Minutes of NE-165 Meeting
Private Strategies, Public Policies, and Food System Performance

Minutes of NE-165 Meeting

Chairperson Julie Caswell (UMass) opened the meeting at 1:30 p.m. on Wednesday, June 23rd (see attached meeting agenda and list of those attending). After a round of introductions, the group approved the minutes of the October 1998 meeting. Julie then outlined the objectives for the business meeting. These were to review and work on plans for NE-165 conferences to be held in 2000 and to do future planning for the year 2001.

Jim MacDonald (ERS), chair of the organizing committee, gave an update on the NE-165 conference on Consolidation in the Meat Sector held in Washington, DC in February 1999. He said there were 18 papers presented and about 80 in attendance. Jim said he overestimated the number of researchers that would attend (there were about 30) and underestimated the general interest among industry and extension and public policy economists (there were about 50 in attendance). The combination of people led to a very good discussion. The papers were distributed in a xeroxed volume through the support of the Food Marketing Policy Center at the University of Connecticut. Additional copies of the volume are available from the FMPC. Jim will work with Julie to put paper summaries from the conference on the NE-165 web site.

Bill Lesser (Cornell), chair of the organizing committee, gave an update on the NE-165 conference on Transitions in Agbiotech: Economics of Strategy and Policy to be held over the next two days. He said that 28 papers were scheduled for presentation and about 90 attendees were expected. The sister conference held in Rome last week was a success and Bill said he expects the discussion at this conference to be equally lively. Decision makers' summaries for the U.S. conference papers are available on the NE-165 web site (http://www.umass.edu/ne165/). A selected set of papers from the two conferences will be published in a special issue of Agribusiness with Bill and Vittorio Santaniello (U of Rome) acting as co-editors. Bill is also pursuing publishing a volume with CABI or in a FMPC proceeding volume and Nick Kalaitzandonakes has expressed interest in having some of the papers published on line on the AgBioForum web site. Tracy Hewitt (C-FARE), Bill, and the group also discussed the desirability of scheduling briefings for key policy makers on the results of the conference.

Discussions on Year 2000 Conferences

Julie noted that NE-165 is involved in three conferences for the year 2000 that have active organizing committees already in place (see attached list for details of each). The first of these conferences was described by Tony Gallo (ERS) and Mark Denbaly (ERS). It is titled The American Consumer in the Changing Food System and will be held April 19-21, 2000 in Washington, DC. It will be a combined policy and research conference. The focus of the first day will be on changes in consumer demand and diets during the last century and the role of consumer demand in shaping changes in the agricultural and food sectors. The second two days will be a research conference presenting a range of results on supply and demand side explanations of changes in the agricultural and food sectors and their impacts on consumers. The group discussed the outline and content of the conference. A call for abstracts has been issued (see the Upcoming Conferences button on the NE-165 web site). As a summary of the discussion, Julie noted NE-165's strong and continuing interest in co-sponsoring the conference and in making contributions to it by participating in peer review of submitted abstracts and in selection of discussants.

The second NE-165 Conference in 2000 will be on Global Food Trade and Consumer Demand for Quality. The conference is being co-organized with the International Agricultural Trade Research Consortium and will be held June 26-27, 1999 in Montreal, Canada. Julie described the conference to the group. It will concentrate on how consumer demand is affecting global agricultural and food trade and on how trade is affecting consumer welfare. The organizing committee has already selected three case studies to be presented and selected paper abstracts are due by September 3 (see NE-165 web site for the call for papers).

The third NE-165 Conference for 2000 is Valuing the Health Benefits of Food Safety. It will be held at the University of Maryland on September 13-14, 2000. Julie described the conference as focusing of economic methodologies for measuring the health benefits of food safety. The several federal agencies in the U.S. use different methodologies. The conference will be structured to explore these methodologies and build consensus among the agencies on best practices for measuring the health benefits of food safety. Several agencies are participating in and sponsoring the conference. The organizing committee also plans a follow-up briefing to present the results of the conference.

Planning for the Year 2001 and Beyond

The group then turned to discussion of plans for the year 2001. Julie noted that the current NE-165 Project ends in September, 2001 so we are already planning through the end of the project's life. Several conference ideas have been proposed in the past (see attached list). Prominent among these is the Pricing Strategy Studies in the Food System conference idea. Ron Cotterill (UConn) described the possible content of this conference, saying it was originally scheduled for 2000 but should be postponed in light of The American Consumer in the Changing Food System conference to be held in April, 2000. He noted that there are many important topics, including market access, spot marketing, brand level measures of elasticity, price transmission, and international convergence, that will not be addressed in the April, 2000 conference and could be taken up in a 2001 conference.

