IDEAS home Printed from https://ideas.repec.org/a/bpj/bjafio/v16y2018i2p16n2.html
   My bibliography  Save this article

The Trade Impacts of a Food Scare: The Fonterra Contamination Incident

Author

Listed:
  • Stojkov Katarina

    (New Zealand Treasury, Wellington, New Zealand)

  • Noy Ilan

    (Victoria University of Wellington, Wellington, New Zealand)

  • Sağlam Yiğit

    (Victoria University of Wellington, Wellington, New Zealand)

Abstract

This paper examines the impact of a food contamination scare in the dairy sector on dairy exports. We investigate this question in the context of the 2013 Whey Protein Concentrate contamination incident in New Zealand. We assess the impact of this incident on dairy exports using synthetic control methods. A synthetic counterfactual scenario where the incident did not occur is developed using weighted information from other countries unaffected by the scare. We find that there was an initial negative shock to the exports of products that were thought to have been contaminated, but that there were no significant sustained impacts on other dairy products. The affected products made up only a small proportion of New Zealand dairy exports, with the vast majority of dairy exports being unaffected. Infant formula exports appear to have recovered more than a year after the scare. However, whey product exports (the contaminated product) remain lower than they otherwise would have been.

Suggested Citation

  • Stojkov Katarina & Noy Ilan & Sağlam Yiğit, 2018. "The Trade Impacts of a Food Scare: The Fonterra Contamination Incident," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 16(2), pages 1-16, November.
    • Handle: RePEc:bpj:bjafio:v:16:y:2018:i:2:p:16:n:2
    DOI: 10.1515/jafio-2016-0031
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/jafio-2016-0031
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/jafio-2016-0031?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Munasib, Abdul & Rickman, Dan S., 2015. "Regional economic impacts of the shale gas and tight oil boom: A synthetic control analysis," Regional Science and Urban Economics, Elsevier, vol. 50(C), pages 1-17.
    2. José G. Montalvo, 2011. "Voting after the Bombings: A Natural Experiment on the Effect of Terrorist Attacks on Democratic Elections," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1146-1154, November.
    3. William duPont IV & Ilan Noy & Yoko Okuyama & Yasuyuki Sawada, 2015. "The Long-Run Socio-Economic Consequences of a Large Disaster: The 1995 Earthquake in Kobe," PLOS ONE, Public Library of Science, vol. 10(10), pages 1-17, October.
    4. Colin A. Carter & Aaron Smith, 2007. "Estimating the Market Effect of a Food Scare: The Case of Genetically Modified StarLink Corn," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 522-533, August.
    5. Coffman, Makena & Noy, Ilan, 2012. "Hurricane Iniki: measuring the long-term economic impact of a natural disaster using synthetic control," Environment and Development Economics, Cambridge University Press, vol. 17(2), pages 187-205, April.
    6. Mario Mazzocchi, 2006. "No News Is Good News: Stochastic Parameters versus Media Coverage Indices in Demand Models after Food Scares," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(3), pages 727-741.
    7. Sarah Bohn & Magnus Lofstrom & Steven Raphael, 2014. "Did the 2007 Legal Arizona Workers Act Reduce the State's Unauthorized Immigrant Population?," The Review of Economics and Statistics, MIT Press, vol. 96(2), pages 258-269, May.
    8. Richards, Timothy J. & Patterson, Paul M., 1999. "The Economic Value Of Public Relations Expenditures: Food Safety And The Strawberry Case," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(2), pages 1-23, December.
    9. William duPont IV & Ilan Noy, 2015. "What Happened to Kobe? A Reassessment of the Impact of the 1995 Earthquake in Japan," Economic Development and Cultural Change, University of Chicago Press, vol. 63(4), pages 777-812.
    10. Bocker, Andreas & Hanf, Claus-Hennig, 2000. "Confidence lost and -- partially -- regained: consumer response to food scares," Journal of Economic Behavior & Organization, Elsevier, vol. 43(4), pages 471-485, December.
    11. Barone, Guglielmo & Mocetti, Sauro, 2014. "Natural disasters, growth and institutions: A tale of two earthquakes," Journal of Urban Economics, Elsevier, vol. 84(C), pages 52-66.
    12. Mark E. Smith & Eileen O. van Ravenswaay & Stanley R. Thompson, 1988. "Sales Loss Determination in Food Contamination Incidents: An Application to Milk Bans in Hawaii," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(3), pages 513-520.
    13. Alon Brav, 2000. "Inference in Long‐Horizon Event Studies: A Bayesian Approach with Application to Initial Public Offerings," Journal of Finance, American Finance Association, vol. 55(5), pages 1979-2016, October.
    14. Peter Hinrichs, 2012. "The Effects of Affirmative Action Bans on College Enrollment, Educational Attainment, and the Demographic Composition of Universities," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 712-722, August.
    15. Victoria Salin & Neal H. Hooker, 2001. "Stock Market Reaction to Food Recalls," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 23(1), pages 33-46.
