Gluten-Free: Where’s the Beef?

This research seeks to determine effects of rising interest in gluten-free foods on U.S. retail food demand and, ultimately, producer and consumer welfare. Increased gluten-free interest led to a modest reduction in cereals and bakery demand and increases in meat, alcoholic beverages, and food away from home demand. Combining estimated effects with an equilibrium displacement model suggests the reduction in cereal and bakery demand decreases wheat and barley producer profits by US$7.2 million/year. After accounting for positive demand impacts on other products, results indicate wheat and barley supply is redistributed away from food production into animal production, increasing wheat producer welfare.

Market power and returns to scale in farm-value share determination

Purpose The purpose of this paper is to investigate the role of market power and returns to scale in the determination of farm-value share. Design/methodology/approach This paper utilizes the equilibrium displacement model to investigate the role of market power and returns to scale in the determination of farm-value share. Contrary to the current literature, the paper incorporates oligopoly power, oligopsony power and non-constant return to scale into one generalized model, which systematically enables us investigate the impacts of market power on the determination and changes of farm-value share. Findings The results imply that market power as well as non-constant returns to scale is central to the understanding of farm-value share. These, in turn, indicate that ignoring the impacts of market power and degree of return to scale may overestimate or underestimate the impacts of exogenous shocks on changes in farm-value share. Originality/value Thus, to the best of the authors’ knowledge, no literature has examined the co-existence of oligopsony power, oligopoly power as well as non-constant return to scale in farm-value share determination. This paper therefore tries to fill this gap.

Detecting Market Power Along Food Supply Chains: Evidence and Methodological Insights from the Fluid Milk Sector in Italy

Concerns about the functioning of food supply chains have been raised by the European Commission over past years, calling for more effective and coordinated action by National Competition Authorities (NCAs). To fill this knowledge gap, an equilibrium displacement model is used to screen conduct along the supply chain, combining the advantages of asymmetric price transmission (APT) studies and structural models. The test was carried out on the Italian fluid milk supply chain following market monitoring action by the NCA. Three periods (1996–2003; 2000–2008 and 1996–2008) have been examined, finding imperfect competition over 1996–2008 and 2000–2008, while no conclusions may be drawn over the time span 1996–2003. In the testing process, the model’s peculiarities and certain limitations emerged, and related suggestions for its improvement are discussed. This approach may be used as a preliminary “fast” test for competition policy screening, as a complement to other methodologies. However, further theoretical and empirical model validation is necessary.

ECONOMIC CONSEQUENCES FOR TREE FRUIT INTERMEDIARIES FROM SHOCKS

Motivated by disease outbreaks and trade shocks, a dynamic equilibrium displacement model is calibrated for the U.S. pear industry to simulate welfare from various shocks compared to a baseline. Our contribution is assessing the impact to intermediary packers for fresh fruit and processors for processed fruit in addition to growers and consumers. The processed market is more sensitive than the fresh market generally, and supply shocks induce larger impacts on both markets than trade sanctions. Impacts to intermediaries are on par with growers, indicating that not considering them misstates the distribution of damages to the industry from a shock.

What do China’s rising meat demand and industrialization of the livestock sector mean for its vegetable oil market?

Purpose The purpose of this paper is to investigate the implications of the China’s rising meat demand and industrialization of the livestock sector for the vegetable oil market. Design/methodology/approach An equilibrium displacement model is constructed to analyze the interactions between meat consumption and vegetable oil market through the development of livestock sector modernization. Parameters derived from the 2006 to 2009 data are first used to produce the counterfactual growth rate of the non-soybean vegetable oil to validate the model. Then the authors use the second set of parameters derived from the 2010 to 2013 data to forecast the changes in the vegetable oil market in China. Findings Soybean oil, as a co-product of soybean processing, tends to crowd out other vegetable oils. In particular, the authors find that the market for non-soybean vegetable oils may shrink as long as the rapid industrialization pace above 10 percent within China’s livestock sector continues. Although their production takes up only 8.5 percent of all agricultural lands in China, oil crops remain as important cash crops for farmers contributing over 10 percent to the overall farm income in some provinces. The authors’ analysis suggests that stakeholders in these regions should closely monitor the structural changes within the livestock sector and consider the information for crop selection. Originality/value The authors’ analysis contributes to the literature on China’s meat demand by highlighting its implications for other agricultural markets involved in the food system.

Can eco-labels reduce carbon emissions? Market-wide analysis of carbon labeling and locally grown fresh apples

Despite the heightened efforts to implement eco-labeling schemes as the market-based vehicle for improving environmental quality, the overall effectiveness of eco-labels are still uncertain due to complex and sometimes unexpected market responses. In this paper, we assess the overall changes in carbon emissions resulting from two types of labeling on fresh apples, carbon labels and location designation labels (e.g., locally grown), both of which can have mixed implications for carbon emissions due to fluctuating supply chain factors. We employ an equilibrium displacement model that integrates existing estimates of differences across production systems, and our own estimates of consumer responses to labels in order to simulate the changes in prices, trade flows and estimate carbon impacts across several scenarios in the US fresh apple market. We find that both labels ultimately affect market outcomes and overall carbon emissions. With location designation labels, consumers’ preference for local products leads to a net decrease in carbon emissions during the local growing season, while the interaction of various market dynamics results in a subsequent net increase in carbon emissions during the local off-season. The interaction of a carbon label with the location label lowers the overall attractiveness of products and reduces the quantity demanded, and thus, reduces the carbon emissions in both seasons. Overall, providing the location designation label increases annual carbon emissions, whereas providing both the location designation and carbon labeling decreases annual emissions. In short, the dynamics and interdependency of labeling strategies are important to consider in the context of eco-labeling.

THE IMPACT OF BIOFUELS POLICY AND DROUGHT ON THE U.S. GRAIN AND LIVESTOCK MARKETS

This article examines the impact of the 2012 drought and the biofuels mandate on the U.S. grain and livestock markets and estimates the mandate waiver required to offset the impact on the corn price. The framework used is a stochastic equilibrium displacement model that integrates the beef, pork, and poultry markets with the corn, distillers’ grain, soybean, soymeal, and ethanol markets. The corn and beef markets are found to be the most vulnerable. A mandate waiver of approximately 23% is required to fully negate the impact of the drought on corn prices. The waiver is equivalent to a 13.7% reduction in ethanol consumption.