Search

In 2006 FDA announced that consumers should not eat fresh spinach in the wake of a large foodborne illness outbreak of E. coli O157:H7. This paper investigates response of consumers to the announcement. We use an AIDS demand model with 5 food safety shock variables and retail scanner data to analyze market response. Even fifteen months after the outbreak, predicted sales of spinach in bags were still down 10 percent from what they would have been in the absense of the food safety shock. After the outbreak, consumers shifted to other leafy greens such as bulk iceberg lettuce, other bulk lettuce, and bagged salads without spinach.

This paper explores the time series properties of cattle and feed prices to determine the effect shocks may have on price evolution. Two different unit roots tests are applied to the data and compared and the issue of fractional integration is discussed. A Geweke Porter-Hudak test finds that at least of three of the four price series are fractionally integrated. VAR models are estimated using level data and fractionally differenced data and impulse responses compared across various degrees of fractional differencing.

Derived demand relationships among four weight categories of feeder cattle entering Texas feedlots and feed were examined using a Generalized McFadden dual cost function specified as an error correction model. Relationships among own- and cross-price elasticities provide evidence for at least two cattle feeding enterprises, feeding lightweight feeder cattle (calves) and feeding heavier cattle. These results indicate systematic differences in demand relationships among the different weight classes, providing explanation and insight into mixed results from earlier studies. Seasonality differed across weight categories, providing additional support for multiple cattle feeding enterprises. A third step was added to the Engle-Granger two-step estimation procedure to incorporate information provided in the second step.

We divide countries into two technology categories: developed and developing. Agricultural efficiency within each technology category was calculated. Cross-category efficiency measures were developed and combined with own-category measures to develop a technical difference index. Results indicate convergence of efficiency within both categories but divergence of efficiency between the two categories.

In this paper we evaluate the performance of a dynamic model of cattle replacement and culling decisions. We derive the price of cattle when it is treated as a unit of capital and evaluate various rates of adjustment of the cattle herd to determine the length of the cattle cycle. Replacement decision is modeled as the solution to a dynamic optimization problem where the breeding herd is viewed as a capital asset that is capable of producing two outputs: calves and culled cows. The own-price, replacement and interest rate elasticities calculated for both the short-run and long-run time-frames suggest fairly rapid adjustment rates. Tests of cycle length revealed a 14-year cattle cycle.

An output distance function conditional on the expansion of a second output is presented. These distance functions are used to calculate distinct relative Total Factor Productivity (TFP) scores for two jointly produced products-livestock and crops for 27 countries. From these, TFP growth and direction of growth are calculated.

We extend the methodology of a two-step profit function to obtain area and yield elasticities. We then estimate the effects of price and technology on crop output of France, Germany, and the UK. Area elasticities were obtained by adding area shadow price equations to the standard dual model of output and input equations. Change in output is dominated by technology in the UK and mixed in France and Germany. The results indicate policies affecting price will have diverse responses across countries and crops.

The relationship among cost functions, distance functions, and technical inefficiency are utilized to show how technical inefficiency scores can be incorporated into the specification of a profit function and a related system of output supply and input demands. A method also is introduced for incorporating allocative efficiency scores into the same system. The theoretical and empirical approach requires fewer assumptions than those made in many studies. An illustrative example is provided for Russian agriculture for 1194-95, a period when significant technical and allocative inefficiency was known to exist. The results demonstrate inefficiency limits the supply response to prices, thus leading to lower estimates of output response compare to a traditional supply model in which efficiency is assumed.

This paper examines domestic and international food market integration in Russia before and after the financial crisis of 1998. Using monthly prices of bread, pork, and beef in 80 regions of Russia from 1994 to 1999, we measure the short-run response of regional prices to changes in foreign prices and domestic inflation. We find that both changes in foreign prices and domestic inflation have distinct impacts on the prices of these commodities in different Russian markets, indicating poor market integration in the short run. An analysis of the effect of the financial crisis shows that market integration for bread and beef deteriorated after the crisis. However, integration improved for pork in some parts of Russia, and the integration of Siberian pork markets with Chinese pork markets also improved after the crisis.

We apply seasonal unit root tests to apple and pear price and quantity data. We then develop a method for testing shifts in amplitude andjor phase of the seasonal cycles. The results have implications to econometric specifications of models which use short-run data (quarterly, monthly).

