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The effects of E. coli 0157:H7, FMD and BSE on Japanese retail beef prices: A historical decomposition

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  • Sayed H. Saghaian

    (Department of Agricultural Economics, 314 Charles E. Barnhart Building, University of Kentucky, Lexington, KY 40546)

  • Leigh J. Maynard

    (Department of Agricultural Economics, 319 Charles E. Barnhart Building, University of Kentucky, Lexington, KY 40546)

  • Michael R. Reed

    (Department of Agricultural Economics, 308 Charles E. Barnhart Building, University of Kentucky, Lexington, KY 40546)

Abstract

This study examines Japanese retail price reactions to the 2001 bovine spongiform encephalopathy (BSE) discovery, the 2000 outbreak of foot and mouth disease (FMD), and the 1996 E. coli food poisoning events. Historical decomposition of retail-level price series aids in explaining the behavior of beef prices in a neighborhood (period-by-period time interval) of the three events. This is based on an application of directed acyclic graphs, constructing orthogonal innovations to determine causal patterns behind contemporaneous innovations. The results show that the beef safety and animal health events had different negative impacts on Japanese retail beef prices, suggesting that consumers understood and differentiated among the health risks. The results provide incentives for beef producers and retailers to inform consumers proactively about ongoing beef safety and animal health measures. Understanding consumer reaction to BSE, FMD, and E. coli helps the beef industry restore consumer confidence after future crises, and provides policy makers a basis for countermeasures and compensations. [EconLit citations: Q11, Q13]. © 2007 Wiley Periodicals, Inc. Agribusiness 23: 131-147, 2007.

Suggested Citation

  • Sayed H. Saghaian & Leigh J. Maynard & Michael R. Reed, 2007. "The effects of E. coli 0157:H7, FMD and BSE on Japanese retail beef prices: A historical decomposition," Agribusiness, John Wiley & Sons, Ltd., vol. 23(1), pages 131-147.
    • Handle: RePEc:wly:agribz:v:23:y:2007:i:1:p:131-147
    DOI: 10.1002/agr.20106
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    1. Saghaian, Sayed H. & Reed, Michael R., 2014. "The Impact Of The Recent Federal Reserve Large-Scale Asset Purchases On The Agricultural Commodity Prices: A Historical Decomposition," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 2(2), pages 1-16, April.
    2. Saghaian, Sayed H. & Özertan, Gökhan & Spaulding, Aslıhan D., 2008. "Dynamics of Price Transmission in the Presence of a Major Food Safety Shock: Impact of H5N1 Avian Influenza on the Turkish Poultry Sector," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 40(3), pages 1015-1031, December.
    3. Moonsoo Park & Yanhong H. Jin & David A. Bessler, 2008. "The impacts of animal disease crises on the Korean meat market," Agricultural Economics, International Association of Agricultural Economists, vol. 39(2), pages 183-195, September.
    4. Edgardo Ayala & Joana Chapa, 2017. "AH1N1 impact on the Mexican pork meat market," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 32(1), pages 3-25.
    5. Byung Min Soon & Wyatt Thompson, 2020. "Japanese beef trade impact from BSE using a time‐varying Armington model," Agribusiness, John Wiley & Sons, Ltd., vol. 36(3), pages 385-401, June.
    6. Assefa, Tsion & Meuwissen, Miranda & Lansink, Alfons G.J.M., 2015. "Food scares and price volatility: the case of German and Spanish pig chains," 2015 Conference, August 9-14, 2015, Milan, Italy 210966, International Association of Agricultural Economists.
    7. Yamane, Fumihiro, 2010. "Estimation of Consumer Welfare Change from the Revision of Age Criterion for BSE Testing: Hypothetical Revealed Preference Method Using Monitoring Survey Data," Japanese Journal of Agricultural Economics (formerly Japanese Journal of Rural Economics), Agricultural Economics Society of Japan (AESJ), vol. 12, pages 1-19.
    8. Rommel, J. & Neuenfeldt, S. & Odening, M., 2010. "Markteffekte medienwirksamer Lebensmittelskandale – eine Ergebnisstudie," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 45, March.

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    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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