Demands for Food Products Across the Development Spectrum: Application of a Rank Four Demand System

A rational rank four AIDS model (RAIDS) is used to estimate consumer demands for final goods and services in countries spanning the development spectrum. RAIDS is used as it provides more general price and expenditure responses. It also nests the Quadratic and non-liner AIDS models. RAIDS is estimated using the entire sample and sub-samples based on the country's level of per capita expenditure. Results indicate selection of nested functional form differs by sub-sample. AIDS is selected for the low per capita expenditure countries, sample is considered. Differences in parameter estimates manifest themselves in price and Engel elasticities. Such differences warrant caution when using global demand systems to undertake policy analysis.Consumer demand, model selection, demand system rank, Demand and Price Analysis,

Factors Influencing the Body Mass Index of Adults in Canada

This paper explores socio-demographic, economic and behaviour factors influencing body mass index (BMI) amongst 20 to 64 year old adults in Canada. BMI scores in Canada have increased, with gains stemming from disproportionate increases in female BMI. Econometric results indicate higher BMI scores for males, those born in Canada, those in food insecure homes and whites. Age-gender interactions suggest different patterns of BMI adjustment over the life of males and females; a pronounced inverse quadratic relationship between with age and male BMI is noted, while female BMI increases with age. Education, used as a gauge of inequality, is inversely related to BMI, while income has a muted effect. BMI is inversely related to level of physical activity, an effect which is more pronounced for females in Canada. BMI has an inverse quadratic relationship with smoking behaviour, with higher BMI amongst former smokers than daily, occasional and non-smokers. BMI appears to be inversely related to intensity of alcohol consumption.Obesity, BMI, Canada, Socio-demographic, Economic, Adults, Food Consumption/Nutrition/Food Safety, Health Economics and Policy, I10, J1,

PERSISTENCE OF PRICE-COST MARGINS IN THE U.S. FOOD AND TOBACCO MANUFACTURING INDUSTRIES: A DYNAMIC SINGLE INDEX MODEL APPROACH

Persistence of price-cost margins in the U.S. food and tobacco manufacturing industries is measured while accounting for price-cost margin risk. Direct measurement of persistence and of long- and short-run price-cost margin risk is accomplished by incorporating a partial-adjustment framework into the Single Index Model. Results indicate persistence of price-cost margins. Short-run margin risk is accounted for primarily by diversifiable risk. Long-run margin risk, which depends on systematic risk alone, is generally lower than the short-run measure. Factors influencing persistence and the systematic relationship between industry margins and a market index are explored.Demand and Price Analysis,

OPTIMAL ADVERTISING WITH TRADED RAW AND FINAL GOODS: THE CASE OF VARIABLE PROPORTIONS TECHNOLOGY

An optimal advertising investment rule is derived for a vertically related, competitive market with traded final and raw goods and processing sector characterized by variable proportions technology and nonconstant returns to scale. An equilibrium displacement framework incorporating conditional factor demands is used to account for the elasticity of substitution between agricultural and nonagricultural inputs to the marketing channel. Simulation for the Canadian beef industry in the post-WTO environment demonstrates how optimal advertising intensity ranges between 0.05% and 0.22% of farm-level market revenue.Marketing,

OPTIMAL COLLECTIVE INVESTMENT IN GENERIC ADVERTISING, EXPORT MARKET PROMOTION AND COST-OF-PRODUCTION REDUCING RESEARCH

Optimal investment rules are developed for a producer agency investing in domestic market generic advertising, export market promotion, and cost of production reducing research. Analytical results show fundamental difference in optimal investment rules when the producer group is assumed to maximise either producers' surplus or social surplus. Incorporating a constraint limiting total expenditure on the three activities substantially alters the structure of the optimal investment rules. Results highlight the importance of accounting for the financing mechanism when modelling optimal producer investment. Simulation of the optimal intensities suggests the proposed budget of the Canadian Beef Cattle Research Market Development and Promotion Agency under-estimates the optimal level of investment.International Relations/Trade, Marketing, Research and Development/Tech Change/Emerging Technologies,

