Competition in the food marketing chain

Competition in the Australian food marketing chain is of continuing concern, but little evidence is available to guide policy debate. In a search for broad guidelines, the theoretical and empirical evidence is reviewed and the recent report of the Joint Select Committee on the Retailing Sector is examined. Then publicly available data on several food groups are used to test for evidence of persistent market power. The purchasing behaviour of the grains and oilseeds processing sector is found to warrant more detailed attention. A possible research agenda and a call for greater attention to data requirements complete the article.Agribusiness,

Sonar behaviour in non-terrestrial ocean exploration

A goal for a future Europan payload is to determine the extent of the postulated sea, aspects of acoustic remote sensing are discussed with a view to operating a sonar in such an subsurface ocean

Three-dimensional cultured glioma cell lines

Three-dimensional glioma spheroids were produced in vitro with size and histological differentiation previously unattained. The spheroids were grown in liquid media suspension in a Johnson Space Center (JSC) Rotating Wall Bioreactor without using support matrices such as microcarrier beads. Spheroid volumes of greater than 3.5 cu mm and diameters of 2.5 mm were achieved with a viable external layer or rim of proliferating cells, a transitional layer beneath the external layer with histological differentiation, and a degenerative central region with a hypoxic necrotic core. Cell debris was evident in the degenerative central region. The necrotics centers of some of the spheroids had hyaline droplets. Granular bodies were detected predominantly in the necrotic center

Integrating Econometric Models of Australia's Livestock Industries: Implications for Forecasting and Other Economic Analyses

The perceived value of integrating small partial- equilibrium structural models of individual livestock industries into a comprehensive single-sector model is to take advantage of the interrelationships that are usually expressed by cross elasticities on both the supply and demand sides of these industries. Model integration should provide a more realistic representation of the livestock industries and an improved mechanism for industry analyses. However, model integration could also lead to increased error in model simulation that could reduce the value of the larger model for those purposes. Using forecasting as an example application, this paper investigates how the increased endogenisation of cross-commodity relationships in alternative structural econometric models of the Australian livestock industries affects the simulation performance of the larger model. Forecast accuracy and encompassing tests were used to investigate the value of model integration by comparing the accuracy of the models' forecasts and by testing for differences in the information contained in those forecasts. The general result was that combining the models did not adversely affect the forecasts from the integrated model and the encompassing tests indicated that the forecasts of the integrated and single models contained different information. Because the forecasts of the integrated model were not impaired relative to the single model forecasts, model integration was considered to be useful for forecasting and other types of economic analysis in the livestock industries.Structural econometric models, Model integration, Forecasting, Economic analysis, Livestock Production/Industries,

Pricing-to-market in NSW rice export markets

The Ricegrowers’ Cooperative Limited is a single‐desk seller of NSW Japonica rice on the export market. Confidential monthly price data supplied by the Cooperative were used to examine ‘pricing‐to‐market’ in four of its major export markets. The hypothesis of a competitive market was rejected. The Cooperative has been able to vary mark‐ups over different markets and with respect to the importer’s currency in each market. The exchange rate results in particular suggest that the Cooperative has been able to exercise market power to obtain price premiums.Crop Production/Industries, International Relations/Trade,

Portfolio Diversification, Leverage, and Financial Contagion

This paper studies the extent to which basic principles of portfolio diversification explain "contagious selling" of financial assets when there are purely local shocks (e.g., a financial crisis in one country). The paper demonstrates that elementary portfolio theory offers key insights into "contagion." Most important, portfolio diversification and leverage are sufficient to explain why an investor will find it optimal to significantly reduce all risky asset positions when an adverse shock impacts just one asset. This result does not depend on margin calls: it applies to portfolios and institutions that rely on borrowed funds. The paper also shows that Value-at-Risk portfolio management rules do not have significantly different consequences for portfolio rebalancing than a variety of other rules. Copyright 2000, International Monetary Fund

Livestock Farming Systems in the Northern Tablelands of NSW: An Economic Analysis

