Research and Publishing: Relevance and Irreverence

The value, relevance, and efficacy of conducting and publishing research has been widely debated throughout the agricultural economics profession. On the one hand, some argue that the research process creates little value and directly competes with teaching/outreach output. On the other hand, others argue that research provides answers to important questions, improves human capital, and complements teaching/outreach activities. I argue that the research and publishing process develops human capital, improves the quality of teaching/outreach, reduces bias, generates new ideas, improves societal welfare, creates innovation, and is essential for public policy debate.publishing, research, Research and Development/Tech Change/Emerging Technologies,

STRATEGIC BUSINESS MANAGEMENT PRINCIPLES FOR THE AGRICULTURAL PRODUCTION SECTOR IN A CHANGING GLOBAL FOOD SYSTEM

Agricultural industries, producers, and producer organizations are often counseled to develop strategies or strategic alliances to address changing market and political environments. Over the next twenty years, production agriculture will experience fundamental changes, which, because of its rapidity and permanence, could surpass the tremendous changes that have occurred over the past fifty years. As the structure of agricultural production changes, so will the role and scope of agricultural producer organizations. Surviving organizations will be forced to fundamentally restructure their mission, goals, and purpose. Consequently, the application of strategic business management concepts will be increasingly more important for these groups over the next decade than at any previous time. The purpose of strategic business management is to build a strategic (or competitive) advantage over rival firms (or organizations) which can lead to long-term above-average returns for a firm in an industry. In general, successful companies employ one of three strategies: (1) a low-cost strategy, (2) a differentiation strategy, or (3) a focus strategy. Each of these strategies provides direction for firm-level decision-making and implicitly develops entry barriers to protect the developed competitive position. In addition, it is essential for a firm to consider strategies to defend its competitive position, lest it be overtaken by other firms who adopt similar market strategies. The best strategy is ultimately a function of consumer demand and the product/service attributes, core competencies, and managerial skills of each company. However, the worst strategy is being "stuck-in-the-middle," that is, being unable to compete with others on the basis of cost, value, or market specificity. In any case, rivals may undercut prices, maintain market share, or become the supplier of choice whenever change occurs in an industry. In addition, strategies must be refined as market conditions change. Over the next twenty years, farms and ranches will gravitate toward one of two production structures. The first type of production structure will be similar to many current farms and ranches in that undifferentiated commodity products will continue to be produced. Only low-cost producers will survive in this sector. A second category of producer will also evolve. Farms in this category will produce differentiated, identity-preserved products that focus on certain product attributes and consumer demands. Strategic business management abilities will be especially critical for farms that gravitate toward identity-preserved production. Agricultural producer organizations have historically performed the role of providing a unified voice in relation to commodity programs and other agricultural policies and as a conduit for information among producers. Trade liberalization, an increasingly global food system, the decoupling of commodity program benefits from production, and advances in biotechnology and information technology will alter the focus of agricultural producer organizations. Surviving organizations will be those who change their primary objective from lobbying for traditional commodity programs to providing resources and services needed by producers to cope with change and to expand profit opportunities. Such organizations will continue to provide valuable lobbying efforts with respect to a new range of issues, such as intellectual patent rights, trade liberalization negotiations, contract law, and environmental awareness. In addition, new roles for agricultural producer organizations will also develop. These will include performing clearinghouse functions for biotechnology information, facilitating strategic alliances and farmer-owned cooperative ventures, and developing new educational programs designed to improve members' strategic and risk management capabilities with respect to specialty food and fiber production. Some producer organizations may provide risk transfer functions for members, serve as contracting agents to facilitate identity-preservation, and organize production contracts that ensure supply availability of specialty food and fiber products. The combination of agricultural industrialization, trade liberalization, information technology, decoupled farm programs, environmental concerns, and consumer demands for food quality, safety, convenience, and nutrition will lead to unprecedented change in the agricultural production and the food and fiber processing and distribution sectors. Successful farm and ranch managers and commodity organizations are likely to be those who develop strategies which allow them to survive and prosper in this changing environment.Production Economics,

TRENDS IN U.S. WHEAT-BASED FOOD CONSUMPTION: NUTRITION, CONVENIENCE, AND ETHNIC FOODS

This study identifies U.S. consumers' use of food nutrition labels on wheat-based foods; consumer attitudes toward the importance of taste, price, and nutrition in choosing wheat-based snack foods; and consumer knowledge of Middle-Eastern wheat-based foods. A survey of U.S. primary grocery shoppers indicated that most respondents believed it was important that their diets contained wheat-based food products. A majority of respondents indicated that fat content was the most important item on food nutrition labels when making a wheat-based food purchase decision. A majority of respondents indicated that taste was the most important factor when making wheat-based snack food purchases. Most respondents were not familiar with Middle-Eastern wheat-based foods.Food Consumption/Nutrition/Food Safety,

What is the Value of Cattle Quality Information? Evidence from the Montana Beef Network

Production Economics,

ENTREPRENEURIAL RISK-TAKING VERSUS GROWTH MANAGEMENT: THE CASE OF PREMIER TECHNOLOGY, INC.

