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Do marketing margins change with food scares?: Examining the effects of food recalls and disease outbreaks in the us red meat industry

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  • Hernandez, Manuel
  • Colin-Castillo, Sergio
  • Capps, Oral, Jr.

Abstract

This paper examines the impact of food scares on marketing margins in the US beef and pork industry. We analyze how market stresses induced by different food recalls and disease outbreaks affect price margins and the extent of price transmission at the slaughter-to-wholesale and wholesale-to-retail levels. We use monthly data for the period 1986–2008. The results indicate that marketing margins are differentially affected by Food Safety and Inspection Service (FSIS) recalls and bovine spongiform encephalopathy (BSE) outbreaks at different levels of the beef and pork marketing chain, although the effects are generally quite modest. Only BSE discoveries in the United States considerably affect marketing margins in the beef industry, specifically at the wholesale-to-retail level, as well as the extent of price transmission at the bottom of the beef and pork marketing channel. We also find that food safety incidents have minor cross-industry and cross-country effects on marketing margins.

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Bibliographic Info

Paper provided by International Food Policy Research Institute (IFPRI) in its series IFPRI discussion papers with number 1104.

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Date of creation: 2011
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Handle: RePEc:fpr:ifprid:1104

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Keywords: marketing margins; price transmission; food recalls; BSE outbreaks; red meat industry;

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References

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  1. Park, Moon-Soo & Jin, Yanhong H. & Bessler, David A., 2008. "The Impacts of Animal Disease Crises on the Korean Meat Market," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6365, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Armah, Stephen E., 2007. "An Empirical Analysis of Recent Changes in US Beef Marketing Margins," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 9354, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  3. Schlenker, Wolfram & Villas-Boas, Sofia B, 2008. "Consumer and market responses to mad-cow disease," CUDARE Working Paper Series 1023, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
  4. John Leeming & Paul Turner, 2004. "The BSE crisis and the price of red meat in the UK," Applied Economics, Taylor & Francis Journals, vol. 36(16), pages 1825-1829.
  5. Nicholas E. Piggott & Thomas L. Marsh, 2004. "Does Food Safety Information Impact U.S. Meat Demand?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 154-174.
  6. Wohlgenant, Michael K. & Mullen, John D., 1987. "Modeling The Farm-Retail Price Spread For Beef," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 12(02), December.
  7. Thomas Marsh & Ted Schroeder & James Mintert, 2004. "Impacts of meat product recalls on consumer demand in the USA," Applied Economics, Taylor & Francis Journals, vol. 36(9), pages 897-909.
  8. T. A. Lloyd & S. McCorriston & C. W. Morgan & A. J. Rayner, 2006. "Food scares, market power and price transmission: the UK BSE crisis," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 33(2), pages 119-147, June.
  9. Ana I. Sanjuán & P. J. Dawson, 2003. "Price transmission, BSE and structural breaks in the UK meat sector," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 30(2), pages 155-172, June.
  10. Brester, Gary W. & Marsh, John M., 2001. "The Effects Of U.S. Meat Packing And Livestock Production Technologies On Marketing Margins And Prices," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(02), December.
  11. Islam Hassouneh & Teresa Serra & José M. Gil, 2010. "Price transmission in the Spanish bovine sector: the BSE effect," Agricultural Economics, International Association of Agricultural Economists, vol. 41(1), pages 33-42, 01.
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Cited by:
  1. Laborde Debucquet, David & Martin, Will & van der Mensbrugghe, Dominique, 2011. "Measuring the impacts of global trade reform with optimal aggregators of distortions:," IFPRI discussion papers 1123, International Food Policy Research Institute (IFPRI).
  2. Prasad, Sanjay K. & Pullabhotla, Hemant & Ganesh-Kumar, A., 2011. "Supply and demand for cereals in Nepal, 2010–2030:," IFPRI discussion papers 1120, International Food Policy Research Institute (IFPRI).
  3. Yamauchi, Futoshi & Liu, Yanyan, 2011. "Impacts of an early education intervention on students' learning achievement: Evidence from the Philippines," IFPRI discussion papers 1121, International Food Policy Research Institute (IFPRI).
  4. Zambrano, Patricia & Maldonado, Jorge H. & Mendoza, Sandra L. & Ruiz, Lorena & Fonseca, Luz Amparo & Cardona, Iván, 2011. "Women cotton farmers: Their perceptions and experiences with transgenic varieties: A case study for Colombia," IFPRI discussion papers 1118, International Food Policy Research Institute (IFPRI).
  5. de Brauw, Alan & Gilligan, Daniel, 2011. "Using the regression discontinuity design with implicit partitions: The impacts of comunidades solidarias rurales on schooling in El Salvador," IFPRI discussion papers 1116, International Food Policy Research Institute (IFPRI).
  6. Cai, Ximing & Yang, Yi-Chen E. & Zhao, Jianshi & Ringler, Claudia, 2011. "Can water allocation in the Yellow River basin be improved?: Insights from a multi-agent system model," IFPRI discussion papers 1117, International Food Policy Research Institute (IFPRI).

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