Julie also introduced the idea/possibility of having some kind of finale conference at the end of the Project (perhaps in June 2001) that focuses on the major determinants of food system performance. This conference would combine the strategy and food safety sides of the project. Randy Torgerson (RBCDS-CS) emphasized in the Executive Committee meeting, in regard to market performance, the re-emergence of market access and price transmission issues, and the role of new wave cooperatives. He noted that there is a working group in the White House working on concentration issues in the hog industry.

Much discussion followed on the audience and content of a possible finale conference and possible preparation of book(s) at the end of the NE-165 term. A major question is the degree to which a finale conference and/or book(s) would be retrospective versus prospective. Bill Lesser expressed the idea that the project might do better to focus on a more specific theme and do it well. An example would be an international comparative approach. At the October 1998 meeting there was some interest expressed in a new "blue" book (Connor et al.) or "red" book (Marion) that could present a broad picture of the current industrial organization of the food sector. Ron Cotterill noted that while many people are enthusiastic about using such a book in their research and teaching, there is not quite so much enthusiasm for actually doing the writing. Several members commented that the institutional structures at universities and ERS have changed significantly making the effort for such books hard to marshal. Stan Fletcher (GA) suggested that the 2001 conference might dovetail nicely with preparations for the 2002 Farm Bill. WTO negotiations are likely to be on-going at the time as well. The group did not come to any conclusions about the usefulness of a finale conference or its specific theme nor on possible book projects. These issues will be a major focus of planning efforts over the next six months. Julie calls for those who are interested in working on this planning process to contact her by August 15. She will organize a planning committee.

Julie also noted that, since we are now only two years out from the end of the project, it is not too early for members to begin thinking about what they want to do next (e.g., new regional committees, AAEA sections, other institutional arrangements). Possible "children" of NE-165 were discussed by the group, including groups in the areas of food safety, the economics of new technologies (e.g., biotech), or other areas of industrial organization. If groups of members and others want to start organizing over the next two years, it is possible that some time at NE-165 meetings could be set aside for their organizing efforts.

Update on Sections

Julie reported, on behalf of Tanya Roberts (ERS), that Tanya and Ron Meekhof have had about 35 AAEA members express an interest in joining a Food Safety Section. With the help of Neal Hooker, they will pursue gaining the additional interest to meet the minimum of 50 members for establishing a section. The Food and Agricultural Marketing Policy Section has been established by the AAEA but no one present was knowledgeable about the section's current activities.

Fall Meeting and Elections

Julie said that the Executive Committee had discussed the need for a Fall, 1999 meeting in its morning meeting. The Executive Committee were in agreement with Julie's suggestion that we not hold a Fall, 1999 meeting. The organizing committees for the year 2000 conferences are working well in small group meetings and members may want to save their travel time and budgets for the many conferences coming up. However, not having a meeting requires that organizing groups start forming for making decisions about year 2001 activities and move forward during the Fall without a meeting as a focal point. Stan Fletcher said he thought the Fall meeting was really a necessity to make sure that planning activity takes place. Everett Peterson (VA) agreed that waiting until 2000 to start planning would be too late. The consensus of the group was that Julie should work as a liaison between groups of members who would like to meet in the Fall either to discuss plans for the year 2001 or after. Such groups should contact Julie directly by August 15, 1999. If there is demand, Julie will ask Dan Rossi to authorize a Fall meeting where the working groups can gather, with location and dates depending on who is participating. Groups may also schedule meetings at the AAEA meetings in Nashville.

Julie noted that NE-165 is scheduled to hold elections for the Chairperson, Secretary, and two Executive Committee members in Fall, 1999. All the positions have 3-year terms. She also said that given the Project ends in Fall 2001, we are really only looking at two-year terms. Julie said that the Executive Committee asked the question of whether we should continue holding elections through Fall of 2000 given the shortening terms of those elected. It was the strong feeling of the members present at the business meeting that elections should continue to be held. Therefore in Fall 1999 an election committee will be formed to run the elections. Following past practice, the committee will be made up of the four continuing members of the Executive Committee. It will solicit nominations from the membership and hold elections.

Meeting Closure

The meeting was adjourned for the day at 4:15 p.m. The remainder of the NE-165 meeting on June 24-25 was comprised of the conference Transitions in Agbiotech: Economics of Strategy and Policy (see the NE-165 web site at http://www.umass.edu/ne165/ for program details).