Significant differences exist in the rates of capital adjustment in the four major sectors of the U.S. economy: agriculture, food, manufacturing, and services. A multioutput adjustment cost model is specified to compute the rates of capital adjustment. This specification allows us to derive dynamic output supply and investment demand functions for the four sectors, which are then fitted to time-series data. Our estimates show that capital in agriculture and manufacturing is almost fixed and adjusts toward respective long-run equilibrium at a rate of about 2% per year. The food processing and services sectors are more flexible in that their capital stocks fully adjust in less than five years. Thus, the rate of adjustment of agricultural capital is lower than that of other sectors in the U.S. economy.

Growth in the agricultural GDP of four major European countries is compared with U.S. agricultural growth for the period 1974-1993. The agricultural sector's domestic terms of trade with the rest of the economy is taken into account along with economy-wide factor market adjustments. For all the four countries— Denmark, France, Germany, and the U.K.— the effects of declining real prices and changes in input levels on growth in agricultural GDP are relatively small on average. Total Factor Productivity (TFP) appears to be the major contributor to European agricultural GDP growth. TFP is the major source of growth in U.S. and EU agricultural GDP, but its rate of growth in the United States is lower than the European countries for the same period. The declining real prices for U.S. agriculture had a large effect on its GDP as compared with the EU. However, in the late 1980s and early 1990s, the effects of declining real prices and declining rates of growth in TFP on European agriculture were relatively large. In the longer run, the relative competitiveness of U.S. agriculture is largely dependent on its ability to sustain and increase growth in TFP.

Multifactor productivity indices that are measured using data envelopment analysis are compared with indices measured using a Cobb-Douglas production function. Cobb-Douglas functions are then used to measure the relative impacts of input growth and productivity on agricultural output growth. Both input growth and productivity growth have accounted for agricultural growth in developed countries. However, in developing countries output growth can primarily be attributed to the growth in fertilizer and machinery. Productivity growth has fallen in many developing countries.

Significant differences exist in the rates of capital adjustment in the four major sectors (agriculture, food processing, manufacturing, and services) of the U.S. economy. The properties of a quadratic value function from a multi-output adjustment cost model are used to derive dynamic supply and investment demand of the four sectors, which are then fitted to time series data. Our estimates show that capital in agriculture and manufacturing is almost fixed and adjusts toward longrun equilibrium at a rate of about 2 percent per year. The food processing and services sectors are more flexible in that their capital stocks fully adjust in less than 5 years. Theoretically consistent supply elasticities further validate the results. Strong linkages among the four major sectors of the economy are also identified. The rates of capital adjustment help explain the pattern of capital's contribution to growth in the various sectors of the economy.

The assumption of adjustment costs is used to specify a dynamic model of the U.S. economy. Output is divided into in three sectors: agriculture, manufacturing, and services. The advantage of this approach is that it can measure more factors that contribute to productivity growth than a static model. Output growth and productivity are measured using data and parameters from an estimated dynamic model. Parameters that are unique to dynamic models and a returns-to-scale measure make up part of the productivity calculations. Dynamic components of productivity are less than 5 percent of productivity growth for most years. This occurs because dynamic components of productivity are a function of returns to scale, and production is measured to be close to constant returns to scale. Elasticities from the estimated model show that both manufacturing and service prices have a major impact on agricultural output. Own-price elasticities are relatively small for agriculture.

Chile's agricultural sector has dramatically expanded and diversified both production and exports in the past 30 years. Previously reliant on annual crops and wool, it is now a strong competitor in international fruit markets, apples and table grapes especially. Its success stems from a shift in consumption toward fruits and vegetables, natural resources suitable for fruit production, and government policies that encouraged farmers to switch to fruit. The industry is now moving toward production and export of pears, peaches and other stone fruit, as well as berries and melons, in addition to apples and table grapes. In diversifying with non-traditional crops, Chilean producers reduce risk.

Numerous methods for measuring multifactor productivity have been used by economists. This report uses a recently developed approach, data envlopment analysis, to measure productivity. This method can be used not only to calculate productivity but also to divide productivity measures into indices that measure technical efficiency and technical change. Technical efficiency measures the efficiency with which resources are used. Technical change measures changes in output arising from improved technology. In this report, relative efficiency measures and multifactor productivity measures are calculated for the agricultural sectors of 77 countries. Analysis shows that multifactor productivity of the agricultural sector has risen in most developed countries and fallen in many developing countries over the past two decades. Adoption of input-intensive technology by developing countries may have offset productivity gains from improved yields and imporved labor productivity

The Heckscher-Ohlin and M!irkusen models state that countries export the goods intensive in the use of their relatively abundant factor. Latin American agricultural trade is consistent with both models. The paper then shows that Latin American agricultural trade is primarily explained by country differences in relative factor abundance between countries rather than differences in technology. This finding does not reject the Heckscher-Ohlin model but rejects one of Markusen's models.

