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Firm Profitability, Firm Structures and Markets in Meeting the Needs of Food Consumers

Institutions
University of Iowa
Start date
2011
End date
2016
Objective

The overall goal of this project is to provide better understanding of how the food and agricultural sector meets the needs of food consumers. Through careful evaluation of the food system and related public policies, the research will provide guidance to better public policies for food markets and to assure a safe and nutritious food supply. The project will lead to new knowledge about the food sector and how firms respond to consumer preferences. This new knowledge can be applied to the development of more efficient markets and improved public policies that support the availability and access to a safer and high quality food supply. The specific objectives of the project are to:

(1) Investigate the role of information in markets and firm incentives to deliver variety, quality, and safety in food markets;

(2) Evaluate the design of regulation and public policies to control and manage food safety and quality risks, including consumer response;

(3) Develop a better understanding of information problems and private motives for maintaining agricultural biosecurity, and implications for changes in public policy; and

(4) Evaluate the effect of agricultural and food policies, food production and processing, marketing and the effects on consumer choices, nutrition and health outcomes. Based on the new knowledge generated through this project, the expected outcomes of this project are:

    (i) the development of more efficient markets that meet the needs of consumers; and

    (ii) improved public policies that support the availability and access of consumers to a safe and high quality food supply.

The output will include publication and presentation of results and findings, and the training and involvement of graduate students in the research. Dissemination of specific outcomes includes publication in professional journals and other outlets, presentations at professional conferences, and through national scientific committees. The importance of food safety and quality, and dietary choices to the future of agricultural and food producers and policy will lead to direct presentations of the research at industry, state and federal-level policy-related discussion forums.

More information

NON-TECHNICAL SUMMARY:
Agricultural and food policies play a role in making a safe and nutritious food supply widely available and accessible. These policies, as well as consumer preferences and choices can affect the production, processing, and marketing sectors and affect the health and well-being of families and individuals. The design of effective policies and programs depends on understanding the role of consumer choices of food, as well as underlying relationships in agricultural production and processing that lead to a safe and nutritious food supply. Consumers want consumer-specific food attributes, high quality food products that are convenient and safe. However, problems continue to exist in markets due to failure of parties throughout the chain from farm to final retail to protect quality. Often communication and information in market channels from farm or producer to final consumer fail. Often, the information flows depend upon the organizational forms of firms along the supply chain. The public sector is involved in food and agricultural markets through regulation of markets in an effort to protect public health, assure truthful market information and the quality of foods available to consumers. Considerations of public policies are often supported by evaluations of public risks, costs and benefits of various policies. Economic behaviors and factors play an important role in determining and managing food system risks. The results of research can inform the development of appropriate policies to improve the quality and safety of foods available to consumers. This project is designed to provide better understanding of how the food and agricultural sector meets the needs of food consumers. Through careful evaluation of the food system and related public policies, the research will provide guidance to better public policies for food markets and to assure a safe and nutritious food supply. The project will lead to new knowledge about the food sector and how firms respond to consumer preferences. This new knowledge will be applied to the development of more efficient markets and improved public policies that support the availability and access to a safer and high quality food supply. APPROACH: The research will involve several approaches. In general the efforts will include development of economic and behavioral models to establish what can be inferred from the basic tenets of economic theory. Data will be collected from available national and other surveys, or through the development and implementation of surveys themselves. As example, data will include information on firm practices, contract stipulations; underlying physical and epidemiological data for food production (field or animal production and product processing); consumer purchase records collected through electronic scanner methods; reported dietary intake data; school meal records; and from experimental studies of consumer response and valuation of product attributes. Some of these data will be used under cooperative agreement with federal (USDA) agencies, as is the case for the use of the NASS/USDA Agricultural Resource Management Survey (ARMS) data, or ACNielsen HomeScan data. The research will use empirical methods when data are publicly available or when it is possible for the researchers to collect data. Data on market prices may also be used to evaluate the perception of consumers of regulations or the reaction of consumers to food safety incidents. Empirical analyses will use available statistical and econometric methods to determine and test underlying relationships with the data. In some cases, and particularly when we are seeking to extend the findings of our analyses to a larger audience, the output may be of a more synthetic and descriptive style. Research results will be published in professional journals and other outlets, and presented at professional, industry, state and federal-level policy-related discussion forums.

