Price Linkage and Transmission between Shippers and Retailers in the French Fresh Vegetable Channel

The existence and the kind of asymmetry that characterize the relationships between shipping-point and retail prices are investigated for two major French fresh vegetables: tomatoes and chicory. Weekly data allow considering these relationships at very detailed levels such as region or supermarket chain. Moreover, the methodology proposes an implicit treatment of asymmetries in price transmission by using recently developed threshold cointegration methods. Our results do not give evidence to the widespread assertion that shipping-point price increases are completely and rapidly passed by middlemen on to consumers while there is a slower and less complete transmission of shipping-point price declines. As already emphasized in the literature, these results may be linked to the perishable nature of the two considered fresh vegetables.Agribusiness, L66, L81, Q13,

Imperfect competition in the fresh tomato industry

In this paper, we analyse the market power of the retail industry in the French tomato market. Following the methods developed in the New Empirical Industrial Organization, we develop a structural model of this industry. The analysis is based on detailed data on final consumption and prices at both shipper and consumer levels for two types of tomatoes in France. The structural model is composed of a system of demand equation and supply equation. Supply equation includes a term that represents the market power of the retail sector. We use different models of demand in order to test the robustness of our results. We show that i) elasticity of demand varies during the year ii) the retail sector exercise only a "moderate" market power iii) the estimated mark-up of the retail sector varies from 0 to about 0.13 €/kg depending on the period iv) the mark-up is thus small (3% in average) as compared to the consumer price which is mainly explained by cost of production. We conclude to a moderate exercise of market power of the retail sector in this sector.Market power, Imperfect competition, Fresh products, Crop Production/Industries, Demand and Price Analysis, Marketing, L13, Q13, L66, L81,

Quality Labels and Firm Survival in the Food Industry

Both industry and firm characteristics influence the survival of a firm in an industry over time. Aging, size, structure are factors often discussed in the literature, but public intervention effects - through public quality labeling for example - may also have an effect that is examined here. We use data on French firms producing cheese under public quality label or not over the period 1990-2006. We perform a nonparametric estimation using Kaplan-Meier estimators as well as proportional hazard rate models to assess the impact of such factors on firms survival. Our results confirm existing finding on firm survival determinants. We also shed light on the effect of public intervention into that industry. More precisely, our focus on public quality labeling in the French cheese industry shows that quality label reduces the risk of exiting for firms and more particularly for small firms. In other words, public intervention in this industry is well designed to increase the competitiveness of small firms enabling the coexistence on the market of both small and large firms.Agribusiness,

Nonparametric vs parametric binary choice models: An empirical investigation

Research Methods/ Statistical Methods,

Imperfect Competition in the Fresh Fruit and Vegetable Industry

Do retailers exert market power in the fresh fruit and vegetables markets? In the EU countries, as the retail industry distributes a significant part of fruit and vegetables, a non competitive behavior might have significant impact on consumption, on surplus and welfare. In this paper, we shed some light on the degree of non-competitive distortions in the French fresh fruit and vegetable markets. We analyze the market of tomato. The analysis is based on aggregate data on final consumption and prices at both shipper and consumer levels in France. The structural model is composed of a system of demand equations, supply equations and pricing equations which include terms that capture the oligopoly and oligopsony power of the retail sector and that account for product differentiation. We show that: i) elasticity of demand varies during the year ii) the exercise of market power decreases over time iii) if markets were competitive, retail price would decrease by about 2% to 12% depending on the year while shipping price might be 10% to 54% higher than observed. As a general result quantities consumed would not change significantly. We conclude that the retail sector exerts a moderate market power.Oligopsony, oligopoly, retail industry, fruit and vegetable markets., Agricultural and Food Policy,

Imperfect competition in the fresh tomato industry

In this paper, we analyse the market power of the retail industry in the French tomato market. Following the methods developed in the New Empirical Industrial Organization, we develop a structural model of this industry. The analysis is based on detailed data on final consumption and prices at both shipper and consumer levels for two types of tomatoes in France. The structural model is composed of a system of demand equations, supply equations and pricing equations which include terms which capture the oligopoly and oligopsony power of the retail sector. We show that i) elasticity of demand varies during the year ii) the retail sector exercise only a ‘moderate’ market power iii) the exercise of market power decreases over time iv) If markets were competitive, in the case of tomato ‘ronde’ retail price would decrease by about 1.2% to 4.5% depending on the year; v) In absence of market power, shipping price might be 6% to 24% higher than observed. We find higher distortions in the case of tomato ‘grappe’. We also find that the distortions tend to decrease over time. We conclude to a moderate exercise of market power of the retail sector in the French tomato market.Oligopoly, Oligopsony, Fresh products, Industrial Organization,

Organic Food Consumption Patterns in France

This research addresses two important issues for the future expansion of organic consumption in France. The first one is related to knowing whether the organic choice is a permanent feature of consumer’s attitude or not: Do organic buyers occasionally pick one organic product or do they choose organic for “several” categories? The second issue concerns the impact of prices on buying organics which is revisited, distinguishing between capturing new consumers and increasing the demand coming from people already involved in organic markets. These questions are examined using the market basket approach; the price issue requires further estimations of demand models. The study relies on two staple food products, eggs and milk. The findings are : (i) choosing organic for one of the two items reinforces the probability of purchasing also the organic version of the second item; (ii) marginal reductions of the organic price have no impact on the decision of buying organic rather than conventional products; (iii) on the contrary, when people already purchase organic products, price elasticities are rather high; (iv) organic buyers’ demographic profile is not related to income neither to age nor to family size, but to the educational level.market basket approach, purchasing behavior, logit model, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, C35, D12, Q13,

Filière fruits et légumes : comment la grande distribution transmet-elle aux consommateurs les variations de prix à la production

La formation des prix au sein des filières agro-alimentaires présente un intérêt considérable pour les acteurs de ces filières ainsi que pour les pouvoirs publics. En témoignent les manifestations récurrentes de producteurs agricoles qui dénoncent la responsabilité des intermédiaires et notamment de la grande distribution. La filière des fruits et légumes frais est l'une des plus concernées. L'absence de transformation industrielle des produits accentue le caractère direct de la confrontation entre les producteurs et une grande distribution dont la part de marché est désormais prépondérante (environ 60% des ventes de fruits et légumes en France sont réalisées en grande et moyenne surfaces (GMS)). L'un des reproches les plus fréquemment adressés aux GMS est de répercuter plus facilement au consommateur les hausses de prix intervenues en amont que les baisses. Un tel comportement aggraverait naturellement les crises de surproduction. En effet, dans ce cas, la rigidité des prix de détail empêche que l'effet négatif de la baisse des prix sur le revenu soit compensé par une augmentation des volumes écoulés. Cette recherche vise à verser à ce dossier des éléments objectifs d'appréciation. Ceux-ci sont issus d'un traitement économétrique des données de prix recueillies par le Service des Nouvelles des Marchés (SNM, ministère de l'Agriculture et de la Pêche), à différents stades de la filière fruits et légumes. Trois produits sont considérés : tomate, endive, chou-fleur.