The Northern Tablelands region of New South Wales covers an area of approximately 3.12 million hectares including 2.11 million hectares occupied by some 2300 agricultural establishments producing agricultural commodities valued at more than $220 million. Sheep and wool production and cattle production are the dominant agricultural enterprises. In this Report, a whole-farm model of a representative livestock farming system in the Northern Tablelands is developed. Whole-farm economic models of the relevant farming system are a useful first step in understanding the nature of the biological and economic constraints facing producers in their decision making in relation to their choices of inputs and outputs. Such models are also useful in relation to more general concerns such as the expected impacts of investments in new technologies applicable to grazing systems, or of external events such as drought conditions or a depreciation in the exchange rate. A whole farm budget for a representative farm includes a statement of assets and liabilities, based upon estimates of the various capital items including land, livestock and plant and machinery and farm structures. There is also an annual operating budget that includes the cash income and costs associated with each of the farm enterprises as well as the fixed costs incurred for running the farm over the year to derive the farm cash income. Allowances for depreciation and interest costs are deducted from farm cash income to determine farm operating surplus. No family labor allowance is subtracted, so the resulting farm operating surplus represents a return on owner-operated labor, management and farm assets. Pasture costs are not apportioned to the specific animal enterprises and therefore appear as separate negative gross margins. Similarly, supplementary feeding costs and fodder conservation activities are listed as a separate negative gross margin. A representative farm model of the Northern Tablelands livestock farming system was developed based on ABS and ABARE data on the relevant industries, from simulations with a linear programming model, and from discussions with local graziers and extension officers. The farm comprises 920 ha of which about half is native pasture and about half is introduced pasture. This farm runs a flock of 1,108 first-cross ewes, a flock of 1,732 Merino wethers and a 127 cow herd producing 18 month old steers suitable for the heavy feeder steer market. Using average prices and costs over an extended period of time, the annual operating budget for the farm shows a total gross margin of$86,191 and total overhead costs for the year of $24,720. This results in a farm cash income of$61,471 and a farm operating surplus of $37,471 after depreciation and interest costs. The statement of assets and liabilities shows total assets of the farm to be$1,498,060 and liabilities of $100,000 which equates to an equity level of 93.3 per cent. The farm operating surplus achieved on this model farm as a percentage of the owner's equity is 2.7 per cent. This represents a return on operator and family labor, management and equity. Low returns to equity are typical of Australian broadacre agriculture. Other scenarios examined included whole-farm budgets based on 2002 actual market prices and on 2003 expected prices. Given the relatively high prices for sheep relative to cattle in these years, the representative farm would be more profitable running 1,558 first-cross ewes and 3,595 Merino wethers. Such an enterprise mix would achieve a farm total gross margin of$165,736. After overhead costs, depreciation and interest costs there would be a farm operating surplus of $111,818. Based on equity totaling$1,472,870, this operating surplus would represent a business return on operator labor, management and equity of 8.1 per cent. However, while the Northern Tablelands representative farm model would suggest that greater profits could be achieved from changing enterprises as commodity prices change, in practice various biological lags, infrastructure, financial and management constraints prevent regular changes in farm enterprises. In fact, diversification amongst a variety of farm enterprises between various sheep and cattle enterprises as evidenced in the Northern Tablelands is one management response to this commodity price variability. A hypothetical new improved-pasture technology suggested by researchers, involving the selection of pasture varieties with improved winter pasture growth, was examined using the whole-farm model. If the existing 450 ha of improved pasture was replaced by a new variety that gave a 10 per cent increase in winter pasture growth, this would result in a 4.9 per cent increase in farm total gross margin. This corresponds to an increase in farm cash income of 6.9 per cent. These improvements in the profitability of the representative farm would be achieved by increasing the investment in first-cross ewes and in cows producing heavy feeder steers (by 3.5 per cent and 7.8 per cent respectively) and by decreasing the Merino wether enterprise from 1,732 to 1,672 wethers. This indicates that the prime lamb and cow enterprises, under the current assumptions of the model, are better able to utilize the farm resources available given an increase in winter pasture growth. The main conclusions from the analysis are that: Returns to equity are quite low in the Northern Tablelands livestock farming system; variable commodity prices, largely determined in world markets, result in variable levels of profitability of the farming system over time; The optimal farm plan is quite sensitive to small changes in the relative prices of the different outputs produced; In practice farm plans do not change very much as prices change, with most farms maintaining a range of cattle and sheep enterprises; Thus a "representative year" is a more realistic basis for assessing potential changes in farm plans; and new technologies can potentially have large impacts of farm profits and on the mix of resources used and outputs produced.Industrial Organization, Production Economics,

Examining long-run relationships between Australian beef prices

Cointegration and impulse response analyses are used to investigate the short‐run and long‐run dynamics of the Australian beef market. The aim of this study is to determine whether long‐run relationships existed between Australian beef prices at the farm, wholesale and retail levels. Based on monthly data from 1971 to 1994, the results show that all three prices considered are cointegrated. Furthermore, the wholesale price is found to be weakly exogenous. The latter result might be an indication of market inefficiency due in part to price levelling often practised in the beef marketing system.Demand and Price Analysis, Livestock Production/Industries,

Farm-level Economic Evaluation of Net Feed Efficiency in Australia’s Southern Beef Cattle Production System: A Multi-period Linear Programming Approach

Selection of beef cattle for increased net feed efficiency is a current major focus for research. At present the trait seems to be more apparent in Australia’s southern beef production system which is dominated by mixed farming enterprises. Farm-level evaluation of net feed efficiency should take account of the farming system for which it is proposed along with the dynamic nature of genetic selection. Gross margin, linear programming and multi-period linear programming approaches to evaluation of the trait at the farm-level using a representative farm are compared. Implications of the trait for researchers and beef producers are identifiedfarm-level evaluation, genetic traits, linear programming, Farm Management,