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The Effects of Changing Input Costs on Food Prices


  • R. McFall Lamm
  • Paul C. Westcott


The relationships between changes in food sector input costs and retail food prices are examined. Results indicate that increases in factor prices pass quickly to consumers, within two quarters for most foods. In addition, rising farm-level prices and substantial increases in nonfarm resource prices appear to explain why food prices rose more rapidly than nonfood prices in the 1970s. The analysis is based on a twenty-equation econometric model of the food-price determination process, specified following Popkin's "stage of processing" approach. Causality and validation test statistics for the model are presented.

Suggested Citation

  • R. McFall Lamm & Paul C. Westcott, 1981. "The Effects of Changing Input Costs on Food Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(2), pages 187-196.
  • Handle: RePEc:oup:ajagec:v:63:y:1981:i:2:p:187-196.

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    Cited by:

    1. Emerick, Paula A. & Willett, Lois Schertz & Novakovic, Andrew M., 1993. "Incorporating Price Regulation in Causality Tests for Dairy Markets," Staff Papers 121338, Cornell University, Department of Applied Economics and Management.
    2. Schwartz, Lisa A. & Willett, Lois Schertz, 1994. "Price Transmission Theory And Applications To Agroindustry: An Annotated Bibliography," Research Bulletins 123003, Cornell University, Department of Applied Economics and Management.
    3. Lamm, R. McFall Jr., 1981. "Food Prices and Rising Energy Costs," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 0(Number 1), pages 1-5, April.
    4. Capps, Oral, Jr., 1986. "Changes In Domestic Demand For Food: Impacts On Southern Agriculture," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 0(Number 1), pages 1-12, July.
    5. Yanagida, John F., 1983. "Differential Impacts Of Income And Inflation On Prices Of Major Red Meat Commodities," Journal of Food Distribution Research, Food Distribution Research Society, vol. 0(Number 2), pages 1-5, June.
    6. repec:ags:agreko:267804 is not listed on IDEAS
    7. Lee, David R., 1987. "Labor Market Dynamics in the U.S. Food Sector," Working Papers 115799, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    8. Lambert, David K. & Miljkovic, Dragan, 2010. "The sources of variability in U.S. food prices," Journal of Policy Modeling, Elsevier, vol. 32(2), pages 210-222, March.
    9. Weaver, Robert D. & Chattin, Peter & Banerjee, Aniruddha, 1989. "Market Structure And The Dynamics Of Retail Food Prices," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 0(Number 2), pages 1-11, October.
    10. Reed, Michael R. & Robbins, Lynn W., 1985. "The Relationship Between Managerial Heuristics And Economics In Pricing Retail Meats," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 0(Number 2), pages 1-9, December.
    11. Theodosios B. Palaskas, 1995. "Statistical Analysis Of Price Transmission In The European Union," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(1), pages 61-69.
    12. Capps, Oral, Jr. & Sherwell, Pablo, 2005. "Spatial Asymmetry in Farm-Retail Price Transmission Associated with Fluid Milk Products," 2005 Annual meeting, July 24-27, Providence, RI 19316, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Oral Capps & Pablo Sherwell, 2007. "Alternative approaches in detecting asymmetry in farm-retail price transmission of fluid milk," Agribusiness, John Wiley & Sons, Ltd., vol. 23(3), pages 313-331.
    14. Bruce Marion, 1998. "Competition in Grocery Retailing: The Impact of a New Strategic Group on BLS Price Increases," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 13(4), pages 381-399, August.
    15. repec:ags:nareaj:160009 is not listed on IDEAS
    16. repec:bla:jageco:v:68:y:2017:i:1:p:3-21 is not listed on IDEAS
    17. Freebairn, John W., 1984. "Farm and Retail Food Prices," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 0(Number 02), pages 1-20, August.
    18. Belongia, Mike & Fisher, Douglas, 1982. "Some Fallacies in Agricultural Economics: A Macroeconomic Interpretation," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 14(01), pages 117-123, July.
    19. Kuhns, Annemarie & Leibtag, Ephraim & Volpe, Richard & Roeger, Ed, 2015. "How USDA Forecasts Retail Food Price Inflation," Technical Bulletins 206500, United States Department of Agriculture, Economic Research Service.
    20. Alston, Julian M. & Mullally, Conner C. & Sumner, Daniel A. & Townsend, Marilyn & Vosti, Stephen A., 2009. "Likely effects on obesity from proposed changes to the US food stamp program," Food Policy, Elsevier, vol. 34(2), pages 176-184, April.
    21. Gempesaw, Conrado M., II & Reisner, G.C. & Wobus, P.J., 1987. "A Farm To Retail Sectoral Analysis Of The Northeast Food Industry," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 0(Number 2), pages 1-14, October.

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