Agribusiness,

Wholesale-Retail Marketing Margin Behavior in the Beef and Pork Industries

An econometric model is used to estimate real wholesale-retail marketing margins for beef and pork. From 1970 to 1998, these margins increased by 27% and 149%, while farm-wholesale margins declined. Wholesale-retail (WR) marketing margin increases have caused livestock producers to focus on the retail sector as a contributor to declining real livestock prices. Increases in WR margins may be related to increased demand and costs of value-added food products/services as well as increased market concentration in the retail grocery sector. Results indicate that retail factors, and to a lesser extent meat processing factors, significantly increased WR margins and decreased livestock prices.livestock prices, retail concentration, retail costs, wholesale-retail marketing margins, Demand and Price Analysis,

THE EFFECTS OF U.S. MEAT PACKING AND LIVESTOCK PRODUCTION TECHNOLOGIES ON MARKETING MARGINS AND PRICES

Real livestock prices and farm-wholesale marketing margins have steadily declined over the past 20 years. Studies examining the causes of these declines have generally failed to account directly for technological change in livestock production and red meat slaughtering. We estimate reduced-form models for beef and pork farm-wholesale marketing margins and cattle and hog prices that include specific measures of technological change. Empirical results indicate cost savings generated by improved meat packing technologies have reduced real margins and positively influenced real cattle and hog prices. However, technological change embodied in cattle production weights has led to substantial declines in real slaughter cattle prices. Nonetheless, the net effect of improved meat packing technology has been to increase cattle price by $1.75/cwt and reduce the farm-wholesale beef marketing margin by 22.8 cents/lb.Demand and Price Analysis,

Technology Changes in the U.S. Beef and Pork Sectors

Research and Development/Tech Change/Emerging Technologies,

IMPACTS OF THE URUGUAY ROUND TRADE AGREEMENT ON U.S. BEEF AND CATTLE PRICES

The Uruguay Round trade negotiations completed in April 1994 reduced beef trade barriers. Trade barriers for beef products have historically been significant. The Uruguay Round essentially converts many nontariff barriers (quotas) to tariffs (tariffication), includes safeguards for import surges, establishes minimum access commitments, reduces domestic subsidy supports, and provides special tariff allowances for developing countries. These provisions, commensurate with a growing world demand for animal source proteins, will likely increase U.S. fed beef exports and ground beef imports. The United States is a major world producer as well as exporter of beef. In 1996, the United States represented 35 percent of world beef production (ranked first) and 28 percent of world beef exports (ranked second to Australia). U.S. quantity share of the annual world beef export market averaged 5.9 percent between 1980 and 1994 but has increased in recent years. In terms of beef and veal, the United States exports primarily higher-value beef cuts. The United States is the largest single-country beef importer. The U.S. annual quantity share of the world fresh beef import market averaged 16.5 percent between 1980 and 1994. U.S. beef imports primarily consist of lower-quality, manufacturing-grade (ground) beef which is primarily used by the fast-food service industry. The Uruguay Round Agreement will reduce trade restrictions gradually over an implementation period (1995–2000). Specifically, Japan is to reduce its beef tariffs and South Korea will increase its beef import quota by the year 2000. In 2001, South Korean import quotas will be replaced by a tariff. The European Union has agreed to reduce quantities of subsidized exports. In 1995, the United States replaced import quotas with a tariff and a tariff-rate quota. The reduction in trade barriers will increase U.S. beef imports and exports. Because U.S. beef imports are primarily ground beef and exports are primarily table cut beef, beef trade liberalization will have different impacts on producers and consumers of these products. In general, increased imports decrease the price of ground beef and increase per capita ground beef consumption. However, increased beef imports reduce nonfed cattle prices and slaughter. Increased exports cause the prices of table cut beef, fed cattle, and feeder cattle to increase. Per capita consumption of table cut beef declines slightly, and fed cattle slaughter and feeder cattle production both increase. Researchers have estimated that the Uruguay Round Agreement could increase U.S. beef imports by 6–19 percent and U.S. beef exports by 10–75 percent over 1990–1994 average levels. For example, the ground beef price could decline by $0.01–$0.04/lb from average 1990–1994 levels because of increased imports. Thus, the price of nonfed cattle (which generally produce ground beef) could decline by $0.71–$2.55/cwt. Conversely, because the United States exports primarily table cut beef, the table cut beef price in the United States could increase by $0.01–$0.09/lb. Increased foreign demand for table cut beef would cause the price of boxed beef to increase by $0.05–$0.10/lb and the price of fed cattle to increase by $0.62–$5.46/cwt relative to average prices received during the 1990–1994 period. B extension, increased demand for fed cattle would increase feeder cattle price by $0.61–$5.40/cwt over average prices received during the 1990–1994 period.GATT, beef trade, cattle prices, Q0, International Relations/Trade, Demand and Price Analysis,

Economic Impacts of the Zero Tolerance Directive on the Cost Structure of Beef Packing Companies

Agribusiness, Livestock Production/Industries,