Docsity
Log inSign up
Docsity
Prepare for your exams
Prepare for your exams

Study with the several resources on Docsity

Earn points to download
Earn points to download

Earn points by helping other students or get them with a premium plan

Guidelines and tips
Guidelines and tips
Sell on Docsity
Sell on Docsity
Log inSign up

Prepare for your exams

Study with the several resources on Docsity

Find documents

Prepare for your exams with the study notes shared by other students like you on Docsity

Search Store documents

The best documents sold by students who completed their studies

Search through all study resources
Docsity AINEW

Summarize your documents, ask them questions, convert them into quizzes and concept maps

Explore questions

Clear up your doubts by reading the answers to questions asked by your fellow students

Earn points to download

Earn points by helping other students or get them with a premium plan

Share documents
download point icon20 Points

For each uploaded document

Answer questions
download point icon5 Points

For each given answer (max 1 per day)

All the ways to get free points
Get points immediately

Choose a premium plan with all the points you need

Study Opportunities

Choose your next study program

Get in touch with the best universities in the world. Search through thousands of universities and official partners

Community

Ask the community

Ask the community for help and clear up your study doubts

University Rankings

Discover the best universities in your country according to Docsity users

Free resources

Our save-the-student-ebooks!

Download our free guides on studying techniques, anxiety management strategies, and thesis advice from Docsity tutors

From our blog

Exams and Study
Go to the blog

Food Industry and Subsector Studies - Analysis of Food System - Lecture Notes, Study notes of Biology

Veer Bahadur Singh Purvanchal UniversityBiology

This lecture is from Analysis of Food System. Key important points are: Food Industry and Subsector Studies, Structure of Key Parts, Food Systems Framework, Empirical Applications, Overview of Food System, Parts of Food System, Relative Contribution, Relative Changes in Employment, Shift in Employment, Farming and FoodFood Industry and Subsector Studies, Structure of Key Parts, Food Systems Framework, Empirical Applications, Overview of Food System, Parts of Food System, Relative Contribution, R

Typology: Study notes

2012/2013

Uploaded on 01/29/2013

uzman
uzman 🇮🇳

4.8

(12)

148 documents

1 / 9

Toggle sidebar

This page cannot be seen from the preview

Don't miss anything!

bg1
FOOD INDUSTRY AND SUBSECTOR STUDIES
I. Objectives of this section of the course
A. Give students brief overview of the structure of key parts of the U.S. food system
B. Provide empirical applications of the food systems framework developed earlier in the
course
II. Overview of Food System
A. Schematic of various parts of food system (Overhead--Fig. 11.1 from Senauer et al.)
B. Relative contribution of various parts of food system to Value Added and Employment
(Overheads--Figures 11-2 and 11-3 of Senauer et al.) Stress the importance of:
1. Transportation, trade, and retailing, including major gains in VA in recent years;
2. How more VA is contributed by eating establishments now than farming.
3. Similar trends as 1-2 in Employment;
4. Relative changes in employment--Shift in employment from farming and food
processing/mfg to eating establishments, transportation, and retailing.
5. Shift in productivity over time (attached table). Largest gains have been in food
processing, while smallest have been in transportation, trade, & retail; and in
eating establishments (most labor-intensive of these fields)
6. Shift in share of consumer's bill going to different segments (Figs. 11-4 and 11.5
from Senauer)
a. Increasing marketing bill
b. Differing shares for at-home and away-from-home food
Docsity.com
pf3
pf4
pf5
pf8
pf9

Partial preview of the text

Download Food Industry and Subsector Studies - Analysis of Food System - Lecture Notes and more Study notes Biology in PDF only on Docsity!

FOOD INDUSTRY AND SUBSECTOR STUDIES

I. Objectives of this section of the course A. Give students brief overview of the structure of key parts of the U.S. food system B. Provide empirical applications of the food systems framework developed earlier in the course II. Overview of Food System A. Schematic of various parts of food system (Overhead--Fig. 11.1 from Senauer et al.) B. Relative contribution of various parts of food system to Value Added and Employment (Overheads--Figures 11-2 and 11-3 of Senauer et al.) Stress the importance of:

  1. Transportation, trade, and retailing, including major gains in VA in recent years;
  2. How more VA is contributed by eating establishments now than farming.
  3. Similar trends as 1-2 in Employment;
  4. Relative changes in employment--Shift in employment from farming and food processing/mfg to eating establishments, transportation, and retailing.
  5. Shift in productivity over time (attached table). Largest gains have been in food processing, while smallest have been in transportation, trade, & retail; and in eating establishments (most labor-intensive of these fields)
  6. Shift in share of consumer's bill going to different segments (Figs. 11-4 and 11. from Senauer) a. Increasing marketing bill b. Differing shares for at-home and away-from-home food

