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

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.

Suggested Citation

  • Colin-Castillo, Sergio & Capps, Oral, Jr. & Hernandez, Manuel A., 2012. "Do Marketing Margins Change with Food Scares? Examining the Effects of Food Recalls and Disease Outbreaks in the U.S. Red Meat Industry," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124966, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea12:124966
    DOI: 10.22004/ag.econ.124966
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    3. 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.
    4. 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).
    5. 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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    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. 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.
    9. 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).

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    Keywords

    Food Consumption/Nutrition/Food Safety;

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