Respectfully Submitted,
Julie A. Caswell
Chairperson, NE-165

  

 Meeting Participants

Business Meeting Agenda

Wednesday, June 23
10:30AM-12:00PM Room N2198		Executive Committee Meeting
1:30-1:45PM		Full NE-165 Business Meeting Introduction of New Participants Approval of Minutes of October 1998 Meeting Meeting Objectives Update on February 1999 Consolidation in the Meat Sector Conference, Jim MacDonald
1:45-3:00PM		Discussion of Upcoming Conference Themes Update on June 1999 Transitions in Agbiotech: Economics of Strategy and Policy Conference, Bill Lesser Year 2000 and Beyond Conferences (See Below)
3:00-3:15PM		Break
3:15-4:30PM		Reports and Discussion Strategy Group Publication Plans (Updates on Possible "Red" or "Blue" Book) Update on AAEA Sections Discussion of Fall 1999 Meeting Future Directions
4:30PM		Meeting Adjourned

THE AMERICAN CONSUMER IN THE CHANGING FOOD SYSTEM
April 19-21, 2000, Washington, DC

The Economic Research Service in cooperation with Food Marketing Institute, The Food Marketing Policy Center, The Retail Food Industry Center, The American Institute of Food Distribution, NE-165, and the Farm Foundation is organizing a conference on the changing industrial organization of food markets. The overall objective of the conference is to take stock and improve our understanding of causes and effects of increasing concentration and coordination, particularly stressing the role of final consumer demand in driving these changes in industry organization. Topics of interest could be organized as:

1. Industry Restructuring:

A. What has happened, both horizontally and vertically?
B. What has happened to production capacity and capacity utilization over time?
C. What are the measurement issues?

2. Causes:

A. What is the role of consumer demand?
B. What role do mergers and acquisition, divestitures, spin-offs of non-core businesses, and outsourcing play?
C. How do they affect efficiency and productivity?
D. What is the relevance of market power?

3. Impacts

A. What are the consumer price Impacts? Is there consumer overcharge?
B. What are the producer price Impacts? How are the price margins influenced?
C. How do they affect product quality, environment, innovation, market access, business practices, etc.?

1. What are some of the important and specific cases of structural changes that require the policy makers attention and what practical information are available to guide the practitioners?

GLOBAL FOOD TRADE AND CONSUMER DEMAND FOR QUALITY
June 26-27, 2000, Montreal, Canada
Symposium sponsored by the International Agricultural Trade Research Consortium--IATRC and NE-165.

Conference organizing committee: Mary Bohman, Chief, Europe, Africa, Middle East Branch, MTED/ERS/USDA; Maury Bredhal, University of Missouri-on sabbatical at Univ. of Reading, UK; Julie Caswell, Univ. of Massachusetts; Spencer Henson, Univ. of Reading; Neal Hooker, Texas A&M, Univ. of Massachusetts; Barry Krissoff, Chief, Specialty Crops Branch, MTED/ERS/USDA; and Laurian Unnevehr, Univ. of Illinois.

This conference focuses on the confluence of consumer and trade economics, both from a methodological and empirical standpoint. The objective of the symposium is to examine consumer demand for quality attributes (including food safety) in the context of a global economy and expanding international trade and the role of both private firm strategies and public policy in facilitating consumer choice and free trade. Specific questions to be addressed in order to meet this objective begin with the two way linkage between trade and consumer demand:

CONSUMER to TRADE -- What are the effects of consumer demand for food quality and safety on global agricultural markets? What are the implications of consumer demand for safety and quality on trade in food products among industrialized countries and between industrialized and developing countries?

TRADE to CONSUMER -- Is international trade increasing welfare by expanding choice or reducing the costs of quality? Is international trade being hampered by market failure, or national policies or regulations that create nontariff barriers?

A second set of questions addresses private firm strategies and appropriate public policy responses: What are the responses and solutions by the private sector (producers, processors, and retailers) to the evolution of consumer demand? Examples are proprietary quality assurance and production systems primarily emanating from the European retail sector. To what extent are national policies or regulations, perhaps inadvertently, creating nontariff trade barriers? Types of national policies to be considered are those based on science, policies to ensure the consumer's right to know, and policies to establish standards (e.g., organic). What is the role for international institutions in developing and establishing international standards, or for facilitating harmonization or mutual recognition of national regulations across countries? How can equivalency of domestic policies be assessed?

The program will consist of invited and selected papers, posters, and case studies.

VALUING THE HEALTH BENEFITS OF FOOD SAFETY
September 13 and 14, University of Maryland
Organizing Committee: Tanya Roberts, Fred Kuchler, Richard Williams, Clark Nardinelli, Julie Caswell, Ron Meekhof, and others

Many Federal agencies conduct analyses of food safety improvements. The Department of Agriculture, the Food and Drug Administration, the Centers for Disease Control and Prevention, the Environmental Protection Agency, the Department of Commerce, the Office of Science and Technology Policy, and the oversight agency Office of Management and Budget implement programs and policies to reduce risks associated with food consumption. The agencies use a variety of approaches to estimate risk reductions and to assign dollar values to human health benefits from reduced risk. Different agencies use different approaches in part because of the variety of human health risks associated with food. Risks range from coronary heart disease to cancer to illness from food-borne pathogens, and outcomes range from short-term morbidity to chronic severe illness to death. The difference in human health risks, however, does not fully account for the differences across agencies in valuing health benefits from reduced risk. Agencies use different approaches to measuring health benefits for the same or similar hazards.

