Retail Pricing Behavior for Agricultural Products with Implications for Farmer Welfare PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Retail Pricing Behavior for Agricultural Products with Implications for Farmer Welfare PDF full book. Access full book title Retail Pricing Behavior for Agricultural Products with Implications for Farmer Welfare by Chenguang Li. Download full books in PDF and EPUB format.
Author: Chenguang Li
Publisher:
ISBN:
Category : Farm produce
Languages : en
Pages : 112
Get Book Here
Book Description
Rising concentration and consolidation of sales among large supermarket chains in the United States in the past decades has accelerated both policy concern and debate among economists. Prior work on food retailers has emphasized their market power over consumers and to a lesser extent their market power over farmers, but essentially no work has made the link between their pricing methods and farmer welfare. This study is the first to evaluate the welfare implications for producers of the diversified pricing strategies that retailers utilize in practice and the resulting attenuation of the relationship between prices at retail and at the farm gate. The typical model of retail pricing for agricultural products assumes retailers set price equal to the farm price plus a certain markup. However, observations from the grocery retailing market indicate a large degree of price dispersion and demonstrate that retailers adopt diversified pricing strategies. By studying the pricing behaviors for six major agricultural commodities sold at fifteen retail chains across the United States, this study provides extensive evidence of price dispersion in the grocery retail market. In particular, I document three alternative pricing patterns in the grocery retailing market in addition to markup pricing: fixed (constant) pricing, periodic sale, and high-low pricing. Retail prices under these alternative-pricing strategies adjust only partially to supply shocks, and do not closely reflect the price variations at the farm gate. A vertical structure model is constructed to reflect the relationship between retailers and producers in a prototypical fresh produce market. Using retailers' markup pricing strategy as the baseline case, I parameterize the model and carry out a series of simulations under different pricing regimes to evaluate the welfare implications for producers of the diversified pricing strategies that retailers utilize in practice. The simulation results show that alternative pricing strategies and the resulting retail price dispersion tends to reduce farm income and exacerbate farm price volatility relative to markup pricing. However, harvest cost places a lower bound constraint on the farm price, since no product will be harvested at price below the marginal harvest cost. If harvest cost is sufficiently large, which is likely to be true especially for perishable products, then increased farm price volatility induced by retailers' alternative pricing strategies may result in higher farm income, compared to markup pricing case. Furthermore, by taking farmers' risk attitude into account, this study shows that retailers' alternative pricing strategies increase farmers' income risk, which tends to reduce the expected utility of risk-averse farmers. The overall welfare effects to producers resulting from diversified retailer pricing strategies depend on several key factors: the level of farm supply shocks, farm demand elasticity, unit harvest cost, and farmers' risk attitude.
Author: Chenguang Li
Publisher:
ISBN:
Category : Farm produce
Languages : en
Pages : 112
Get Book Here
Book Description
Rising concentration and consolidation of sales among large supermarket chains in the United States in the past decades has accelerated both policy concern and debate among economists. Prior work on food retailers has emphasized their market power over consumers and to a lesser extent their market power over farmers, but essentially no work has made the link between their pricing methods and farmer welfare. This study is the first to evaluate the welfare implications for producers of the diversified pricing strategies that retailers utilize in practice and the resulting attenuation of the relationship between prices at retail and at the farm gate. The typical model of retail pricing for agricultural products assumes retailers set price equal to the farm price plus a certain markup. However, observations from the grocery retailing market indicate a large degree of price dispersion and demonstrate that retailers adopt diversified pricing strategies. By studying the pricing behaviors for six major agricultural commodities sold at fifteen retail chains across the United States, this study provides extensive evidence of price dispersion in the grocery retail market. In particular, I document three alternative pricing patterns in the grocery retailing market in addition to markup pricing: fixed (constant) pricing, periodic sale, and high-low pricing. Retail prices under these alternative-pricing strategies adjust only partially to supply shocks, and do not closely reflect the price variations at the farm gate. A vertical structure model is constructed to reflect the relationship between retailers and producers in a prototypical fresh produce market. Using retailers' markup pricing strategy as the baseline case, I parameterize the model and carry out a series of simulations under different pricing regimes to evaluate the welfare implications for producers of the diversified pricing strategies that retailers utilize in practice. The simulation results show that alternative pricing strategies and the resulting retail price dispersion tends to reduce farm income and exacerbate farm price volatility relative to markup pricing. However, harvest cost places a lower bound constraint on the farm price, since no product will be harvested at price below the marginal harvest cost. If harvest cost is sufficiently large, which is likely to be true especially for perishable products, then increased farm price volatility induced by retailers' alternative pricing strategies may result in higher farm income, compared to markup pricing case. Furthermore, by taking farmers' risk attitude into account, this study shows that retailers' alternative pricing strategies increase farmers' income risk, which tends to reduce the expected utility of risk-averse farmers. The overall welfare effects to producers resulting from diversified retailer pricing strategies depend on several key factors: the level of farm supply shocks, farm demand elasticity, unit harvest cost, and farmers' risk attitude.
