EMPIRICAL TESTS OF THE ARGUMENT THAT CONSUMERS VALUE STABLE RETAIL MILK PRICES

Existing policy allows interstate dairy compacts if they serve a compelling public interest. Compact supporters argue consumers benefit from retail price stability, but no supporting evidence was found. Milk demand systems were estimated using scanner data and four measures of price volatility. Price volatility defined as forecast errors influenced demand, but did not systematically depress demand. Response was more elastic to unanticipated than anticipated price changes, possibly explaining the higher elasticities often observed in scanner data studies.dairy compacts, dairy demand, price instability, scanner data, Demand and Price Analysis,

SOURCES OF IRREVERSIBLE CONSUMER DEMAND IN U.S. DAIRY PRODUCTS

Irreversible demand is relevant to pricing strategy and demand modeling with weekly data. Competing explanations include loss aversion and stockpiling. Irreversible models for U.S. cheese and table spreads suggest that stockpiling dominates loss aversion. Price smoothing may be an inappropriate strategy in this case. Reversible demand models applied to weekly data may overestimate own-price elasticities.Demand and Price Analysis,

PRICE DISCOVERY IN THE EGG INDUSTRY

Formula pricing of eggs is typically based on quotations issued by Urner Barry Publications, and egg producers worry that the quotes are systematically lower than equilibrium levels. Egg Clearinghouse, Inc. (ECI) provides a public forum for cash trading, intended to facilitate price discovery. Evidence from 1994-95 does not suggest that Urner Barry understands producer level prices on average, Granger causality tests indicate a feedback relationship between the Urner Barry quotes and ECI prices, with ECI leading during price upswings. Lead times appear to have fallen since the late 1970s and early 1980s, confirming earlier predictions regarding market efficiency.Demand and Price Analysis,

Context-Dependent BSE Impacts on Canadian Food-at-Home Beef Purchases

Household-level Canadian scanner data from 2002 – 2005 were used to identify consumer reactions to the early BSE discoveries that severely impacted Canada’s beef industry. In all provinces, consumers reacted to the initial BSE event by purchasing more beef, apparently to support struggling ranchers. Subsequent BSE events, however, met with reduced beef purchases. The results were consistent across three measures of monthly beef purchases: participation, units purchased, and beef expenditure share. Failing to account for the context of individual BSE events would have produced little evidence of consumer reaction, a common finding among prior North American BSE studies.BSE, mad cow disease, food safety, consumer behavior, Canada, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, D12, Q11,

THE IMPACT OF BSE, FMD, AND U.S. EXPORT PROMOTION EXPENDITURES ON JAPANESE MEAT DEMAND

The study examined Japanese consumer response to the discovery of BSE and discusses implications for the U.S. beef industry following BSE discovery in the U.S. Impacts of FMD and export promotion expenditures were also modeled. Synthetic inverse and ordinary demand systems were used to appropriately specify the demand system.Food Consumption/Nutrition/Food Safety,

IS THE THINLY-TRADED BUTTER FUTURES CONTRACT PRICED EFFICIENTLY?

After over eight years of trading, the Chicago Mercantile Exchange butter futures contract remains thinly traded, possibly impeding price discovery. Pricing efficiency was assessed using cointegration techniques and error correction models. Results suggest that market efficiency could not be rejected up to a two-month forecast horizon. Illiquid markets reduce hedging performance, which in turn discourage liquidity growth.Marketing,

Hedonic Price Analysis of Thoroughbred Broodmares in Foal

Thoroughbred broodmares are the foundation of a successful racing operation. This study estimated the impact of breeding, racing, genetic, and market characteristics on broodmare auction prices. Data represent 298 broodmares in foal that were sold in Keeneland's 2005 sale. Prices were most responsive to the sire's stud fee and the broodmare's age, with pronounced day-of-sale effects. Overall valuation structure appeared similar to Neibergs' results using 1996 data. Out-of-sample forecasts were far superior to naive forecasts, but were not accurate enough to use in isolation from other decision aids such as visual inspection of the horse.broodmare, Thoroughbred horses, hedonic price analysis, forecasting, Demand and Price Analysis,

PRICE SENSITIVITIES FOR U.S. FROZEN DAIRY PRODUCTS

Price elasticities and flexibilities for a system of frozen dessert products are estimated from scanner data. Simultaneity tests reject exogeneity of conditional expenditures, but not prices or quantities, at the weekly level. Inverting the elasticity matrix to obtain flexibilities, while theoretically appropriate, appears to be empirically unacceptable.Demand and Price Analysis,

Hedonic Price Analysis of Thoroughbred Broodmares in Foal

Thoroughbred broodmares are the foundation of a successful racing operation. This study estimated the impact of breeding, racing, and market characteristics on broodmare auction prices. Data represent 604 in-foal broodmares sold in Keeneland’s 2005 sale. Prices were highly responsive to the sire’s stud fee, the broodmare’s age, and progeny performance in graded stakes races, with pronounced day-of-sale effects. The stud fee marginal value was substantially lower than one break-even estimate, suggesting possible disincentives for investment in stallion services. Out-of-sample forecasts were far superior to naïve forecasts but were not accurate enough to use in isolation from other decision aids.broodmare, forecasting, hedonic price analysis, Thoroughbred, Agribusiness, Livestock Production/Industries,

IMPACT OF SHELTERBELTS ON GROUNDNUT PRODUCTION IN THERILANDS: A DECOMPOSITION ANALYSIS.

In areas characterized by wind erosion and shifting sand dunes, shelterbelts can increase crop yields. Groundnut yields in southern India increased with the introduction and maturation of shelterbelts. Decomposition analysis attributed most of the yield increases to the shelterbelts themselves, with a small portion attributed to input use changes. While shelterbelt cost data are scarce, the estimated value of inputs saved due to shelterbelts suggested a net benefit stream that is initially negative but increasing into the indefinite future. Public investments in shelterbelts may be the most effective means of preventing land degradation.Crop Production/Industries,