IDEAS home Printed from https://ideas.repec.org/a/ags/sojoae/29772.html
   My bibliography  Save this article

Monopsonistic Food Processing And Farm Prices: The Case Of The West Alabama Catfish Industry

Author

Listed:
  • Kinnucan, Henry W.
  • Sullivan, Gregory M.

Abstract

Increasing concentration in food processing has important economic implications for agricultural producers and consumers. This paper addresses the issue by focusing on a case where pure monopsony conditions appear to hold-catfish processing in West Alabama. Farm-level impacts of the market power imbalance are described via a six equation theoretical model. Results show price elasticity of farm supply governing the economic incentive to the processor for exploiting its market power: less (more) elastic supply implies greater (lesser) divergence between competitive and monopsony price. The theoretical model is operationalized using an indirect procedure recently suggested by Houck for estimating farm level supply elasticities. Based on these supply elasticities and historical prices, the model predicts a 12-35 percent potential reduction in prices received by West Alabama producers as a result of market power imbalance.

Suggested Citation

  • Kinnucan, Henry W. & Sullivan, Gregory M., 1986. "Monopsonistic Food Processing And Farm Prices: The Case Of The West Alabama Catfish Industry," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 18(2), pages 1-10, December.
    • Handle: RePEc:ags:sojoae:29772
    DOI: 10.22004/ag.econ.29772
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/29772/files/18020015.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.29772?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Lacewell, Ronald D. & Nichols, John P. & Jambers, T. Harold, 1973. "An Analysis of Pond Raised Catfish Production in Texas," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 5(1), pages 141-145, July.
    2. Tweeten, Luther G & Quance, C Leroy, 1969. "Positivistic Measures of Aggregate Supply Elasticities: Some New Approaches," American Economic Review, American Economic Association, vol. 59(2), pages 175-183, May.
    3. Russell, Jesse R., 1972. "Catfish Processing: A Rising Southern Industry," Agricultural Economic Reports 305673, United States Department of Agriculture, Economic Research Service.
    4. Willard F. Mueller, 1983. "Market Power and Its Control in the Food System," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(5), pages 855-863.
    5. Luther G. Tweeten & C. Leroy Quance, 1969. "Positivistic Measures of Aggregate Supply Elasticities: Some New Approaches," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 51(2), pages 342-352.
    6. Lacewell, Ronald D. & Nichols, John P. & Jambers, T. Harold, Jr., 1973. "An Analysis Of Pond Raised Catfish Production In Texas," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 5(1), pages 1-5, July.
    7. Hanson, Gregory D. & Martin, Neil R. & Flynn, John B., 1984. "Production, Price and Risk Factors in Channel Catfish Farming," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 16(1), pages 173-182, July.
    8. Hanson, Gregory D. & Martin, Neil R., Jr. & Flynn, John B., 1984. "Production, Price And Risk Factors In Channel Catfish Farming," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 16(1), pages 1-10, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kim, C.S. & Schaible, Glenn D., 1987. "Monopsonistic Food Processing And Farm Prices: Comment," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 19(2), pages 1-2, December.
    2. Buccola, Steven T., 1989. "Pricing Efficiency In Agricultural Markets: Issues, Methods, And Results," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(1), pages 1-11, July.
    3. Kinnucan, Henry W. & Sindelar, Scott & Wineholt, David & Hatch, L. Upton, 1988. "Processor Demand And Price-Markup Functions For Catfish: A Disaggregated Analysis With Implications For The Off-Flavor Problem," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 20(2), pages 1-12, December.
    4. David Bouras & Troy Frank & Eric Burgess, 2017. "Functional Forms and Oligopolistic Models: An Empirical Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 7(4), pages 645-649.
    5. Kinnucan, Henry W., 1995. "Price Bargaining Without Supply Control," Agricultural and Resource Economics Review, Cambridge University Press, vol. 24(1), pages 119-127, April.
    6. Kinnucan, Henry W. & Cacho, Oscar J. & Hanson, Gregory D., 1986. "Effects Of Selected Tax Policies On Management And Growth Of A Catfish Enterprise," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 18(2), pages 1-11, December.
    7. Chen, Xuan & Scuderi, Ben, 2016. "Assessing the Market Integration of Domestic and Imported Catfish in the U.S," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235550, Agricultural and Applied Economics Association.
