greater. Fees that are fixed, or only depend on quantity, increase market power, but do not hurt product quality. Therefore, they should be used if collective reputation is the main concern. Fees that depend on prices exacerbate bad quality incentives for firms, so they should only be considered if quality is not a concern for consumers. The optimal quality standard depends on the fee structure, as well as the level of compliance to that standard.

Consistent with preferences for other food products, consumers increasingly care about a range of search and credence seafood characteristics such as: environmental effects and product form. This study utilized a dataset obtained from an online survey, and a Multivariate Ordered Probit formulation to examine the impact of: demographic characteristics, lifestyle preferences, and seafood consumption frequency on preferences for selected seafood attributes. The findings indicate that the factors influencing consumer preferences differ across the attributes examined. Although some demographic variables have a statistically significant effect on consumers’ preferences for seafood attributes other than price, their predictive power was limited regarding preferences for wild-caught, fresh seafood and the impact of sustainability on purchasing decisions. Furthermore, consumers who utilize direct marketing outlets have stronger preferences towards fresh and wild-caught seafood products.

The objective of this paper is to present a descriptive review of all the studies published on wine price determinants. The selection process has been carefully designed to assure that we cover the complete literature of hedonic price functions and wine price determinants. Because of the heterogeneity among these studies, the objective was to classify all the determinants in clusters related to geographical and agricultural factors, time horizon, public information and, supply factors (production costs and volume of production). For this review, we have identified a list of 117 papers published on price determinants over the period 1993 to 2018.