Author: William G. Tomek
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 378
Get Book Here
Book Description
Principles of price determination; Price differences and variability; Pricing institutions; Introduction to empirical price analysis.
Author: Berend Wierenga
Publisher: Springer Science & Business Media
ISBN: 1461562732
Category : Business & Economics
Languages : en
Pages : 314
Get Book Here
Book Description
As in many other sectors, in agribusiness major changes are taking place. On the demand side, consumers are changing lifestyles, eating and shopping habits, and increasingly are demanding more accommodation of these needs in the supermarket. With regard to the supply: the traditional distribution channel dominators - manufacturers of branded consumer products - are trying hard to defend their positions against retailers, who gather and use information about the consumer to streamline their enterprises and strengthen their ties with the consumer. The agricultural producers, meanwhile, face increased regulations with regard to food additives, pesticides, and herbicides. Pressures rise as their business becomes more specialized and capital-intensive than that of their predecessors. Finally, the larger political climate is not so favorable to agriculture, which now has to compete in the global market without significant government support. This title describes and interprets changes in the domain of agriculture and food. The contributors develop the theme of taking an interdisciplinary approach to coping with these changes, using concepts and methods developed in general marketing, which are adapted so as to apply to the particular characteristics of the food and agriculture sector. This book is published to honor the distinguished career of Professor Mathew T.G. Meulenberg from Wageningen Agricultural University, on the occasion of his retirement in September 1996. As a scientist, teacher, and advisor to the agribusiness and the government, Professor Meulenberg has made an important contribution to the development of marketing, inside and outside the domain of agriculture.
Author: Steve Martinez
Publisher: DIANE Publishing
ISBN: 1437933629
Category : Social Science
Languages : en
Pages : 87
Get Book Here
Book Description
This comprehensive overview of local food systems explores alternative definitions of local food, estimates market size and reach, describes the characteristics of local consumers and producers, and examines early indications of the economic and health impacts of local food systems. Defining ¿local¿ based on marketing arrangements, such as farmers selling directly to consumers at regional farmers¿ markets or to schools, is well recognized. Statistics suggest that local food markets account for a small, but growing, share of U.S. agricultural production. For smaller farms, direct marketing to consumers accounts for a higher percentage of their sales than for larger farms. Charts and tables.
Author: Charng-Jiun Yu
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
The dairy industry is one of the most important components in U.S. economy. Milk production added substantial value to the agricultural sector. In 2017, U.S. dairy farmers produced 38.1 billion dollars worth of milk. On the consumption side, Americans on average consume 244 pounds of dairy products in a year. Despite the significance of the U.S. dairy industry, several important economic issues in pricing and policy are not studied. With the improvement in data quality over the past decade, there is an emerging opportunity for empirical studies to analyze the U.S. dairy industry and provide economic insights to a more general scope. My dissertation provides empirical analysis to understand the pricing and policy issues for producers, retailers, and consumers in the U.S. dairy industry. Specifically, in the following three chapters I study the relationship between market power and farm-retail price transmission, the impact of environmental regulations on dairy farm management, and the relationship between price and perceived quality in consumer choice of cheese products. In the first chapter, I seek to understand the impact of market competitiveness on the degree of asymmetric price transmission and associated welfare implications. I estimate a kinked Almost Ideal Demand System for fluid milk products in 18 U.S. metropolitan areas. By conducting an asymmetric price transmission test, I find that cities with less competitive food retailing tend to exhibit asymmetric price transmission. The degree of price asymmetry and associated welfare loss are decreasing in the market competitiveness. The welfare analysis suggests that the welfare loss due to asymmetric price transmission is large in terms of the percentage of milk expenditures. The potential is for substantially higher future welfare loss given the ongoing consolidation in food retailing industry. In the second chapter, I quantify the impact of the Clean Water Act (CWA) on farm waste management practices of U.S. dairy concentrated animal feeding operations (CAFOs). A double-hurdle model is employed to examine how dairy farmers adjust their practices in response to the major policy revision of the CWA in 2003. Using the 2000 and 2010 Agricultural Resource Management Survey data, I find that CAFO farmers who follow the management standards of the nutrient management plan (NMP) required by the CWA are more likely to implement manure storage after the policy revision. There are, however, no significant changes in storage capacity for those who have already adopted. Furthermore, CAFOs that fail to comply with NMPs did not make significant changes in storage capacity, land application of manure, and manure removal. The results suggest a heterogenous and limited impact of the CWA on waste management practices of dairy CAFOs. In the third chapter, I examine how prices affect consumers' perception of quality and consequently their product choices using individual consumers' purchase records in the U.S. cheese market. I hypothesize that price affects product choices by two channels: (i) a "pure price" effect directly affecting the purchase cost, and (ii) a "perceived quality" effect affecting the perceived product quality. In the empirical analysis, I complement the traditional mixed logit model with the conditions of purchasing behavior and utilize the Nielsen consumer panel and retail scanner data of the U.S. cheese markets from 2012 to 2014. The results suggest a strong perceived quality effect. With a 10% increase in the price of a cheese product, the corresponding choice probability would on average decrease by 5.4%, which consists of a 13.0% decrease due to higher purchase cost and a 7.6% increase driven by higher perceived quality. For approximately 10% of the cheese products, the ratios of the perceived quality elasticity to the total price elasticity are greater than 3.69; on the lower end, the ratios are lower than 0.24 for another 10% of the products. Such a large value is indicative of a large heterogeneity of the price impact on perceived quality across products. In addition, the impact of price on perceived varies across different types of households. Finally, I find that the perceived quality effect decreases with repeat purchases. These findings have significant implications for retailers' marketing strategy, government policy, and analysis of product competition