    8. Lumnije Thaçi, 2022. "Bank Loans Types and Economic Growth - Literature Review," European Journal of Economics and Business Studies Articles, Revistia Research and Publishing, vol. 8, ejes_v8_i.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tauer, Loren W., 2006. "When to Get In and Out of Dairy Farming: A Real Option Analysis," Agricultural and Resource Economics Review, Cambridge University Press, vol. 35(2), pages 339-347, October.
    2. Czyżewski Andrzej & Staniszewski Jakub, 2015. "Changes in the production factor’s structures in agriculture in the light of price adjustments. A case study of selected EU countries," Management, Sciendo, vol. 19(2), pages 136-151, December.
    3. Kanlaya J. Barr & Bruce A. Babcock & Miguel A. Carriquiry & Andre M. Nassar & Leila Harfuch, 2011. "Agricultural Land Elasticities in the United States and Brazil," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(3), pages 449-462.
    4. Boggess, William G. & Anaman, Kwabena A. & Hanson, Gregory D., 1985. "Importance, Causes, And Management Responses To Farm Risks: Evidence From Florida And Alabama," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 17(2), pages 1-12, December.
    5. Fousekis, Panos & Katrakilidis, Constantinos & Trachanas, Emmanouil, 2016. "Vertical price transmission in the US beef sector: Evidence from the nonlinear ARDL model," Economic Modelling, Elsevier, vol. 52(PB), pages 499-506.
    6. Tweeten, Luther, 1981. "Puzzles for Agricultural Economists in the 1980's," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 0(Number 2), pages 1-8, October.
    7. repec:zbw:rwirep:0451 is not listed on IDEAS
    8. Frondel, Manuel & Vance, Colin, 2013. "Re-Identifying the Rebound: What About Asymmetry?," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 34(4), pages 42-54.
    9. Manuel Frondel & Christoph M. Schmidt & Colin Vance, 2013. "Asymmetry – Resurrecting the Roots," Ruhr Economic Papers 0451, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    10. Szőke, Tamás & Hortay, Olivér & Balogh, Eszter, 2019. "Asymmetric price transmission in the Hungarian retail electricity market," Energy Policy, Elsevier, vol. 133(C).
    11. Tweeten, Luther, 1981. "Puzzles for Agricultural Economists in the 1980's," Journal of the Northeastern Agricultural Economics Council, Northeastern Agricultural and Resource Economics Association, vol. 10(2), pages 1-8, October.
    12. Ball, V. Eldon & Moss, Charles B. & Erickson, Kenneth W. & Nehring, Richard F., 2003. "Modeling Supply Response In A Multiproduct Framework Revisited: The Nexus Of Empirics And Economics," 2003 Annual meeting, July 27-30, Montreal, Canada 21981, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Mamingi, Nlandu, 1997. "The impact of prices and macroeconomic policies on agricultural supply: a synthesis of available results," Agricultural Economics, Blackwell, vol. 16(1), pages 17-34, March.
    14. Ito, Shoichi & Peterson, E. Wesley F. & Mainali, Bharat & Rosegrant, Mark W., 1999. "Estimates for Evolution of U.S. Rice Supply Response Using Implicit Revenue Functions: Implications to the World Food Supply and Trade," Japanese Journal of Agricultural Economics (formerly Japanese Journal of Rural Economics), Agricultural Economics Society of Japan (AESJ), vol. 1.
    15. Bathla, Seema & Srinivasulu, R., 2011. "Price Transmission and Asymmetry: An Empirical Analysis of Indian Groundnut Seed and Oil Markets," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 66(4), pages 1-16.
    16. Cano Lamy, Victoria, 1989. "Evaluating the Impact of Price Incentives on Adoption of Technology and Production Patterns in the Ontario Wheat Industry," Working Papers 244050, Agriculture and Agri-Food Canada.
    17. M. Jaforullah, 1993. "Asymmetric Agricultural Supply Response: Evidence From Bangladesh Agriculture," Journal of Agricultural Economics, Wiley Blackwell, vol. 44(3), pages 490-495, September.
    18. Tamara Rudinskaya & Iveta Boskova, 2021. "Asymmetric price transmission and farmers' response in the Czech dairy chain," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 67(5), pages 163-172.
    19. Burt, Oscar R., 1989. "Irreversible Supply Functions: Concepts And Estimation," Working Papers 225827, University of California, Davis, Department of Agricultural and Resource Economics.
    20. Henry de-Graft Acquah, 2013. "A Bootstrap Approach to Evaluating the Power of the Houck’s Test for Asymmetry," Journal of Social and Development Sciences, AMH International, vol. 4(2), pages 69-73.
    21. Colman, David R., 1983. "A Review of the Arts of Supply Response Analysis," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 51(03), pages 1-30, December.

    More about this item

    Keywords

    Industrial Organization;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:sojoae:29772. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/saeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.