PROGRESS: 2013/01 TO 2013/09
Target Audience: Multiple audiences are targeted to receive the information generated in this project including academic researchers in research institutions, as well as advisors to the food, agriculture, and livestock industry, international bodies, scientific committees and other non-governmental organizations, and technical and regulatory agencies. Agricultural and applied economists at other academic institutions are a target audience to provide critical review and comment on the work and to assist in communications and applications of the results of the output. The audiences include targeted groups at the state, national and international levels. The information generated by this project is further extended to the target audiences through scientific publications, working papers and through presentations at professional meetings. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided? Nothing Reported How have the results been disseminated to communities of interest? The results have been made widely available to academic and governmental communities through journal publications, chapters in books and edited volumes, as well briefing reports and working papers available through web-based sites. In addition, the project investigators have made presentations at regional, national and international meetings. Results have been made available to national and international science bodies, such as the National Academies National Research Council and Institute of Medicine; the INRA French National Institute for Agricultural Research; the OECD; and the World Health Organization�s Foodborne Disease Burden Epidemiology Reference Group (FERG). What do you plan to do during the next reporting period to accomplish the goals? Project participants will continue work under each of the project objectives, and designed to accomplish the project goals. This will include work on the measurement and effectiveness of food safety controls in fresh produce production and in market channels; work on biosecurity, disease management policies and other initiatives intended to control the extent and costs of animal disease; work on interactions between animal production structure and food quality and safety; and consumer response in energy markets. Other investigations underway examine the associations among food assistance programs, food prices and environment on food choices and food insecurity.

PROGRESS: 2012/01/01 TO 2012/12/31
OUTPUTS: Several investigations consider food product quality and safety. Pouliot and Jensen conducted an analysis of costs and benefits of good agricultural practices in the leafy greens industry to improve food safety at the farm level. Jensen and colleagues developed a survey of leafy greens growers and handlers to estimate the costs of improved food safety in leafy greens production. Hennessy initiated work with Wanlong Lin at the China Agricultural University to provide an overview of biosecurity policies, infrastructure and vulnerabilities in China's food animal production sector. This work is designed to enhance understanding in the event of significant global food safety or animal health issues arising in the sector. Wang, Hennessy and O'Connor use new US census data for veterinarian occupations to study geographic shifts in veterinarian location between 1990 and 2010 and veterinarian time allocations to food animal species and companion animals. Pouliot and Larue show an expansion of import quotas can perversely trigger domestic price increases when firms in the importing country have market power. They apply their findings to the imports of poultry in Canada. Pouliot and Sumner examine differential market impacts of mandatory Country of origin labeling (COOL) on cattle raised in Canada and imported into the United States and find significant evidence of differential impacts of COOL through widening of the price bases and a decline in ratios of imports to total domestic use for both fed and feeder cattle. Li and Beghin look at the stringency of food quality standards, including related effects in international trade. They constructed indices of Non-Tariff Measures (NTMs) to quantify the protectionism relative to international standards and apply the indices to the national Maximum Residue Limit (MRL) regulations affecting agricultural and food trade using criteria embodied in Codex Alimentarius international standards. Li and Beghin, and Xiong and Beghin use the score indices to assess the implications of stringency in MRLs in plant and animal products for Canadian and US trade performance. Miao, Beghin and Jensen investigated tax policies to reduce added sweetener consumption and incorporate the implicit substitution between added sugars and solid fats into a comprehensive food demand system to evaluate the effect of taxes on sugars and fats on consumer demand and welfare. Jensen, Ishdorj and Crepinsek estimated the effects of school meals and food policies on fruit and vegetable intakes and found that school meal participants consume more total fruits and vegetables, with relatively more at school and less away from school compared to nonparticipants. School food policies had little effect on participation itself. Senia, Jensen and Zhylyevskyy initiated a study on factors that affect how much time individuals devote to eating and food preparation and find that as the opportunity cost of time increases (wages rise), individuals devote relatively less time to food preparation, spend relatively more time eating away from home and engage in multi-tasking while eating. PARTICIPANTS: Helen H. Jensen, John Beghin, David Hennessy, Sebastien Pouliot. TARGET AUDIENCES: Multiple audiences are targeted to receive the information generated in this project, including academic researchers in research institutions, as well as advisors to the food, agriculture, and livestock industry, international bodies, scientific committees and other non-governmental organizations, and technical and regulatory agencies. Agricultural and applied economists at other academic institutions are a target audience to provide critical review and comment on the work and to assist in communications and applications of the results of the work. The audiences include targeted groups at the state, national and international levels. The information generated by this project is further extended to the target audiences through scientific publications, working papers and through presentations at professional meetings. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

