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In this paper results are reported of an initial assessment of the prospective economic benefits of a project examining the technical and economic feasibility of the use of new carcase measurement technologies for the Australian beef, sheep meat, and pig meat industries (the ALMTech project). Information provided in a report to Meat and Livestock Australia on their Objective Measurement program (the Revised OM Report) is used as input into recently updated/developed partial equilibrium models of the Australian beef and sheep meat industries to replicate the six value proposition scenarios for the beef and sheep meat industries assessed within that report. The Revised OM Report provides the starting values, and then the formal economic models are used to estimate the magnitude and distribution of gross annual benefits after the market reacts to the new information. Benefits are also estimated for the pig meat industry using a similar modelling framework. Adoption profiles from the Revised OM Report are then used to predict benefits out to 2040, R&D and user costs are estimated, all values are discounted to a common 2020 time period, and NPVs and benefit cost ratios are calculated. The estimated NPV for net benefits was $243 million, while the discounted R&D cost was $127 million. The overall Meat and Livestock Australia OM program was estimated to generate a discounted net benefit of $116 million with an estimated BCR of 1.9:1; for the ALMTech project it was $30 million with the same BCR.

The Australian apple industry is one of the nation’s largest fruit industries with apples consumed in almost every household. To assist in industry development, levies are paid by producers on processing and fresh apples with funds directed towards research, development and marketing. While specific chain actors contribute to these developments, it is important to identify the beneficiaries to ensure the costs associated with the levies are allocated to those who will benefit. Within a framework depicting the Australian apple value chain, an equilibrium displacement model illustrates the distribution of surplus changes resulting from specified research, development and marketing actions. The distribution of surplus change shares indicates where the costs would be appropriately directed and the total impact to the value chain. It is evident that relatively small changes within the chain have the potential to induce significant increases to the values received by chain participants.

Current estimates point to food loss and waste as costing around $US 900 billion dollars a year. That is equivalent to around one-third of global food production. The magnitude of this valuation, however, is reliant on the effective measurement of the actual amount of food loss and waste. There are various definitions of this problem, which differ in their scope. FAO, FUSION and WRI are the most prominent institutions that have proposed different definitions of food loss and waste. All of these definitions have been at least partially criticized. Nonetheless, FAO’s definition and methodology have been the basis for many studies attempting to quantify food loss and waste. FAO’s methodology is based more on estimation rather than direct measurements. Taking the example of maize in Mozambique, using FAO’s methodology to measure food loss and waste at the farm level seems to provide estimates comparable to the available statistics from the national agricultural surveys. Di rect measurements on the other hand, apart from being costly, seem to suffer from representativeness problems as highlighted by some authors. Also, some of the direct measurement methods proposed by some authors seem to look at food loss and waste as a static problem, rather than a dynamic problem that evolves over time. Regardless of the level where the problem of food loss and waste occurs (upper or lower end of supply chains), it results in a deadweight loss for society. That is demonstrated by a Marshallian supply and demand diagram., Proceedings in Food System Dynamics, Proceedings in System Dynamics and Innovation in Food Networks 2021

Concerns over livestock production practices have resulted in increased consumer preferences for certified products. Australian beef buyers’ survey data revealed the preferences of consumers who would buy differentiated beef based on animal welfare, safety, health, or environmental-friendly considerations. Female respondents are more likely to buy certified animal welfare products. Buyers with children, and those who value branded beef, are more likely to buy products differentiated by a bundle of credence attributes. Given that Australian beef consumers eat similar amounts, there are opportunities for differentiating beef products according to credence attributes and offering them in a range of retailers., International Journal on Food System Dynamics, Vol 11, No 3 (2020)

Apples are a significant and popular fruit among the Australian population, and in the case of fresh apples, the domestic market is relatively self-sustaining. Retail and consumer preferences are the driving force for quality standards for apples along the chain, with actors working to provide the best quality selection of produce. In order to meet these high standards, loss and waste occurs in the lower grades which are simply a by-product of first grade production. Globally, loss and waste of fresh produce is amongst the highest of all food groups and from the limited data available, apples appear to be no exception. While there is not accurate specific data regarding loss and waste data of fresh apples in the Australian value chain, reporting is increasing as is awareness of the broader issues of food loss and waste. Following along the value chain, there appear to be discrepancies in quantities of fresh apples available at the various stages, with these variations potentially reflective of loss and waste along the chain. Using best estimates from the literature, the total amount of fresh apples, conservatively, that is potentially diverted from the Australian fresh apple supply chain is around 163,000 tonnes which is about 41 per cent of total production at the farm level. What is also lacking from Australian market data and literature, other than robust primary loss and waste data, is the cost of food loss and waste, and the extent of the externalities that occur due to loss and waste along the value chain. Not only do negative externalities incur costs to the broader society, there are additional costs of intervention, and analysis is required to determine the feasibility and appropriateness of intervention strategies., Proceedings in Food System Dynamics, Proceedings in System Dynamics and Innovation in Food Networks 2020

