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Spatial Procurement of Farm Products and the Supply of Processed Foods: Application to the Tomato Processing Industry

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  • Hamilton, Stephen
  • Kjorlien, Scott
  • Ligon, Ethan
  • Shafran, Aric

Abstract

Increased transportation and logistical costs in agricultural markets have affected the spatial allocation of production in the agricultural and food sectors of the economy. We develop a spatial model of farm product procurement by a food processor, which is designed to capture the effects of supply-chain disruptions on the spatial procurement of farm products in the processed food sector. We use detailed data on production and procurement from a large California tomato processor to estimate the key parameters of the model, which allow us to calculate the price elasticity of supply for California tomato paste production and describe how changes in energy prices and transportation costs for primary agricultural products affect the supply of processed food.
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Suggested Citation

  • Hamilton, Stephen & Kjorlien, Scott & Ligon, Ethan & Shafran, Aric, 2024. "Spatial Procurement of Farm Products and the Supply of Processed Foods: Application to the Tomato Processing Industry," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt5m84n9bb, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:qt5m84n9bb
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    References listed on IDEAS

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    1. Catherine A. Durham & Richard J. Sexton & Joo Ho Song, 1996. "Spatial Competition, Uniform Pricing, and Transportation Efficiency in the California Processing Tomato Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 115-125.
    2. Emi Nakamura & Dawit Zerom, 2010. "Accounting for Incomplete Pass-Through," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(3), pages 1192-1230.
    3. Jean‐Paul Chavas & Thomas L. Cox & Edward Jesse, 1998. "Spatial allocation and the shadow pricing of product characteristics," Agricultural Economics, International Association of Agricultural Economists, vol. 18(1), pages 1-19, January.
    4. Celine Bonnet & Pierre Dubois & Sofia B. Villas Boas & Daniel Klapper, 2013. "Empirical Evidence on the Role of Nonlinear Wholesale Pricing and Vertical Restraints on Cost Pass-Through," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 500-515, May.
    5. Gee Hee Hong & Nicholas Li, 2017. "Market Structure and Cost Pass-Through in Retail," The Review of Economics and Statistics, MIT Press, vol. 99(1), pages 151-166, March.
    6. Emi Nakamura, 2008. "Pass-Through in Retail and Wholesale," American Economic Review, American Economic Association, vol. 98(2), pages 430-437, May.
    7. Catherine A. Durham & Richard J. Sexton, 1992. "Oligopsony Potential in Agriculture: Residual Supply Estimation in California's Processing Tomato Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(4), pages 962-972.
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    Cited by:

    1. James M. MacDonald, 2024. "Introduction: The Industrial Organization of Food and Agriculture," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 64(1), pages 1-9, February.

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    More about this item

    Keywords

    Social and Behavioral Sciences;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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