    16. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    17. Michael R. Thomsen & Andrew M. McKenzie, 2001. "Market Incentives for Safe Foods: An Examination of Shareholder Losses from Meat and Poultry Recalls," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 526-538.
    18. Güneş Kamber & Chris McDonald & Gael Price, 2013. "Drying out: Investigating the economic effects of drought in New Zealand," Reserve Bank of New Zealand Analytical Notes series AN2013/02, Reserve Bank of New Zealand.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Giulio Grossi & Marco Mariani & Alessandra Mattei & Patrizia Lattarulo & Ozge Oner, 2020. "Direct and spillover effects of a new tramway line on the commercial vitality of peripheral streets. A synthetic-control approach," Papers 2004.05027, arXiv.org, revised Nov 2023.
    2. Bruno Ferman & Cristine Pinto & Vitor Possebom, 2020. "Cherry Picking with Synthetic Controls," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(2), pages 510-532, March.
    3. Ferman, Bruno & Pinto, Cristine, 2016. "Revisiting the Synthetic Control Estimator," MPRA Paper 73982, University Library of Munich, Germany.
    4. Huseynov, Samir & Palma, Marco A., 2018. "Does California’s LCFS Reduce CO2 Emissions?," 2018 Annual Meeting, August 5-7, Washington, D.C. 274200, Agricultural and Applied Economics Association.
    5. Grier, Kevin & Maynard, Norman, 2016. "The economic consequences of Hugo Chavez: A synthetic control analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 1-21.
    6. David Gilchrist & Thomas Emery & Nuno Garoupa & Rok Spruk, 2023. "Synthetic Control Method: A tool for comparative case studies in economic history," Journal of Economic Surveys, Wiley Blackwell, vol. 37(2), pages 409-445, April.
    7. Kaul, Ashok & Klößner, Stefan & Pfeifer, Gregor & Schieler, Manuel, 2015. "Synthetic Control Methods: Never Use All Pre-Intervention Outcomes Together With Covariates," MPRA Paper 83790, University Library of Munich, Germany.
    8. Kleis, Mischa & Moessinger, Marc-Daniel, 2016. "The long-run effect of fiscal consolidation on economic growth: Evidence from quantitative case studies," ZEW Discussion Papers 16-047, ZEW - Leibniz Centre for European Economic Research, revised 2016.
    9. Irz, Xavier & Mazzocchi, Mario & Réquillart, Vincent & Soler, Louis-Georges, 2015. "Research in Food Economics: past trends and new challenges," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 96(01), pages 187-237, March.
    10. Rohan Best & Paul J. Burke, 2019. "Macroeconomic impacts of the 2010 earthquake in Haiti," Empirical Economics, Springer, vol. 56(5), pages 1647-1681, May.
    11. Lynham, John & Noy, Ilan & Page, Jonathan, 2017. "The 1960 Tsunami in Hawaii: Long-Term Consequences of a Coastal Disaster," World Development, Elsevier, vol. 94(C), pages 106-118.
    12. Maïmouna Diakite & Jean-François Brun & Souleymane Diarra & Nasser Ary Tanimoune, 2017. "The effects of tax coordination on the tax revenue mobilization in West African Economic and Monetary Union (WAEMU)," CERDI Working papers halshs-01535104, HAL.
    13. Pier Basaglia & Sophie M. Behr & Moritz A. Drupp, 2023. "De-Fueling Externalities: How Tax Salience and Fuel Substitution Mediate Climate and Health Benefits," Discussion Papers of DIW Berlin 2041, DIW Berlin, German Institute for Economic Research.
    14. Ferrier, Peyton M. & Zhen, Chen & Bovay, John, 2023. "Price and Welfare Effects of the Food Safety Modernization Act Produce Safety Rule," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 48(1), January.
    15. Björn Falkenhall & Jonas Månsson & Sofia Tano, 2020. "Impact of VAT Reform on Swedish Restaurants: A Synthetic Control Group Approach," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(2), pages 824-850, April.
    16. repec:oup:apecpp:v:40:y:2018:i:3:p:482-501. is not listed on IDEAS
    17. Pier Basaglia & Sophie M. Behr & Moritz A. Drupp, 2023. "De-Fueling Externalities: Causal Effects of Fuel Taxation and Mediating Mechanisms for Reducing Climate and Pollution Costs," CESifo Working Paper Series 10508, CESifo.
    18. Myoung-jae Lee & Yasuyuki Sawada, 2020. "Review on Difference in Differences," Korean Economic Review, Korean Economic Association, vol. 36, pages 135-173.
    19. David Powell, 2016. "Synthetic Control Estimation Beyond Case Studies Does the Minimum Wage Reduce Employment?," Working Papers WR-1142, RAND Corporation.
    20. Samuel Verevis & Murat Üngör, 2021. "What has New Zealand gained from The FTA with China?: Two counterfactual analyses†," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(1), pages 20-50, February.
    21. Demko, Iryna & Edward, Jaenicke, 2016. "Policy Impacts from U.S. Organic Equivalency with the European Union," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235887, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    contamination; food scare; trade; synthetic control;
    All these keywords.

    JEL classification:

    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bjafio:v:16:y:2018:i:2:p:16:n:2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.