Large-scale industry investment in quality assurance and marketing campaigns for Australian lamb make both Meat Standards Australia (MSA) sheep meat and lamb advertising campaigns modern and plausible determinants of Australian consumer demand for lamb. Incorporating non-discretionary demand shift variables such as these into the General Almost Ideal Demand System (GAIDS) model may provide a suitable method to test for their impact on Australian lamb consumption patterns. This paper extends on a recent application of the GAIDS to Australian meat data by incorporating two alternative and novel methods of demand-shift index construction. It also proposes a semi-formalised approach to GAIDS model development and specification when dealing with underlying data quality issues.

The long-distance transport of live sheep, cattle and goats by ship from Australia to Asia and the Middle East is an ongoing, contentious issue in Australia due to concern for the welfare of the animals during and after the voyage. This concern has been driven by internet-based and televised campaigns against animal cruelty which have triggered a significant reaction of anger from the Australian public. This study investigates a novel method of capturing and measuring the impact of these concerns on Australian meat demand. This is done by incorporating an aggregated live export Google Trends index as a proxy for consumer response to live export information in a demand system for Australian meat. This study provides an alternative method for capturing consumer response to non-traditional demand shift variables and provides insight into how Australian meat demand is affected by interest in the live export trade, as well as price, income, seasonality and pre-committed consumption.

Pre-committed consumption represents the portion of demand that is determined by non-price and non-income factors. This study uses quarterly data to estimate a Generalised Almost Ideal Demand System (GAIDS) to test for the existence of pre committed meat consumption in Australia. Two specifications are estimated to evaluate the impact of seasonal and time trend factors on pre-committed demand. Evidence is found for the existence of pre-committed chicken consumption when jointly estimated with seasonal and time trend factors. Results support improved demand modelling of Australian meat consumption using the GAIDS and provide insights into how Australian meat demand is affected by price, expenditures, pre-committed consumption, seasonality, and trends.

Agricultural RD&E managers have responded to the increased focus on value chains in food and agricultural product markets and most Australian agricultural RD&E corporations now have value chain programs embedded in their portfolios of funded projects. As community concerns have intensified within the social, environmental and public health spheres, the agricultural RD&E corporations also have started to invest some resources in areas of research which have externality implications. However, the assessment processes they use typically have not kept up with these changes, and some are questioning the basis of the current approaches when whole-of-chain and externality issues are important considerations. In this paper, the idea that agricultural value chain RD&E results in ‘chain goods’ is linked with Swann’s idea of a ‘club goods solution’ to research funding, to argue that a ‘chain goods solution’ can be a viable means of funding research activity that relates to agricultural value chains. Thus, members of a value chain need not rely solely on government to fund value chain RD&E. A set of criteria is suggested to determine who should fund RD&E activities in Australian agricultural value chains depending on the relative balance between expected private, chain and social benefits.

A new equilibrium displacement model of the Australian sheep meat industry was specified, calibrated and validated to enable the distribution of the total benefits from the adoption of new technology or promotion investments to be estimated across sheep meat value chains. A number of hypothetical simulations were run to test the impact of various 1 per cent displacements from the initial equilibrium. The gross benefits to the various industry sectors from the displacements were found to be broadly consistent with a 1 per cent change in total value in the sector where the displacement occurred. In the base case, sheep meat producers receive between 29 and 52 per cent of the potential gross benefits from the hypothetical investments, overseas consumers receive between 10 and 28 per cent, while domestic consumers receive between 15 and 47 per cent, depending on the particular scenario. Sheep meat processors, exporters and domestic retailers all receive much smaller shares of gross benefits, generally less than 15 per cent but ranging up to 26 per cent in one instance. While the updated model provides a framework that reflects the current industry size and structure, as always the results are conditional on the specified price and quantity values, their underlying assumptions and calculations, and the parameter values used to represent industry responses to price changes.

