Does the Data Support Ikerd’s “Economic Fallacies of Industrial Hog Production”?

In one of the most comprehensive studies of U.S. hog production, McBride and Key (2003) found that although the cost of producing hogs declines with increasing farm size across producer types (farrow-to-finish, farrow-tofeeder, and feeder-to-finish), the distribution of costs is such that many small and medium-sized operations produce at a cost that is competitive with industrial-scale operations. The study attributed the cost competitiveness to managerial ability, which is likely to be as important as size economies lowering the costs of hog production (p. 18). The same view is shared by Ikerd (2001), a well-known advocate of small hog farms. He reports that farm records have consistently indicated that 20-40 percent of family hog farms are as cost-efficient as are the large-scale, corporate hog operations. So even with current production methods, a well-managed family hog operation can compete with the large-scale corporate hog operations

Is the world converging to a ‘Western diet’?

Objective: To test the nutrition transition hypothesis of global dietary convergence to a ‘Western diet’. Design: Consumer-waste-adjusted FAO Food Balance Sheets are used to construct for each country a Western Diet Similarity Index (WSI), expressed as a ratio of calories from animal-sourced foods, oils, fats and sweeteners to total per capita calories. β-Convergence and associated speed are estimated by growth regressions using 1992–2013 panel data. Speed of convergence, a non-linear function of income per capita, globalisation and urbanisation, determines the steady-state or long-term global WSI. The long-term global WSI is compared with the WSI of the group of countries with the highest population-weighted average WSI. The group, determined by K-means cluster analysis, consists of sixteen Western countries. Setting: Worldwide. Participants: Not applicable. Results: Strong evidence of global dietary convergence at a speed driven by income per capita, globalisation and urbanisation with a long-term WSI of 38 %. When compared with the WSI of Western countries (68 %), the hypothesis of global dietary convergence to a Western diet is rejected. Conclusions: The nutrition transition is acting in two opposing directions. Some countries experienced positive and others negative WSI growth, slowing down the transition to a Western diet in the long run. Policies to further slowdown the transition by some countries to unhealthier dietary patterns are as important as policies to further speed up the transition by other countries to healthier ones

The Effect of Concentration in the

Whether rising concentration in the food processing industry leads to higher or lower food prices depends on the relative strengths of the market power effect (higher food prices), and the efficiency effect (lower or higher production costs) associated with rising concentration

Estimates and Interpretation of Income Elasticities of Demand for Food Products

The income elasticity of demand for a product measures the responsiveness of demand for the product to a change in disposable (after tax) income. To get the measure, one divides the percentage change in demand for the product by the percentage change in income. For example, if the demand for butter fell by 2 percent when incomes rose by 5 percent, the income elasticity of demand for butter is – 0.4 percent. If demand for butter went up by 5 percent, the income elasticity of demand would be 0.4. If instead it went up by 2 percent, the income elasticity of demand is 1. Most products have positive income elasticities of demand, meaning that as people become better off they buy more of it. Products that are consumed less as people become better off have negative income elasticities

Slotting Allowances and Price-Cost Margins: A Note

It has become common practice for retail grocers to charge grocery manufacturers a slotting allowance for placing products on the retail shelf. Manufacturers view the allowance as anti-competitive. Retailers view it as compensation for the risks associated with stocking new products. The largely theoretical literature on the subject is consistent with both views. This article proposes an empirical model to test the effect of slotting allowances on performance, and discusses if and how the model can be tied to the qualitative predictions of existing theoretical literature

Slotting Allowances and Price-Cost Margins: A Note

It has become common practice for retail grocers to charge grocery manufacturers a slotting allowance for placing products on the retail shelf. Manufacturers view the allowance as anti-competitive. Retailers view it as compensation for the risks associated with stocking new products. The largely theoretical literature on the subject is consistent with both views. This article proposes an empirical model to test the effect of slotting allowances on performance, and discusses if and how the model can be tied to the qualitative predictions of existing theoretical literature

Is Mandatory Price Reporting Good for the Cattle Industry?

On April 2, 2001 the Agricultural Marketing Service (AMS) implemented the Livestock Mandatory Price Reporting Act, mandating collection and reporting of transaction data for cattle, swine, lambs and other livestock products. What prompted the Act, which was pushed through Congress by some livestock organizations, was concern over price discovery in the light of increased concentration in the livestock industry and increased use of captive supplies. As more and more animals are transacted through contracts, the argument goes, less and less price information becomes available for independent livestock producers

Is Mandatory Price Reporting Good for the Cattle Industry?

On April 2, 2001 the Agricultural Marketing Service (AMS) implemented the Livestock Mandatory Price Reporting Act, mandating collection and reporting of transaction data for cattle, swine, lambs and other livestock products. What prompted the Act, which was pushed through Congress by some livestock organizations, was concern over price discovery in the light of increased concentration in the livestock industry and increased use of captive supplies. As more and more animals are transacted through contracts, the argument goes, less and less price information becomes available for independent livestock producers

Testing for Oligopoly and Oligopsony Power

This paper extends the conjectural approach in industrial organization to the analysis of imperfections in output and factor markets simultaneously. Starting from the specification of a production function, the econometric analysis is based on the formulation and estimation of a simultaneous equation model consisting of a production function, first order conditions associated with factor employment, and two conjectural elasticities to parametrize the industry's oligopoly and oligopsony equilibria. As an example, we provide an application to the U.S. meat packing industry. Our results suggest that the industry excercised market power in both the output (meat) market and the factor (live animals) market.Industrial Organization,

IDENTIFYING IMPLICIT COLLUSION UNDER DECLINING OUTPUT DEMAND

The "trigger price" oligopoly model is used to develop a test for oligopolistic as well as oligopsonistic conduct by observing how an industry responds to unexpected declines in output demand. The hypothesis that U.S. beef packers maintain cooperative pricing strategies is rejected.Demand and Price Analysis,