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The Trade Impacts of a Food Scare: The Fonterra Contamination Incident

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  • Stojkov Katarina

    (New Zealand Treasury, Wellington, New Zealand)

  • Noy Ilan
  • Sağlam Yiğit

    (Victoria University of Wellington, Wellington, New Zealand)

Abstract

This paper examines the impact of a food contamination scare in the dairy sector on dairy exports. We investigate this question in the context of the 2013 Whey Protein Concentrate contamination incident in New Zealand. We assess the impact of this incident on dairy exports using synthetic control methods. A synthetic counterfactual scenario where the incident did not occur is developed using weighted information from other countries unaffected by the scare. We find that there was an initial negative shock to the exports of products that were thought to have been contaminated, but that there were no significant sustained impacts on other dairy products. The affected products made up only a small proportion of New Zealand dairy exports, with the vast majority of dairy exports being unaffected. Infant formula exports appear to have recovered more than a year after the scare. However, whey product exports (the contaminated product) remain lower than they otherwise would have been.

Suggested Citation

  • Stojkov Katarina & Noy Ilan & Sağlam Yiğit, 2018. "The Trade Impacts of a Food Scare: The Fonterra Contamination Incident," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 16(2), pages 1-16, November.
    • Handle: RePEc:bpj:bjafio:v:16:y:2018:i:2:p:16:n:2
    DOI: 10.1515/jafio-2016-0031
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    More about this item

    Keywords

    contamination; food scare; trade; synthetic control;
    All these keywords.

    JEL classification:

    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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