Food value chain businesses form alliances with horizontal and/or vertical partners to take collective action to either overcome or ameliorate chain failure, or to take advantage of new opportunities available due to innovations in products or processes. The desired outcomes from the collective action would not be possible to achieve if these businesses acted independently. While such alliances may take many forms, depending on degree of commitment and infrastructure linkages, they can often be considered to be clubs. Four such types of clubs can be identified (1) horizontal clubs comprising businesses that take collective action across a single cross-section or an aggregate of multiple cross-sections in the value chain; (2) vertical clubs, which consist of businesses that form a strategic alliance for collective action along a single value chain within a network of chains; (3) clubs that specialise in a single product or multiple products in the value chain; or (4) clubs focusing on a single input/activity or multiple inputs/activities. Thus the path to collective action chosen by clubs may vary according to existing capabilities and the scope for collaboration, particularly in relation to the potential for value-creating innovation. The result of the collective action is the provision of a chain good or service which usually leads to greater and more valuable chain coordination. By collectively identifying, funding and acting to capture positive externalities associated with innovation, businesses in many parts of a food value chain can widen opportunities to increase whole-of-chain surplus as well as increase private profits. In this paper four mini-case studies are presented which demonstrate the breadth of past collective actions that have been undertaken by a substantial proportion of businesses in food value chains, two in Europe and two in Australia. These are (1) the Euro Pool System, (2) Global Standards certification in Europe and globally, (3) Meat Standards Australia, and (4) the OBE Beef organic producer alliance in Australia. Each case study yields insights into the rationale of how businesses in different food value chains in different countries have acted as a club to use their joint resources to internalise positive innovation and coordination externalities that would not have been possible to achieve were these businesses to act independently., Proceedings in Food System Dynamics, Proceedings in System Dynamics and Innovation in Food Networks 2018

An existing equilibrium displacement model of the Australian beef industry was updated to enable the distribution of the total benefits from the adoption of new technology or promotion investments to be estimated across the beef value chain. Three hypothetical simulations were run to test the impact of recalibrating the model to the new initial equilibrium. The distribution of the gross benefits to the various industry sectors were found to be broadly similar to those reported in the original model. Cattle producers receive between 29 and 40 per cent of the potential gross benefits from the hypothetical investments, overseas consumers receive between 11 and 15 per cent, while domestic consumers receive between 37 and 47 per cent, depending on the scenario. Beef processors, feedlots and domestic retailers all receive much smaller shares of gross benefits, typically less than 5 per cent each. While the updated model provides a framework that reflects the current industry size and structure, the results are conditional on the specified price and quantity values, their underlying assumptions and calculations, and the parameter values used to represent industry responses to price changes.

Certain members of a population consciously and deliberately decide to take joint action to provide particular types of goods or services that are at least partly excludable and at least partly congestible because it is too costly to provide such goods individually. These goods are called club goods or collective goods. We first define some key concepts in club theory and public choice. This includes the prospects for determining the optimal level of membership of a club, how to determine the optimal level and range of provision of services by a club, and consideration of the dynamics of club membership. Then we examine the ways in which club theory can help provide an alternative approach to recognising and overcoming market failure in agricultural and food value chains. We note that useful insights can be gained by considering value chains as ‘latent clubs’. That is, they are systems that exist but which are either inactive or have not been fully developed, but which have the potential for improvement through collective action. If value chain members do exploit an opportunity to reap the rewards of collective action, then forming a club that comprises the whole chain or a subset of chain members offers an efficient organisation design to do so. We find that all of the calculus that has been identified for clubs can be applied to agricultural and food value chains. However, there are two particular issues that require further consideration. One is the nature of risk in agricultural value chains, and how it is related to member preferences, and the other is the form of collective action to be taken by agricultural value chains in the future.

In its 2008 Inquiry report into the impact of imports on the Australian pig meat industry, the Productivity Commission (PC) concluded that the main reason for the declining profitability of pig farmers in Australia was the higher costs of feed in the domestic market. Movements of the Australian dollar were also found to favour increased imports of pig meat. Based on analyses conducted with data up to 2007, the PC was unable to justify the need for Australia to activate the safeguard measures prescribed under the World Trade Organization (WTO) rules in order to temporarily protect the local pig industry. In a preceding paper, using exactly the same methods but with a dataset updated to 2013, the authors found that domestic production, rather than import volumes or prices, has been affecting the saleyard price and that there was not a strong causal effect between import volume or unit values and domestic production or saleyard price. Thus, based on a straightforward updating of the PC’s models, the PC conclusions were confirmed: it is unlikely that a new case could be made for the application of the WTO safeguard measures to the Australian pig meat industry. However, there were a number of statistical problems with the PC models that were simply updated for the previous analysis. In this paper, the PC models are re-specified and re-estimated to overcome these statistical problems. However, the misspecifications do not lead to any different implications of the results.

