Do consumers benefit from private label development?

In the European food sector private labels represent a relevant and increasing share of total sales. Thus, national brands need to adapt their marketing strategies to deal with this growing competition. Focusing on price strategies, recent theoretical papers conclude that private label development should cause a decrease in the price of national brands, while some empirical studies do not support this prediction. The aim of this study is to explore this empirical relationship for the Italian food retail sector, which is of special research interest, since it has undergone a dramatic change in the last 10 years. Using retail sales data, we build time series of market shares of prices of national brands and private labels for different dairy products and we study how prices of national brands react to private label growth. We find that, for most products, the negative impact of private label development on national brand prices is confirmed, and this may be mainly due to the difficulties in implementing product differentiation strategies by national brand manufacturers. A relevant exception is the hard discount channel, probably because its success is attracting an increasing number of national brands.private label, pricing, retail sector, dairy products., Consumer/Household Economics, Marketing,

Modelling the Impact of the CAP Reform on Farm Investments

In this paper we evaluate empirically the impact of policies on farm investment and output decisions, considering risk-averse farmers making inter-temporal choices on current and future profits. We refer specifically to the recent reform of the CAP, while estimation and simulation results are carried out on a FADN sample of Italian arable crop farms. The main message of the paper is that a policy change that shifts resources from price support to direct payments tend to consistently reduce farm investments, mainly as a result of the increased output price volatility, which increases the level of uncertainty faced by farmers. However, this is not clearly reflected in a negative impact on farm output.investments, Common Agricultural Policy, decoupling, uncertainty, Agricultural and Food Policy, Q18,

Modelling Agricultural Commodity Markets under Imperfect Competition

In this paper, we develop a model that explains the exporters’ behaviour in international commodity markets considering explicitly the case of an imperfectly competitive structure of these markets. More specifically, drawing from the imperfect competition and trade literature, we derive price transmission equations between producer and consumer prices and between producer and export prices that can be included in large commodity models in order to verify how results of these models change assuming the imperfect competition hypothesis. The results obtained carrying out a simple simulation exercise, with two competing exporting countries and one importing region, show the relevance of assuming imperfect competition in commodity markets.Imperfect Competition, State Trading Enterprises, Policy simulation, Cereal markets, International Relations/Trade, Marketing, Q12, Q17, Q18,

MODELLING THE 1992 CAP REFORM: DEGREE OF DECOUPLING AND FUTURE SCENARIOS

We model CAP reform in order to measure the response of production and land allocation to compensatory payments. The application refers to a sample of farms in Italy. The model allows us an analysis of the degree of decoupling and a simulation of the impact of the "Agenda 2000" proposals.Land Economics/Use,

MODELLING THE CAP ARABLE CROP REGIME UNDER UNCERTAINTY

In this paper we evaluate empirically the absolute and relative size of risk-related effects of a farm policy change, with specific reference to the CAP arable crop regime. We adopt a dual framework under non linear mean-variance risk preferences, which incorporates the impact of price uncertainty in the specific decision-making structure of EU arable crop producers. A system of output supply, input demand and land allocation equations has been estimated on a sample of Italian specialised arable crop farms, which allows us to derive elasticities with respect to all the relevant exogenous variables, including those related to risk. The simulation of the impact of an Agenda 2000-type of shock confirms that the size of risk effects is important in evaluating farmer's output responses. This may have important implications for the revision of "green box" criteria in the context of the current WTO negotiations. Keywords: Risk effects; Common Agricultural Policy; Decoupling; Duality.Risk effects, Common Agricultural Policy, Decoupling, Duality., Agricultural and Food Policy,

The impact of pillar I support on farm choices: conceptual and methodological challenges

In the near future the CAP will continue to be structured around two pillars. In the first pillar the main instrument for producers’ support is the decoupled Single Farm Payment. In this paper we review the methodological framework for analysing decoupled payments in models of agricultural production. Market and technological uncertainty, credit constraints, farm household choices involving extra-agricultural decisions, policy uncertainty and long-run impact of decoupling on investment and land values are the relevant issues that should be pursued by methodological and empirical analysis. Future research should refine the analysis of decoupled payments, mainly trying to provide results that can be useful for policy simulation, to bridge the gap between analysis at the individual level and sector policy models.decoupled payments, agricultural production models, Common Agricultural Policy, Agricultural and Food Policy, Q12, Q18,

Consumers’ willingness to pay for food safety: the case of mycotoxins in milk

European statistics show that one of the most widespread source of health risks related to food is mycotoxins. The objective of this paper is to evaluate the Italian consumers’ perception of the mycotoxins’ risk and, more specifically, their willingness-to-pay (WTP) for a hypothetical bottle of milk obtained by cows in which the feed ration contains maize certified for the ‘good practices’ that reduce such risk. For this purpose, a web-based stated choice (SC) experiment involving a representative sample of 973 Italian consumers has been carried out and WTP has been measured using the panel data version of a Random Parameters Logit (RPL) model. The results show that Italian consumers are willing to pay a rather high average price premium for “reduced-micotoxin” milk. This premium becomes even higher for female, middle-age and low-education consumers.Food safety, Mycotoxins, Willingness to pay, Mixed logit, Agricultural and Food Policy, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Health Economics and Policy, C35, D12,

Panel Data Estimation Techniques for Farm-level Data Model

Econometric models wishing to estimate relevant parameters for agricultural policy analysis are increasingly relying on unbalanced panels of farm-level data. Since in the agricultural economics literature such models have often been estimated through simplified approaches, in this paper we try to verify whether the adoption of more sophisticated panel data techniques may impact the estimation results. For this reason, the policy model by Moro and Sckokai (1999) has been reestimated using techniques recently developed in the econometric literature. The preliminary results show a strong impact on the estimations. This seems to suggest that the adoption of proper panel-data techniques is likely to be very important in order to obtain reliable estimates of some key policy parameters.Agricultural policy, Panel data, Systems of equations, Agricultural and Food Policy,

A Partial Equilibrium Model of the Beef and Dairy Sector in Italy Under Imperfect Competition

In this paper we present a partial equilibrium model for the bovine sector (beef and dairy) in Italy, which can be used for simulation and forecasting. The structure of the model follows the vertical chain of the beef and dairy sector, allowing trade of both agricultural raw materials and final products. Since the processing and retailing stage is characterised by an imperfectly competitive structure, the model accounts for market power in modelling the price transmission mechanism. This provides further insights on the vertical transmission of shocks, both at the final level (i.e. the BSE crisis) and at the farm level (i.e. agricultural policy reform).simulation models, policy analysis, imperfect competition, beef, dairy, Livestock Production/Industries,

FARM-LEVEL DATA MODEL FOR AGRICULTURAL POLICY ANALYSIS: A TWO-WAY ECM APPROACH

Econometric models wishing to estimate relevant parameters for agricultural policy analysis are increasingly relying on unbalanced panels of farm-level data. Since in the agricultural economics literature such models have often been estimated through simplified approaches, in this paper we try to verify whether the adoption of more sophisticated panel data techniques may impact the estimation results. For this reason, the policy model by Moro and Sckokai (1999) has been re-estimated using techniques recently developed in the econometric literature. The preliminary results show a strong impact on the estimations. This seems to suggest that the adoption of proper panel-data techniques is likely to be very important in order to obtain reliable estimates of some key policy parameters.Agricultural policy, Panel data, Systems of equations, Agricultural and Food Policy, Research Methods/ Statistical Methods,