INDUSTRYAND SUBSECTOR STUDIES

PAGE 2

  1. These shifts reflect historical evolution of system, as detailed in optional readings and the old notes (MOD4A.OLD). III. Empirical Evaluation of system performance A. Subsector approach (see reading by Holtzman et al.) B. Evaluating Industry performance via SCP approach
  2. Most focus has been on pricing behavior, based on basic hypotheses derived from monopoly or oligopoly theory, i.e., a. More concentrated industries are characterized by barriers to entry, that allow incumbent firms to restrict output and raise prices (on output side) or reduce input purchase prices (on processing side) b. Forms of barriers to entry often measured and relationship with market structure evaluated--e.g., relationship between advertising and market concentration (conduct-structure relationship) - see old notes for examples. c. Most common--Attempt to link structure either to conduct (pricing) or performance (profit levels or prices received by buyers/sellers)
  3. Examples: a. Pricing differentials between national brands and unbranded products or store brands. (1) See Marion example (2) Hypothesis--price differential due purely to advertising-based consumer franchise.

INDUSTRYAND SUBSECTOR STUDIES

PAGE 4

  1. Remarkably consistent results showing that accounting profits and cost-price margins positively related to CR4, relative market share, and advertising intensity (overhead--figure 4-12 from Marion et al.)
  2. Debate over whether higher profits reflect lower costs and greater efficiency or simply market power (Demsetz argument--Chicago school). Implications for policy. --> need to look at how prices vary relative to costs. a. If prices increase by less than profits with increased concentration, this implies falling costs and net social gain. b. If prices increase by more than profits, this suggests higher costs due to X-inefficiency, and hence net social losses from the higher concentration. D. Another example--Food retailing and effects of concentration--Econometrics work of Mueller and Connor
  3. Background to the study a. Following wage and price controls of early 1970s and a lot of concern about rising food prices, Congress established the Joint Economic Committee, with subpoena power. b. Got data from 14 firms (114 divisions) on profits and price data from 3 firms operating in 35 SMSAs on prices. c. Used econometric analysis to look at relationship between absolute concentration (as measured by CR4), relative concentration (as measured by RFMS--relative firm market share = (Firm i's market share)/CR4 and: (1) Profit levels (2) Price levels

INDUSTRYAND SUBSECTOR STUDIES

PAGE 5

d. Results (1) Profits (a) Positively related to CR (b) Positively related to RFMS (2) Prices (a) Increased with both CR4 and RFMS (b) Increased more than profits--i.e., higher profit levels accounted for only 36% of the higher price levels.--I.e., more concentrated markets have higher costs. (i.e., not economies of size or greater efficiency)-- Overhead of table from UW handout showing prices up to 8% higher in more concentrated markets. (3) So, consumers in concentrated markets pay more both due to higher costs and higher profits. (4) Yet many SMSAs continue to be competitively structured. V. So what--Why are we worried about concentration--Is the cost of monopoly that great to societhy?

INDUSTRYAND SUBSECTOR STUDIES

PAGE 7

a. The above graph indicates that in addition to a deadweight loss, there is large redistribution of income between consumers and owners of food industries due to consumer overcharges. Redistribution of income roughly 20 times the level of deadweight loss to the economy, although economists often pay little attention to it (assuming it is just a transfer). But from a policy perspective it is probably more important than the deadweight loss. b. Such redistribution is highly regressive, since the poor spend a higher proportion of their income on food than do the rich. (1) Parker-Connor estimate consumer overcharge at 10%. (2) This is the equivalent of 1.1% of gross income for poor households (<$10,000/hh in 1975) and 0.7% for rich households (>$60,000/hh)

C. Other aspects of performance--e.g.,

  1. Technological performance a. Paradox of fairly rapid innovation in food industry with Very little R & D expenditure, and it has declined over time.--Tied with apparel manufacturers for the lowest ratio of R&D expenditures to sales in all of manufacturing. b. Most innovations (over 90%) come from outside the food industry--e.g., from equipment manufacturers and from public research). c. Relationships among size, concentration, and R & D

INDUSTRYAND SUBSECTOR STUDIES

PAGE 8

(1) Regression analysis does not support the hypothesis that substantial market power and large firm size promote R & D. Rather, (a) Increasing returns to R & D occur up to firm asset size of $125 million (1970 $), then decrease. Almost 200 food manufacturers were larger than this size. (b) R & D outputs increase until CR4 reaches 50-60%, then decrease. (2) Many innovations come from small firms, that are then bought out by the large firms. d. Implications for public policy (1) Need to keep a size mix in food industry to promote innovation (2) Hypothesis that you need large near monopolies to promote innovation is not supported by the evidence.

  1. Food advertising, consumption patterns, and nutrition a. Concerns about how food advertising affects nutrition (1) Low information content for "empty calorie" products--sale of imagery rather than content (2) Advertising aimed at children promoting heavily sugared foods, especially breakfast cereals. Now some restrictions on quantity of children's television advertising.