Consumer acceptance and valuation of beef that has been tested for BSE

In light of the discovery of BSE infected cattle in Canada in 2003, a number of efforts have been undertaken to ensure the safety of beef produced in Canada. Recent discussion has focused on testing live cattle for the BSE prion. This paper investigates consumer acceptance and valuation of beef from live cattle that have been tested for BSE. Using data from an internet-­‐based survey of English speaking Canada, single bound estimates of WTP are measured. Expected WTP is 43 per cent for the entire sample, but ranges from 52 per cent for respondents with a high purchase intention to 28 per cent for those with less than a high purchase intention. Nevertheless, the proportion of respondents who were predicted to purchase a tested beef product was small, and ranged from 21 per cent for the high purchase intention respondents to eight per cent for the low/medium intention respondents. While respondents appear willing to pay for beef that has been tested for BSE, the market for such products is small.Consumer demand, beef, BSE, willingness to pay, Consumer/Household Economics, Marketing,

Canadian Consumer's Willingness-To-Pay For Pesticide Free Food Products: An Ordered Probit Analysis

A new crop production system has emerged in western Canada. Pesticide Free ProductionTM (PFPTM) emphasizes reduced pesticide use in conjunction with increased reliance on producer knowledge of agronomic practices that mitigate weed, insect and disease pressure. A contingent valuation survey was undertaken to determine if Canadian consumers would pay a premium for PFPTM food products. Over 65 percent of respondents would be willing to pay a one to ten percent premium relative to a conventional food product. Five percent of respondents would be willing to pay more than a 20 percent premium. Health and environmental concerns, willingness to switch grocery stores and youth are important characteristics of consumers who would be willing to pay higher premiums. Distribution channels geared towards health food stores (or health food centers within grocery stores) are likely targets for PFPTM food products.Demand and Price Analysis, Food Consumption/Nutrition/Food Safety,

What impact has food price inflation had on consumer welfare: a global analysis

The impact of rising global food prices on consumer welfare is investigated. A quadratic AIDS model is estimated using data spanning countries at various levels of economic development. Statistical comparison suggests the QUAIDS model is preferred over the non-linear AIDS model. Estimated parameters are used to calibrate a QUAIDS indirect utility function and base utility for welfare analysis. Compensated variation associated with recently observed food price inflation for different foods in different income cohorts of countries is calculated. Per capita compensated variation increases with per capita expenditure. However, per capita compensated variation expressed as a percent of per capita expenditure falls as one moves from less developed to more developed countries. Aggregate compensating variation associated with annualized food price inflation between 2005 and 2008 is estimated at US$515 billion globallyConsumer/Household Economics,

The Effects of Relative Price and Health Information on Derived Demand for Sweeteners in the U.S. Food Processing Industry

The purpose of the study is to examine the differential effects of relative prices and diet-health link information on the degree of substitution between corn and cane sugar in the U.S. food processing sector. Our results suggest that the nature of the relationship between cane and corn sugar is complementary and time-varying; and the elasticity of substitution is more responsive to changes in relative prices than to changes in health information.Derived Demand, Sweeteners, Relative Prices, Health Information, Trade offs, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, D21, I18, L66,

MISASSESSED RISK IN CONSUMER VALUATION OF FOOD SAFETY: AN EXPERIMENTAL APPROACH

This study estimates Canadian consumers' willingness to pay for food safety improvements and identifies systematic misassessments of food-borne risks. Non-hypothetical experimental auctions were used to elicit consumer valuations of food safety improvement. Consistent with behavioural research, results suggest that subjects generally overestimate the likelihood of becoming ill due to food-borne disease relative to scientifically-estimated odds. Subjects were willing to pay a positive amount to reduce food-safety risk. Risk reductions' valuations increased with higher initial risk, supporting arguments of diminishing marginal value for risk reductions.Food Consumption/Nutrition/Food Safety,