Volume 22, Issue 1

This research analyzes the U.S. cheese industry dynamics (changes in wholesale cheese prices, milk price, margins, and the nature of wholesale cheese pricing) in light of a herd retirement program implemented by the Cooperatives Working Together (CWT) in the period of 2003–2010, which led to an antitrust lawsuit filed by cheese buyers against a group of dairy cooperatives and a large settlement. Presuming that they had a Capper-Volstead Act immunity, the CWT cooperatives acted in a cartel-like manner to decrease milk supply to increase and stabilize milk prices received by dairy farmers. While the program may have modestly increased seller market power of dairy farmers, seller market power of dairy cooperatives involved in cheese manufacturing decreased. This is because the cost of milk used in cheese manufacturing increased at a higher rate than wholesale cheese prices, which caused wholesale cheese margins to decrease.

In this paper, we reconsider the rationale used to justify a complaint filed by the U.S. Department of Justice regarding the acquisition of a cottonseed company by an agricultural biotechnology company. With the benefit of hindsight, we show that the competitive assessment overlooked significant market developments that were altering the competitive position of the firms under investigation. This review is intended to raise awareness of the complexities of enforcing antitrust policy in a dynamic environment, with a special emphasis on agricultural markets. We argue that antitrust analysis should incorporate a process view of competition to better account for present market dynamics and the everchanging competitive environment.

We examine the association between beer prices and the inherent characteristics of beers within the traditional price hedonic framework. Using a large-scale Norwegian data set with more than 9000 individual beer products from several production countries, we find that alcohol content has a strong, positive, and significant effect on the retail price of beer. In contrast, the effect of expert quality rating on beer price appears to be of only small to moderate importance. We also find significant and substantially important price differences between production countries. Finally, there is effect heterogeneity (i.e. interaction effects) for both alcohol content and quality rating with respect to production country. For example, the association between alcohol content and price is larger in Norway and Germany than in most of the other production countries in the data.

The Tunisian olive oil strategy is based on the development of exports. Extension and modernization measures of Tunisian olivegrove have come into effect these recent years in order to increase the exports and diversify the target markets. Like any other agricultural good, olive oil is subject to world price fluctuations. Forecasting the long-term world price of olive oil is essential both as a decision-making tool and as a strategic factor for the development of the sector. This paper attempts to forecast the long-term olive oil world price using annual time series. The data reveals that the number of observations is too restrictive for a frequentist approach. To overcome the sample shortage, we adopt a Bayesian VAR. We use the hierarchical prior selection to specify the prior parameters. The results show an increase in world price and production. However, the price grows more proportionally than the production. In such a context, the increasing production orientation seems adequate but not sufficient to enhance the Tunisian position on the international olive oil market. For the coming decade, the Tunisian olive oil policy should focus as well on deepening the dynamics of product valorization.

Due to significant implications for resource and food sectors that directly influence social well-being, commodity price comovements represent an important issue in agricultural economics. In this study, we approach this issue by concentrating on daily prices of the corn futures market and 496 cash markets from 16 states in the United States for the period of July 2006 – February 2011 through correlation based hierarchical analysis and synchronization analysis, which allow for determining interactions and interdependence among these prices, heterogeneities in price synchronization, and their changing patterns over time. As the first study of the issue focusing on prices of the futures and hundreds of spatially dispersed cash markets for a commodity of indubitable economic significance, empirical findings show that the degree of comovements is generally higher after March 2008 but no persistent increase is observed. Different groups of cash markets are identified, each of which has its members exhibit relatively stable price synchronization over time that is generally at a higher level than the synchronization among the futures and all of the 496 cash markets. The futures is not found to show stable price synchronization with any cash market. Certain cash markets have potential of serving as cash price leaders. Results here benefit resource and food policy analysis and design for economic welfare. The empirical framework has potential of being adapted to network analysis of prices of different commodities.

The paper analyzes the economic impact of the gradual removal of the subsidy in the bakery sector in Tunisia. A partial equilibrium model under imperfect competition in the soft wheat market is developed to evaluate the impact of the gradual removal of the subsidy in the Tunisian bakery sector. Two scenarios are simulated. In the first scenario, the subsidy is eliminated over a three years, starting in 2024. Scenario 2 mirrors scenario 1, but assumes a 5 % annual increase in the world price of soft wheat from 2024 to 2026, accounting for the anticipated depreciation of the Tunisian currency. The results show that the overall welfare would increase under both scenarios 1 and 2, and range between 443.9 and 472.2 million dinars by 2026, respectively. Based on the results of the simulations, to mitigate the negative impact of subsidy removal, it is strongly recommended to extend the food subsidy reform to a five-year period, prioritizing the protection of low-income segments. In addition, abolishing the Cereal Board’s regulatory role and moving to a competitive farm-level market would enhance competition, attract investment, and improve productivity and efficiency. However, a new cereal policy should be implemented to achieve objectives of food security, improved productivity, sustainability, and resilience.

In this paper, we recover and decompose markups, and estimate the pass-through rates from cost to prices in small and medium retail stores for oil, tomato sauce, and rice in Uruguay using a structural model of demand and assumptions about the competitive behavior of producers. The market power for these products has been under study by the Commission of Promotion and Defense of Competition since 2016, and the proposed methodology allows for a deeper exploration of the measurement and understanding of the origin of that market power. In addition to providing a fundamental input for competition defense policies in Uruguay, this study enhances the international academic literature by contributing evidence on cost-to-price pass-through in a developing economy with potentially greater market power than that found in developed countries. About 65 % of the market power under the Nash Bertrand assumption is explained by the ability of firms to differentiate products and 35 % by the ownership structure in the case of oil and sauce. In the case of rice, 49 % is explained by differentiation and 51 % for ownership structure. Finally, the pass-through rates are low for the three products, being under both behavioral assumptions lower than 55 % for the three products.