The approaches to valuing food safety improvements differ in theory (what they intend to measure) and practice (how they measure). Some agencies use the savings in national income as a measure of program benefits when illness is prevented. Other agencies use willingness-to-pay as a measure of risk reduction. Even those agencies that embrace willingness-to-pay as an appropriate indicator of human health benefits use a wide variety of methods and data. Data have come from market expenditures, contingent valuation studies, and experimental markets. Finally, some agencies reject monetary measures of the health benefits of reduced illness. Instead, those agencies use cost-effectiveness methods, which estimate the reduction in the number of illnesses or deaths per dollar spent.

The difference in approaches to measuring health benefits makes it difficult to compare net benefit estimates across agency programs. If there were an established approach to assigning values to risk reductions and each agency used it, risk managers could compare the net benefits of different programs. Those comparisons would provide risk managers with information to help them choose food safety programs that reduce both food-borne illness and public costs.

As a first step toward generating a consensus on the current state of knowledge and determining a "best practices" approach, NE-165 proposes a large conference with both invited and submitted papers. The conference will review the state of the art in valuing food safety risk reductions. One purpose of bringing together different agencies as participants and co-sponsors is to investigate methods that can be used by all agencies concerned with public health.

The conference would cover the following topics:

• What should economists be trying to measure when they assign values to reducing morbidity and postponing deaths?
• How should economists estimate the value of reducing risks of illness or death?
• How can acute hazards be compared with chronic hazards?
• How should the value of a statistical life be measured?

Papers would be submitted in advance of the conference and sent to conference participants one month in advance. At the conference, a considerable amount of time would be allowed for discussion among breakout groups. The conference report would consist of a compilation of papers and a summary of breakout group discussions. The conference report would determine the agenda for a second, smaller conference that would generate recommendations for a common approach to valuing food safety improvement.

PRICING STRATEGY STUDIES IN THE FOOD SYSTEM
Organizing Co-Chairs: Ron Cotterill, John Connor, James MacDonald, and Everett Peterson

Quantitative approaches to analyzing pricing strategies in the food industry using micro-level data and discussion of policy implications.

RISK ASSESSMENT, RISK MANAGEMENT, AND BENEFIT/COST ANALYSIS FOR FOODBORNE PATHOGENS: AN INTERNATIONAL COMPARISON
Proposal Submitted in Fall 1998 by Tanya Roberts
Proposed Date: Sometime in 2001 (Washington, DC or London)

Risk Assessment: How have various countries chosen to allocate resources to estimate the extent of foodborne disease, fund food safety research, fund data collection, assess farm-to-table risks to identify control points? What kind of tools and methods have risk assessors used?

Risk Management: How have various countries chosen to reorganize their policy efforts to control foodborne pathogens? What budgetary changes have occurred? What new policy initiatives have been implemented and how successful have they been? Have risk assessments played a role in policy initiatives? What kinds of public participation have evolved? What have been the changes in the role of industry in providing a safer food supply? Have economic incentives been used prominently in new policy initiatives?

Benefit/Cost Analysis for Foodborne Pathogens: What role have benefit/cost analyses played in formulating new policies? What methods are economists using in their benefit/cost analyses (cost of illness vs. willingness to pay)? Are international methods converging or diverging? What innovative techniques have been used to determine where (from farm to table) to place food safety interventions, either public or private?

Alternative title and focus: IMPACT OF FOODBORNE PATHOGENS ON THE STRUCTURE OF THE INTERNATIONAL FOOD INDUSTRY: THE ROLES OF RISK ASSESSMENT, RISK MANAGEMENT, AND BENEFIT/COST ANALYSIS.

FOOD SAFETY, LIABILITY, AND INTERNATIONAL TRADE
Organizing Co-Chairs: Spencer Henson, Jean Buzby, Tanya Roberts, Julie Caswell

Comparative conference with focus on food safety systems, economic incentives (such as product liability and product differentiation), and public and private mechanisms to facilitate food safety in international trade. (Possible European location (e.g., FAO in Rome, Reading))

ECONOMICS OF FOOD STANDARDS, CERTIFICATION PROGRAMS, AND LABELING (or ECONOMICS OF QUALITY VERIFICATION AND SIGNALING??)
Organizing Chairs: Julie Caswell and others (Eileen van Ravenswaay, Cathy Wessells, Steve Crutchfield, Katherine Ralston?)

Idea originally proposed for June 1999 but set aside as agbiotech conference developed more fully. Might include papers related to standard setting and enforcement by public and private certification entities, the market and consumer impacts of labeling, market structure and competitiveness questions, and trade issues. Case studies could include organics, GMOs, food safety, and nutrition attributes.

NE-165 FINALE CONFERENCE

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