Author: William G. Tomek
Publisher: Cornell University Press
ISBN: 0801471109
Category : Business & Economics
Languages : en
Pages : 484
Get Book Here
Book Description
Published continuously since 1972, Agricultural Product Prices has become the standard textbook and reference work for students in agricultural and applied economics, buyers and sellers of commodities, and policymakers, clearly explaining conceptual and empirical models applicable to agricultural product markets. The new fifth edition uses up-to-date information and models to explain the behavior of agricultural product prices. Topics include price differences over market levels (marketing margins), price differences over space (regionally and internationally) and by quality attributes, and price variability with the passage of time (seasonal and cyclical variations, trends, and random behavior). William G. Tomek and Harry M. Kaiser review and adapt microeconomic principles to the characteristics of agricultural commodity markets and then apply these principles to the various dimensions of price behavior. They also provide an in-depth discussion of prices established for futures contracts and their relationship to cash (spot) market prices; cover the influential roles of price discovery institutions, such as auctions and negotiated contracts, and government policies regulating trade and farms; and discuss the specification, use, and evaluation of empirical models of agricultural prices, placing emphasis on the challenges of doing high-quality, useful analyses and interpreting results.
Author: Giovanni Galizzi
Publisher: Physica
ISBN:
Category : Business & Economics
Languages : en
Pages : 660
Get Book Here
Book Description
New analysis and empirical evidence on several topics such as the determinants of shape and nature of the vertical relationships in the food system, the determinants of vertical co-ordination and competition, types and mechanisms of co-ordination as well as the consequences for competitiveness, consumer welfare and policy implications are provided. The focus is on vertical issues at different stages of the food chain with a particular emphasis on the increasing role played by retailers in shaping the vertical relationships in the food system through the development of food supply-chain management.
Author: OECD
Publisher: OECD Publishing
ISBN: 9264253238
Category :
Languages : en
Pages : 138
Get Book Here
Book Description
The OECD-FAO Agricultural Outlook 2016-2025 provides an assessment of prospects for the coming decade of the agricultural commodity markets across 41 countries and 12 regions, including OECD countries and key agricultural producers, such as India, China, Brazil, the Russian Federation and Argentina.
Author: F. Bailey Norwood
Publisher: Waveland Press
ISBN: 1478648678
Category : Technology & Engineering
Languages : en
Pages : 445
Get Book Here
Book Description
Friendly and readable, Agricultural Marketing and Price Analysis presents a comprehensive approach to agricultural price analysis, agricultural market structures, and agricultural marketing strategies. The authors engage students with very little exposure to economics and with only a basic grasp of algebra. The text utilizes a fresh approach and supplies thorough coverage of core topics, as well as complex topics such as general equilibrium models, game theory, and econometrics. It also provides an introduction to data analysis and incorporates many examples. Supplemental materials are available for additional practice and further exploration. Unique to the Second Edition is the inclusion of a chapter on consumer behavior and food preferences, as well as relevant areas of research. The authors introduce readers to the agricultural supply chain, including forecasting and inventory management. Succinct and approachable, this text sets the stage for an enjoyable and effective learning experience.
Author: Inderjit Singh
Publisher:
ISBN:
Category : Agricultural industries
Languages : en
Pages : 360
Get Book Here
Book Description
This book presents the basic model of an agricultural household that underlies most of the case studies undertaken so far. The model assumes that households are price-takers and is therefore recursive. The decisions modeled include those affecting production and the demand for inputs and those affecting consumption and the supply of labor. Comparative results on selected elasticities are presented for a number of economies. The empirical significance of the approach is demonstrated in a comparison of models that treat production and consumption decisions separately and those in which the decisionmaking process is recursive. The book summarizes the implications of agricultural pricing policy for the welfare of farm households, marketed surplus, the demand for nonagricultural goods and services, the rural labor market, budget revenues, and foreign exchange earnings. In addition, it is shown that the basic model can be extended in order to explore the effects of government policy on crop composition, nutritional status, health, saving, and investment and to provide a more comprehensive analysis of the effects on budget revenues and foreign exchange earnings. Methodological topics, primarily the data requirements of the basic model and its extensions, along with aggregation, market interaction, uncertainty, and market imperfections are discussed. The most important methodological issues - the question of the recursive property of these models - is also discussed.
