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Do Marketing Margins Change with Food Scares? Examining the Effects of Food Recalls and Disease Outbreaks in the U.S. Red Meat Industry

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  • Oral Capps Jr.
  • Sergio Colin‐Castillo
  • Manuel A. Hernandez

Abstract

This paper examines the impact of food scares on marketing margins in the US beef and pork industries. We analyze how market stresses induced by different food recalls and disease outbreaks affect price spreads 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 FSIS recalls and 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. We also find that food safety incidents have minor cross-industry and cross-country effects on marketing margins.
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Suggested Citation

  • Oral Capps Jr. & Sergio Colin‐Castillo & Manuel A. Hernandez, 2013. "Do Marketing Margins Change with Food Scares? Examining the Effects of Food Recalls and Disease Outbreaks in the U.S. Red Meat Industry," Agribusiness, John Wiley & Sons, Ltd., vol. 29(4), pages 426-454, September.
    • Handle: RePEc:wly:agribz:v:29:y:2013:i:4:p:426-454
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    File URL: http://hdl.handle.net/10.1002/agr.v29.4
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    1. Gilligan, Daniel & de Brauw, Alan, 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).
    2. Lan Yi & Congcong Duan & Jianping Tao & Yong Huang & Meihua Xing & Zhongkun Zhu & Caifeng Tan & Xinglin Chen, 2020. "Disease Outbreak, Health Scare, and Distance Decay: Evidence from HPAI Shocks in Chinese Meat Sector," IJERPH, MDPI, vol. 17(21), pages 1-35, October.
    3. Bakhtavoryan, Rafael & Capps, Oral, Jr. & Salin, Victoria, 2014. "Dynamics of Consumer Response to Food Contamination: The 2007 Peanut Butter Recall," Journal of Food Distribution Research, Food Distribution Research Society, vol. 45(2), pages 1-16, July.
    4. El Benni, Nadja & Finger, Robert & Hediger, Werner, 2014. "Transmission of beef and veal prices in different marketing channels," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182696, European Association of Agricultural Economists.
    5. Cai, Ximing & Ringler, Claudia & Yang, Yi-Chen E. & Zhao, Jianshi, 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).
    6. Liu, Yanyan & Yamauchi, Futoshi, 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).
    7. Taylor, Mykel & Klaiber, H. Allen & Kuchler, Fred, 2016. "Changes in U.S. consumer response to food safety recalls in the shadow of a BSE scare," Food Policy, Elsevier, vol. 62(C), pages 56-64.
    8. Chi Ma & Jianping Tao & Caifeng Tan & Wei Liu & Xia Li, 2023. "Negative Media Sentiment about the Pig Epidemic and Pork Price Fluctuations: A Study on Spatial Spillover Effect and Mechanism," Agriculture, MDPI, vol. 13(3), pages 1-23, March.
    9. Ganesh-Kumar, A. & Prasad, Sanjay K. & Pullabhotla, Hemant, 2011. "Supply and demand for cereals in Nepal, 2010–2030:," IFPRI discussion papers 1120, International Food Policy Research Institute (IFPRI).
    10. David Laborde & Will Martin & Dominique van der Mensbrugghe, 2017. "Measuring the Impacts of Global Trade Reform with Optimal Aggregators of Distortions," Review of International Economics, Wiley Blackwell, vol. 25(2), pages 403-425, May.
    11. Cardona, Iván & Fonseca, Luz Amparo & Maldonado, Jorge H. & Mendoza, Sandra L. & Ruiz, Lorena & Zambrano, Patricia, 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).
    12. Neill, Clinton L. & Chen, Susan E., 2021. "Food Safety Events versus Media: Nonlinear Effects of Egg Recalls on U.S. Egg Prices," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 47(01), January.

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