Tracing the Effects of Agricultural Commodity Prices and Food Costs

14 Pages Posted: 2 Apr 2020

See all articles by Catherine J. Morrison Paul

Catherine J. Morrison Paul

University of California, Davis - Department of Agricultural and Resource Economics; National Bureau of Economic Research (NBER); University of Hartford - Barney School of Business

James M. MacDonald

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

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Date Written: August 2003

Abstract

We estimate a system of product and input‐demand equations for food‐processing industries to trace the links among farm commodity prices, food‐processing costs, and food prices. Disembodied technical change, which likely reflects increasing consumer demand for convenience and product variety, has sharply reduced agricultural materials demand relative to most other food‐processing inputs. This implies weakening impacts of farm price shocks on food prices. But improving quality and falling relative prices for agricultural inputs, in combination with increasing factor substitution, has counteracted these forces to encourage greater usage of agricultural inputs in food processing, and limit these trends.

Keywords: agricultural inputs, costs, factor substitution, food prices, food processing

Suggested Citation

Morrison Paul, Catherine J. and MacDonald, James M., Tracing the Effects of Agricultural Commodity Prices and Food Costs (August 2003). American Journal of Agricultural Economics, Vol. 85, Issue 3, pp. 633-646, 2003, Available at SSRN: https://ssrn.com/abstract=3566336 or http://dx.doi.org/10.1111/1467-8276.00461

Catherine J. Morrison Paul (Contact Author)

University of California, Davis - Department of Agricultural and Resource Economics ( email )

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University of Hartford - Barney School of Business

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James M. MacDonald

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