Error correction models impose few prior restrictions on dynamic model specification and allow the data to determine model structure. Despite this obvious advantage, few applications have adopted the error correction model to explain trade flows. An error correction model of cotton import demand is estimated for France, Japan, and Hong Kong. A variety of tests are applied to determine the dynamic structure of the model. We find the most general models are those that best fit the data for cotton import demand. Long-run elasticities from these general models are significantly different than elasticities derived from a comparable static model.

Chile's fruit sector, both in production and exports, has grown significantly since 1974. At that time, Chile introduced structural reforms in its economy which assured that market principles would operate regarding land ownership. Also, the government began a 'hands-off' policy which basically allowed free-market principles to prevail. As a result of these conditions operating in the economy, Chile's agricultural sector diversified from producing largely annual crops and wool to also producing a significant amount of commercial fruit crops. A second round of diversification is currently underway within the fruit industry where pears and peaches are being produced and exported in addition to apples and table grapes. In this paper we derive decision criteria when aggregate performance is evaluated from the perspective of maximizing a risk-averse utility function. Empirical evidence on Chilean fruit exports indicates that, on an aggregate level, Chilean fruit exporters are following the path of utility maximization and validates the sequence by which Chilean producers introduced nontraditional crops over time. While on an individual level there may be complex factors and constraints involved in the planting decisions, the results of this study seem to indicate that the sum of producer behavior satisfies the conditions required for maximizing a risk-averse utility function.

Brazil's agricultural sector underwent major changes in the past two decades. Though Brazil is abundant in labor, land, and animal power, government subsidies encouraged the use of fertilizer and machines. Since productivity growth arises from technical change, Brazil's drive to modernize its agricultural sector should improve agricultural productivity. However, inefficient production practices arising from subsidies can slow multifactor productivity growth. Recent removal of agricultural subsidies in Brazil has coincided with increased productivity, providing evidence that input subsidies made Brazilian agriculture inefficient.

This report presents multifactor productivity indices of Brazil's agricultural sector. The imposed restriction, that the production technology is constant returns to scale, influences calculation of indices. The difference between the constant returns-to-scale index and the more general index derived here indicates that constant returns to scale is an overly restrictive assumption for Brazilian agriculture. This report presents indices for eight categories of inputs (energy, feed and seed, fertilizers, labor, land, pesticides, livestock, and machinery) and describes and documents the data used in calculation of the indices.

Western Agricultural Economics Association Conference, Colorado Springs CO, July 12-15, 1992

Latin American agricultural trade is consistent with both the Heckscher-Ohlin and Markusen propositions, which hold that countries export goods intensive in the use of their relatively abundant factor. This paper further shows that Latin American agricultural trade is primarily driven by country differences in relative factor abundance rather than by technology differences. This finding does not counter the Heckscher-Ohlin model, but counters one of Markusen's models, which allows for factor trade.

This paper discusses the growing importance of policies by Central American countries to promote nontraditional agricultural exports. It demonstrates that these programs are rational if countries are risk-averse utility maximizers. It describes the characteristics that crops must have for utility maximizers to benefit from nontraditional export promotion programs. It also shows that the recent nontraditional vegetable and fruit exports of Central America can meet these requirements.

Price and income elasticities for imports of US and Brazilian soyabeans by each of the eight major workd soyabean importers and the rest of the world were weighted by their shares of the respective soyabean markets and summed to approximate total price and income elasticities for US and Brazilian soyabean exports. This weighted-market-share technique was applied to elasticity estimates derived from two different procedures: Sirhan and Johnson's market-share approach and direct estimation. Estimates from both procedures indicated that, in the short run (1 year) during 1972-85, soyabean exports from the USA were inelastic with respect to price; from Brazil they were elastic with respect to price; and from both countries they were elastic with respect to income.

A 19-equation econometric analysis of demand for U.S. wheat exports, 1961-83, indicated importers' wheat production, importers' income, and the U.S. wheat price were major demand determinants. Average 1-year price, income, and exchange rate elasticities were inelastic; -.2 to -.4, .4 to .5, and -.06 to -.24 respectively.

This paper questions the standard assumption that inflation has no effect on import demand functions. We describe a simple method for testing whether proportionate changes in prices and income influence import demands. We estimate several import demand functions and provide, some evidence that inflation influences importers' demand. We also show that, when estimating import demand functions, it is difficult to test for the correct index of inflation.