Sara K. Schumacher

The Persistence of Profitability among Firms in the Food Economy

The persistence of industry, firm-specific, and corporate-parent effects on firm profitability in the food economy are calculated and further analyzed within its four major sectors: food processing, wholesale grocery, retail supermarket, and restaurant. Profits are more persistent within an industry than within a corporation. The retail supermarket sector has had stable profits as has individual retail supermarket firms relative to the other three sectors.

Economies of Scale in the Floriculture Industry

This study investigated the cost structure of the floriculture industry in the United States. Economies of scale and input elasticities were estimated with a normalized quadratic cost function. Results suggest that economies of scale exist in the floriculture industry. As producers become large and more automated, they have a cost advantage relative to smaller producers who are producing the same output product mix. The existence of economies of scale suggests that average grower size can increase in the future as growers increase in size to take advantage of cost efficiencies.

The sustainability of return on assets among sectors in the food economy

Using return on assets as a proxy for profitability, this study evaluates the sustainability of profits in the food economy with respect to industry, corporate, and business-specific effects for low- and high-performing firms. The food economy is broken into its four major sectors: food processing, wholesale grocery, retail supermarket, and restaurant. Industry incremental effects are not significantly different between low and high performers except in processing. On average, high performance has been more sustainable than low performance. Corporate and segment sustainability rates were larger for high performers as compared to low performers. Within the retail industry, there is no significant difference between sustainability rates of high and low performers. High performers in the retail industry had significantly greater industry, business-segment, and total-sum sustainability rates than the other three sectors, suggesting the retail sector has important characteristics that merit further research.