PROGRESS: 2012/01/01 TO 2012/12/31
OUTPUTS: Several investigations consider food product quality and safety. Pouliot and Jensen conducted an analysis of costs and benefits of good agricultural practices in the leafy greens industry to improve food safety at the farm level. Jensen and colleagues developed a survey of leafy greens growers and handlers to estimate the costs of improved food safety in leafy greens production. Hennessy initiated work with Wanlong Lin at the China Agricultural University to provide an overview of biosecurity policies, infrastructure and vulnerabilities in China's food animal production sector. This work is designed to enhance understanding in the event of significant global food safety or animal health issues arising in the sector. Wang, Hennessy and O'Connor use new US census data for veterinarian occupations to study geographic shifts in veterinarian location between 1990 and 2010 and veterinarian time allocations to food animal species and companion animals. Pouliot and Larue show an expansion of import quotas can perversely trigger domestic price increases when firms in the importing country have market power. They apply their findings to the imports of poultry in Canada. Pouliot and Sumner examine differential market impacts of mandatory Country of origin labeling (COOL) on cattle raised in Canada and imported into the United States and find significant evidence of differential impacts of COOL through widening of the price bases and a decline in ratios of imports to total domestic use for both fed and feeder cattle. Li and Beghin look at the stringency of food quality standards, including related effects in international trade. They constructed indices of Non-Tariff Measures (NTMs) to quantify the protectionism relative to international standards and apply the indices to the national Maximum Residue Limit (MRL) regulations affecting agricultural and food trade using criteria embodied in Codex Alimentarius international standards. Li and Beghin, and Xiong and Beghin use the score indices to assess the implications of stringency in MRLs in plant and animal products for Canadian and US trade performance. Miao, Beghin and Jensen investigated tax policies to reduce added sweetener consumption and incorporate the implicit substitution between added sugars and solid fats into a comprehensive food demand system to evaluate the effect of taxes on sugars and fats on consumer demand and welfare. Jensen, Ishdorj and Crepinsek estimated the effects of school meals and food policies on fruit and vegetable intakes and found that school meal participants consume more total fruits and vegetables, with relatively more at school and less away from school compared to nonparticipants. School food policies had little effect on participation itself. Senia, Jensen and Zhylyevskyy initiated a study on factors that affect how much time individuals devote to eating and food preparation and find that as the opportunity cost of time increases (wages rise), individuals devote relatively less time to food preparation, spend relatively more time eating away from home and engage in multi-tasking while eating. PARTICIPANTS: Helen H. Jensen, John Beghin, David Hennessy, Sebastien Pouliot. TARGET AUDIENCES: Multiple audiences are targeted to receive the information generated in this project, including academic researchers in research institutions, as well as advisors to the food, agriculture, and livestock industry, international bodies, scientific committees and other non-governmental organizations, and technical and regulatory agencies. Agricultural and applied economists at other academic institutions are a target audience to provide critical review and comment on the work and to assist in communications and applications of the results of the work. The audiences include targeted groups at the state, national and international levels. The information generated by this project is further extended to the target audiences through scientific publications, working papers and through presentations at professional meetings. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

PROGRESS: 2011/01/01 TO 2011/12/31
OUTPUTS: Several investigations considered food product quality and safety. Pouliot and Jensen are developing methods to evaluate the costs and benefits of good agricultural practices in the leafy greens industry to improve food safety at the farm level. Jensen conducted a series of industry interviews to better understand food safety practices and costs. In another effort, Pouliot summarized food safety regulations in the United States and discussed the economic implications. He also developed a model that investigates the effect of the exemptions for small firms in the FDA Food Safety and Modernization Act. The model shows how the exemption affects welfare and food safety. The work on food safety in fresh produce was presented and discussed at national meetings of agricultural economists and with collaborators in the field of microbiology. In other work, Pouliot developed a model that shows how economic variables may be useful in guiding import inspections. Hennessy and Ruiqing Miao evaluated the benefits of a quality (protein) sorting technology. Hennessy, Tong Wang and Annette O'Connor conducted evaluations designed to better inform animal disease management policies, including the Veterinary Medicine Loan Repayment Program (VMLRP). Hennessy and Wang's work on the dynamics of a voluntary livestock disease program was presented as an invited paper at a conference in China. In related research, Hennessy is working with graduate student Juan Murguia on understanding how infectious disease losses externalities can affect equilibrium herd size and national hog herd production efficiency. Policies designed to reduce obesity and its associated costs were also considered. Miao, Beghin and Jensen investigated two tax policies to reduce added sweetener consumption: a consumption tax on sweetened goods and a sweetener input tax. Although a tax on retail goods can reduce the amount of sweeteners consumed, the research conducted by Miao, Beghin and Jensen also investigated taxing sweets at the processing levels. Applying a consumption tax to a specific sweetener-intensive food directly changes its price and thus, reduces the consumer demand for that food item. In contrast, applying a sweetener tax on inputs induces manufacturers to reduce their use in food processing. This research was discussed in several media reports and published in an academic journal. Zhylyevskyy and Jensen used data from the Family and Community Health Study survey of African-American youth to determine the role of family, peer (best friend) and economic factors on the consumption of fruits and vegetables for youth, parents and best friends. This work was presented at a special workshop of the Agricultural and Applied Economics Association. PARTICIPANTS: Helen H. Jensen, David Hennessy, and Sebastien Pouliot. TARGET AUDIENCES: Not relevant to this project. PROJECT MODIFICATIONS: Not relevant to this project.

Funding Source
Nat'l. Inst. of Food and Agriculture
Project source
View this project
Project number
IOW03709
Accession number
226325
Categories
Bacterial Pathogens
Food Defense and Integrity
Chemical Contaminants
Natural Toxins
Commodities
Meat, Poultry, Game