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Tracing the Effects of Agricultural Commodity Prices and Food Costs

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  • Catherine J. Morrison Paul
  • James M. MacDonald

Abstract

We estimate a system of product and input-demand equations for food-processing industries to trace the links among farm commodity prices, food-processing costs, and food prices. Disembodied technical change, which likely reflects increasing consumer demand for convenience and product variety, has sharply reduced agricultural materials demand relative to most other food-processing inputs. This implies weakening impacts of farm price shocks on food prices. But improving quality and falling relative prices for agricultural inputs, in combination with increasing factor substitution, has counteracted these forces to encourage greater usage of agricultural inputs in food processing, and limit these trends. Copyright 2003, Oxford University Press.

Suggested Citation

  • Catherine J. Morrison Paul & James M. MacDonald, 2003. "Tracing the Effects of Agricultural Commodity Prices and Food Costs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(3), pages 633-646.
  • Handle: RePEc:oup:ajagec:v:85:y:2003:i:3:p:633-646
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    File URL: http://hdl.handle.net/10.1111/1467-8276.00461
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    Citations

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    Cited by:

    1. Miller, J. Corey & Coble, Keith H., 2007. "Cheap food policy: Fact or rhetoric?," Food Policy, Elsevier, vol. 32(1), pages 98-111, February.
    2. Hille, Erik, 2014. "Pollution havens: International empirical evidence using a shadow price measure of climate policy stringency," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100551, Verein für Socialpolitik / German Economic Association.
    3. Cohen, Jeffrey P. & Paul, Catherine J. Morrison, 2005. "Agglomeration economies and industry location decisions: the impacts of spatial and industrial spillovers," Regional Science and Urban Economics, Elsevier, vol. 35(3), pages 215-237, May.
    4. Zhang, Wei & Alston, Julian M., 2013. "Factor Substitution and Technical Change in the U.S. Dairy Processing and Manufacturing Industry," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150707, Agricultural and Applied Economics Association.
    5. van Soest, Daan P. & List, John A. & Jeppesen, Tim, 2006. "Shadow prices, environmental stringency, and international competitiveness," European Economic Review, Elsevier, vol. 50(5), pages 1151-1167, July.
    6. Jeffrey Bernstein & Theofanis Mamuneas, 2008. "Public infrastructure, input efficiency and productivity growth in the Canadian food processing industry," Journal of Productivity Analysis, Springer, vol. 29(1), pages 1-13, February.
    7. Hille, Erik & Althammer, Wilhelm, 2015. "Measuring climate policy stringency: A shadow price approach using energy prices," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112804, Verein für Socialpolitik / German Economic Association.
    8. Wilhelm Althammer & Erik Hille, 2016. "Measuring climate policy stringency: a shadow price approach," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(4), pages 607-639, August.
    9. Wendy Chapple & Richard Harris & Catherine Paul, 2006. "The cost implications of waste reduction: factor demand, competitiveness and policy implications," Journal of Productivity Analysis, Springer, vol. 26(3), pages 245-258, December.
    10. Chapple, Wendy & Paul, Catherine J. Morrison & Harris, Richard, 2005. "Manufacturing and corporate environmental responsibility: cost implications of voluntary waste minimisation," Structural Change and Economic Dynamics, Elsevier, vol. 16(3), pages 347-373, September.

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