It is now 25 years since pig meat imports were first allowed into Australia. Pig producers have argued that import liberalization has caused the decline in the domestic production of pig meat and in the profitability of pig production. In its most recent Inquiry report in 2008, the Productivity Commission (PC) concluded that the main reason for the declining profitability of pig farmers in Australia was the higher costs of feed in the domestic market. Movements of the Australian dollar were also found to favour increased imports of pig meat. Based on analyses conducted with data up to 2007, the PC was unable to justify the need for Australia to activate the safeguard measures prescribed under the World Trade Organization (WTO) rules in order to temporarily protect the local pig industry. Since then the volume of pig meat imports into Australia has continued to rise so that by 2014 imported pig meat made up nearly 70 per cent of the total pig meat processed domestically and half of total consumption. The question addressed in this analysis is whether the current market scenario of substantial and continuing increases in pig meat imports in Australia could now justify the need for the WTO’s safeguard measures. The specific objective is to assess whether the PC’s earlier results still hold using exactly the same methods but with an updated dataset. Application of the first of the estimation techniques used by the PC suggests that domestic production has been affecting the saleyard price rather than import volumes or prices, while the second technique used by the PC and its respective post-estimation tests did not suggest a strong causal effect between import volume or unit values and domestic production or saleyard price. Thus, based on the PC’s models, it is unlikely that a new case could be made for the application of the WTO safeguard measures to the Australian pig meat industry. However, there are a number of statistical problems with the PC models that were simply updated for the current analysis. In a companion paper, the PC models are re-specified and re-estimated to overcome these statistical problems.

Imports of pig meat into Australia have grown rapidly in recent years and now total around 150 Kt pa (shipped weight). This is well over 300Kt in carcase weight terms, and makes up two - thirds of processed pig meat production and about half of domestic consumption. A recurring question is whether these trends have harmed the domestic pig industry and , if so, to the degree sufficient to warrant safeguard action under WTO regulations. While the Productivity Commission regularly examines the aggregate data to test this hypothesis, in this paper we investigate the value system that coordinates the imports of Danish pig meat into the Australian pig meat market, and we seek to identify which parameters impact this value system. We find that the Danish pig meat industry built its current position in the Australian market (about 40Kt pa, mainly middles for bacon) based on the following determinants of value: economies of scale in production, processing and logistics; uniform quality of the middles; high food-safety and veterinary standards ; the ability to supply a c ustomised product ”made to order”; and a long-term focus on the customer. Other conributing factors include Australians’ strong preference for ham and bacon which means that Danish suppliers can obtain higher prices in Australia for middles than they can elsewhere , and the recent strength of the $AU : the $AU/ Euro rate has fluctuated between 0.64 - 0.86 over recent years. Import prices set domestic prices for manufacturing type pig meat, and imported products are typically cheaper than domestically produced pig meat suitable for manufacturing. Given the latitude allowed by the arguably ineffective country - of - origin labelling laws, cost efficient manufacturers will use imported product. This has resulted in a consi derable degree of industry consolidation as well as a marked decline in the production of pigs more suitable for manufacturing pig meat in Australia. Those producers who are left have moved out of the processed market towards the fresh pork market and , to a lesser extent, towards export markets. We also examine one of the dominant value chains in this system and analyse how it achieved and maintains success.

The scoring of wines and the ratings of wineries is the source of much debate. In this paper we attempt to explain variations in winery ratings in Victoria by examining two winery rating systems, the winery 5-star ratings system of Halliday and the WineBoss version that modifies the Halliday system, to obtain a consensus industry rating from a variety of sources; in conjunction with a limited number of other data about the wineries that are rated. We use ordered logit models and odds ratios on a sample of rated Victorian wineries (291 in the Halliday sample and 331 in the WineBoss sample) to see which predictor variables increase the odds of a winery being in a higher-rated category. Wineries that are older, use a consultant winemaker and/or produce predominantly red wines are more likely to be in a higher-rated category than those wineries that do not; conversely, wineries that use a contract winemaker and/or are located in a number of particular regions of Victoria are more likely to be in a lower-rated category than those wineries that do not. All of these results are as expected and confirm previous research. However, neither the size of the winery in terms of output nor whether the winery has other revenue sources, such as a restaurant, has any significant correlation with winery rating. The paper concludes with some suggestions for further research.