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Supply Response and Investment in the Canadian Food Processing Industry

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  • Ramon E. Lopez

Abstract

This paper reports on the estimation of a dynamic model of the food manufacturing industry in Canada. Its major objectives are to analyze the determinants of investments and the production structure of the industry. An important finding of the study is that the hypothesis of instantaneous capital adjustment to changing market conditions is statistically rejected. Capital stock adjustment to optimal levels takes approximately two and one-third years. Another result is that although the industry is responsive to price changes, a general pattern of inelastic factor demand and output supply prevails in the short run, intermediate run, and even in the long run.

Suggested Citation

  • Ramon E. Lopez, 1985. "Supply Response and Investment in the Canadian Food Processing Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(1), pages 40-48.
    • Handle: RePEc:oup:ajagec:v:67:y:1985:i:1:p:40-48.
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    File URL: http://hdl.handle.net/10.2307/1240822
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    Cited by:

    1. Jan Schiefer & Stefan Hirsch & Monika Hartmann & Adelina Gschwandtner, 2013. "Industry, firm, year and country effects on profitability in EU food processing," Studies in Economics 1309, School of Economics, University of Kent.
    2. Jongeneel, Roelof A. & Ge, Lan, 2005. "Explaining Growth in Dutch Agriculture: Prices, Public R&D, and Technological Change," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24573, European Association of Agricultural Economists.
    3. Anthony N. Rezitis & A. Blake Brown & William E. Foster, 1998. "Adjustment costs and dynamic factor demands for U.S. cigarette manufacturing," Agricultural Economics, International Association of Agricultural Economists, vol. 18(3), pages 217-231, May.
    4. Larson, Bruce A., 1988. "Dynamic Factor Demands Using Intertemporal Duality," Journal of Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, vol. 41(1), pages 1-6.
    5. Vasavada, Utpal & Ball, V. Eldon, 1988. "Modeling Dynamic Adjustment In A Multi-Output Framework," Staff Reports 278021, United States Department of Agriculture, Economic Research Service.
    6. Feinerman, Eli & Peerlings, Jack H.M., 2002. "Uncertain Land Availability and Perceived Biases in Investment Decisions: The Case of Dutch Dairy Farms," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24949, European Association of Agricultural Economists.
    7. Buhr, Brian L. & Kim, Hanho, 1997. "Dynamic adjustment in the US beef market with imports," Agricultural Economics, Blackwell, vol. 17(1), pages 21-34, October.
    8. Wayne H. Howard & C. Richard Shumway, 1988. "Dynamic Adjustment in the U.S. Dairy Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(4), pages 837-847.
    9. Giancarlo Moschini, 1988. "A Model of Production with Supply Management for the Canadian Agricultural Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(2), pages 318-329.
    10. Panos Fousekis, 1997. "Internal And External Scale Effects In Productivity Analysis: A Dynamic Dual Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 48(1‐3), pages 151-166, January.
    11. Morrison, Catherine J., 1997. "Economic performance, cost economies and pricing behaviour in the US and Australian meat products industries," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 41(3), pages 1-23.
    12. Panos Fousekis & Aspasia Papakonstantinou, 1997. "Economic Capacity Utilisation And Productivity Growth In Greek Agriculture," Journal of Agricultural Economics, Wiley Blackwell, vol. 48(1‐3), pages 38-51, January.
    13. Gardebroek, Cornelis & Oude Lansink, Alfons G.J.M., 2008. "Dynamic Microeconometric Approaches To Analysing Agricultural Policy," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6592, European Association of Agricultural Economists.
    14. Krasachat, W. & Coelli, T. J., 1995. "Dynamics of Agricultural Production on Thailand," 1995 Conference (39th), February 14-16, 1995, Perth, Australia 170898, Australian Agricultural and Resource Economics Society.
    15. Eswaramoorthy, K., 1991. "U.S. livestock production and factor demand: a multiproduct dynamic dual approach," ISU General Staff Papers 1991010108000010523, Iowa State University, Department of Economics.
    16. Wohlgenant, Michael K. & Haidacher, RichardC., 1991. "Approaches to Modeling Retail-Farm Price Spreads and Derived Demand Relationships for Food Commodities: A Selected, Annotated Bibliography," Staff Reports 278572, United States Department of Agriculture, Economic Research Service.
    17. Ankarhem, Mattias, 2005. "Effects of Increased Demand for Biofuels: A Dynamic Model of the Swedish Forest Sector," Umeå Economic Studies 658, Umeå University, Department of Economics.
    18. Schoney, R. A., 1990. "An Analysis of Wheat Supply Response Under Risk and Uncertainty," Working Papers 244030, Agriculture and Agri-Food Canada.
    19. Agbola, Frank W., 2005. "Optimal intertemporal investment in Australian agriculture: An empirical investigation," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 6(2), pages 1-11.
    20. Villezca-Becerra, Pedro A. & Shumway, C. Richard, 1992. "Multiple-Output Production Modeled With Three Functional Forms," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(1), pages 1-16, July.
    21. Alfons Oude Lansink, 2001. "Long and Short Term Economies of Scope in Dutch Vegetable Production," Journal of Agricultural Economics, Wiley Blackwell, vol. 52(1), pages 123-138, January.
    22. Agbola, Frank W., 1999. "The Structure of Production and Investment in Australia's Pastoral Zone," 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand 122327, Australian Agricultural and Resource Economics Society.

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