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Do marketing margins change with food scares?: Examining the effects of food recalls and disease outbreaks in the us red meat industry

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

This paper examines the impact of food scares on marketing margins in the US beef and pork industry. We analyze how market stresses induced by different food recalls and disease outbreaks affect price margins 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 Food Safety and Inspection Service (FSIS) recalls and bovine spongiform encephalopathy (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, as well as the extent of price transmission at the bottom of the beef and pork marketing channel. We also find that food safety incidents have minor cross-industry and cross-country effects on marketing margins.

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Paper provided by International Food Policy Research Institute (IFPRI) in its series IFPRI discussion papers with number 1104.

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Date of creation: 2011
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Handle: RePEc:fpr:ifprid:1104
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  1. Schlenker, Wolfram & Villas-Boas, Sofia B, 2008. "Consumer and Market Responses to Mad-Cow Disease," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt7995j7cm, Department of Agricultural & Resource Economics, UC Berkeley.
  2. Armah, Stephen E., 2007. "An Empirical Analysis of Recent Changes in US Beef Marketing Margins," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 9354, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  3. Park, Moon-Soo & Jin, Yanhong H. & Bessler, David A., 2008. "The Impacts of Animal Disease Crises on the Korean Meat Market," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6365, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Wohlgenant, Michael K. & Mullen, John D., 1987. "Modeling The Farm-Retail Price Spread For Beef," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 12(02), December.
  5. John Leeming & Paul Turner, 2004. "The BSE crisis and the price of red meat in the UK," Applied Economics, Taylor & Francis Journals, vol. 36(16), pages 1825-1829.
  6. Thomas Marsh & Ted Schroeder & James Mintert, 2004. "Impacts of meat product recalls on consumer demand in the USA," Applied Economics, Taylor & Francis Journals, vol. 36(9), pages 897-909.
  7. Nicholas E. Piggott & Thomas L. Marsh, 2004. "Does Food Safety Information Impact U.S. Meat Demand?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 154-174.
  8. Brester, Gary W. & Marsh, John M., 2001. "The Effects Of U.S. Meat Packing And Livestock Production Technologies On Marketing Margins And Prices," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(02), December.
  9. Islam Hassouneh & Teresa Serra & José M. Gil, 2010. "Price transmission in the Spanish bovine sector: the BSE effect," Agricultural Economics, International Association of Agricultural Economists, vol. 41(1), pages 33-42, 01.
  10. Ana I. Sanjuán & P. J. Dawson, 2003. "Price transmission, BSE and structural breaks in the UK meat sector," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 30(2), pages 155-172, June.
  11. T. A. Lloyd & S. McCorriston & C. W. Morgan & A. J. Rayner, 2006. "Food scares, market power and price transmission: the UK BSE crisis," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 33(2), pages 119-147, June.
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