Maury E. Bredahl

Private incentives for adopting food safety and quality assurance

The competitiveness of food companies in national and international markets depends upon their ability to adopt production processes which meet food safety and quality requirements. Food safety and quality assurance affect the cost of carrying out transactions, and therein lies the private incentive for adopting voluntary quality assurance systems. While quality assurance systems have the potential to reduce transaction costs by serving as the seller’s guarantee of safety or quality, they may also serve as trade barriers.

The Elasticity of Foreign Demand for U.S. Agricultural Products: The Importance of the Price Transmission Elasticity

Johnson and Tweeten (1967, 1977) have provided estimates of the elasticity of export demand for specific agricultural commodities and aggregate agricultural exports. These estimates indicate the aggregate export demand for U.S. agricultural commodities is very elastic with respect to price, and the estimated elasticity is somewhat greater than 6.0 in both cases. The elasticities of export demand for specific commodities are also very large, ranging from -2.8 for soybeans to 10.18 for feed grains (Johnson). Theoretically, the elasticity of export demand may be quite large. However, the Johnson-Tweeten estimates do not consider government policies which insulate domestic producers and consumers from external price fluctuations. In order to study the effect of these policies on the elasticity of export demand, we (a) examine the formulation of the elasticity of export demand and the implication of price insulation policies, (b) review the trade policies of major importers and competing exporters, and (c) calculate the export demand elasticities for major agricultural commodities which incorporate price insulation policies. These export demand elasticities are much smaller than those of Johnson and

How Quality Management Metasystems Are Affecting the Food Industry

The future competitiveness of the U.S. food industry depends on its ability to deliver high-quality products at competitive prices to domestic and international markets. Recent developments in the establishment and operation of quality management metasystems are having important effects on this competitiveness. Their use has the potential to enhance product quality, simplify contractual relationships, demonstrate compliance with regulations, and improve responsiveness to customers. Their use is also requiring novel internal organization and market linkages between firms.

Multifunctionality and Agricultural Trade Negotiations

Differing views of multifunctionality - attributing nonmarket benefits to agricultural production - continue to be an obstacle in World Trade Organization (WTO) negotiations. Some nations see multifunctionality as justifying subsidies to agricultural production; others see it as disguised protection. This paper shows that while multifunctionality never justifies trade interventions, it can justify production subsidies or taxes. Recognizing that the subsidies or taxes can be economically efficient policies, nations must precisely define and value the externalities in order to design policies and defend those interventions in the WTO. Trade rules are developed that accommodate domestic policy intervention while preventing disguised protection.

Rent Seeking in International Trade: The Great Tomato War

This paper presents a model of international rent-seeking activities by producers in both exporting and importing nations. The model is applied to the winter vegetable trade between the United States and Mexico. An analysis is made of the attempts to form export/import coalitions. Reasons for these failures are given. Due to past failures to impede trade, essentially free trade in winter vegetables between the two countries exists.

Multiple Exchange Rate Changes and U.S. Agricultural Commodity Prices

A model was developed to assess recent effects of exchange rate changes, inflation, and price insulation policies on real U.S. commodity prices. Exchange rate effects are defined so that they can occur and be significant under either fixed or floating rate regimes. The results indicate exchange rate effects on real U.S. commodity prices are smallest under free trade and real commodity price insulation policies but rise substantially as nominal price insulation policies become more prevalent.

Behavior and Productivity Implications of Institutional and Project Funding of Research

A behavioral model of a research scientist is utilized to develop the characteristics of the demand for institutional (lR) and project research (PR) funds. The demand analysis implies a trade-off between the allocative and productive efficiency of IR funding and the research output mix of PR funding. The model is used to evaluate the formula and competitive grant funding of U.S. agricultural research. We conclude that national research policy should be cast in terms of the relative mix of the two systems of support, not in the absolute merits of either system.

Agribusiness Competitiveness in the 1990s: Discussion

Streeter, Sonka, and Hudson (SSH) are to be congratulated on their willingness to address the relationship between information technology, coordination, and competitiveness. Throughout the paper there are nuggets that could be polished and brought to market. Yet, the implicit objective of developing a conceptual framework is still missing. And SSH struggle to enhance the economists and the agribusiness managers ability to link a factor (computerized information technology), a process (coordination), with a yet-to-be-well-defined phenomenon (competitiveness). As the authors continue their work in this area, it would be beneficial to start with a theoretical

Interrelationships between Monetary Instrmnents and Agricultural Commodity Trade: Discussion

The evolving relationships of macroeconomic variables (which Chambers terms monetary instruments) necessitates two quite different types of analyses. The analysis of the evolving relationship of agricultural prices (and hence utilization, income, etc.) and macroeconomic variables in a post-harvest context (within marketing year) or across a few marketing years may be termed commodity analysis. The analysis of the evolving relationship of macroeconomic variables and the long-run equilibrium of the agricultural sector may be termed agricultural adjustment analysis. Much of commodity analysis is logically directed toward the domestic and foreign demand sectors. The supply side of the livestock sector is also impacted by interest rate fluctuations in the short run. Much of this analysis utilizes a forecasting (versus projection) framework. This analysis identifies marketing strategies for farmers, procurement strategies for processing firms, and strategies for hedging

Trade Negotiation and Agriculture: New Approaches and Possible Consequences: Discussion

the negotiations. A common element of all proposals and of the RS framework is the use of a quantitative indicator to measure the degree of trade or output distortion that results from various agricultural policies. The Schwartz and Parker (SP) paper contributes significantly to an understanding of the potential use and economic properties of several quantitative indicators of trade and output distortions.