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<p>This project will investigate market responses to food scare events over a full range, focusing on the size and duration of these responses. In particular, this project will examine asymmetric impacts between heterogeneous economic agents, across different stages of a food supply chain, and between different industries, for different types of food scare events. The overall aim of this research is to describe and analyze market responses to food scares events along the food supply chain. The specific objectives are listed below. </p>
<p>Objective 1: To develop and extend a database combining information: (a) on food scare events and food safety efforts from multiple agencies; and (b) on market responses including consumption data, futures prices on related agricultural commodities, and futures prices of relevant food companies among others. </p>
<p>Objective 2: To develop a comparative analysis investigating asymmetric market impacts resulting from different types of food scare events, specifically, bacteria pathogen contamination and animal disease outbreaks. </p>
<p>Objective 3: To identify and quantify market responses in a full range for certain food scare events, including the impacts on food consumption, price margins along the supply chain, futures markets of agricultural commodities, and stock prices of relevant publically listed companies. </p>
<p>Objective 4: To develop, specify and estimate an empirical model that characterizes profiles of heterogeneous consumers, depending on their consumption changes, and quantifies differentiated impacts on different food brands associated with a food scare event. The research will contribute to the existing literature on food safety by systematically investigating and comparing market responses (a) across different market sectors (food consumption, futures and equity markets of agricultural food products); (b) among heterogeneous consumers and firms; (c) along different stages of the food supply chain; (d) between different types of food scares; and (e) on different product brands. </p>
<p>This research will provide important insights into the various challenges faced by the U.S. food supply chain from farm to folk, as well as quantify market response to food scare events across different market sectors and consumer segments and along different stages of food supply chain. Policy makers and industry leaders will benefit from systematic information on food safety and market responses to food scare events. Such economic analysis will help policy makers and industry leaders to better understand potential consequences of these events. They will be better prepared to respond to and manage such crises if food scare event occurs. Consumers will also benefit from this systematic analysis as well; they will be better informed about the consequences of various food scare events and become better able to adjust their consumption and investment behavior.</p>
<p>NON-TECHNICAL SUMMARY:<br/> The food supply chain that extends from farm to folk faces numerous food safety challenges, including naturally-occurring bacterial pathogen contaminations, intentional and unintentional animal disease outbreaks, and even possible terrorist attacks. Food scare events may have significant socio-economic consequences. According to the Center for Disease Control (CDC), food-borne illness sickens 76 million Americans, causes 325,000 hospitalizations and thousands of deaths, and costs $44 billion annually. In addition, market responses, including changes in food consumption, the market value of food companies, and futures prices of agricultural commodities, can generate even greater economic loss. While a market response to a scare event may start at one particular stage in the food supply chain, it can easily extend upstream and/or downstream in the
food supply chain. A market response can also readily spread to economic sectors outside of the food industry. Suppose an outbreak of foot-and-mouth (FMD) disease is detected and confirmed in a cattle feedlot. Changes in meat consumption are likely as slaughter of infected and contact animals causes supply distortions; consumers may also change their preference for meat consumption. Traders in futures markets exposed to subsequent media coverage and government announcements of such outbreaks will react accordingly, causing abnormal changes of feed cattle and feed cattle futures. Meat companies will react to this event as well. Given the vertical (across different stages of a food supply chain) and horizontal (across various industries) nature of market response to food scare events, a systematic, thorough investigation of the market impacts of such events is warranted. This project will
investigate market responses to food scare events over a full range, focusing on the size and duration of these responses. In particular, this project will examine asymmetric impacts between heterogeneous economic agents (e.g. firms and consumers), across different stages of a food supply chain, and between different industries, for different types of food scare events. Research results from this systematic and thorough investigation will inform policy makers in government, industry, and companies on likely market responses to these events, making them better prepared to respond to and manage these adverse events. The proposed research accords with the mission of the NJAES as it identifies current and future challenges on food safety and quantifies the subsequent economic consequences. It also provide important information to meet the national goals for agricultural in providing "a safe
and secure food and fiber system" and enhancing "quality of life for Americans".
<p>APPROACH:<br/> Procedure for Objective 1: Objective 1 involves obtaining, organizing and merging data from various public and private sectors for identified food scare events. I have already documented the chronology of sixteen BSE cases in North America. Data collection efforts will be extended to other animal disease outbreaks as well as product recalls. Available data on market responses includes (a) AC Nelson homescan data related to certain product recalls (eg. the 2007 peanut butter recall) that is currently on the progress under the cooperative agreement with ERS of USDA.; (b) futures prices of four meat commodities, live cattle, fed cattle, lean hogs, and pork bellies from the Chicago Mercantile Exchange (CME), which will be used for the market analysis of confirmation as well as rumors of animal disease outbreaks; and (c) stock prices of publically listed food
companies collected during the course of this research. In addition to the studies focusing on the food scare events in the U.S., I have been conducting research in the context of other regions like China. In particular, I have been investigating the 2008 milk contamination incidents in China. I have collected data of the stock price of the relevant dairy companies that are publically traded in different stock markets. I am in the process of obtaining scanner data on dairy consumption in Shanghai. Procedure for Objective 2: (a) Collect monthly consumption data (price and quantity) for different types of meat (beef, pork, chicken, and turkey) and FSIS meat recalls for identified food scare events (b) Specify appropriate econometric models to estimate demand for affected food products. (c) Estimate the effect of food scare events (d) Test for differences in consumer response to animal
disease-related food scares compared with bacterial pathogen related food recalls. Procedure for Objective 3: (a) Identify appropriate food scare events (b) Collect data on consumption, product prices, futures prices, and stock prices (c) Specify theoretical and econometric models that will allow us to investigate a potentially wide range of market responses in reaction to the identified food scare event (d) Estimate the impacts on meat consumption, price, price margins along the supply chain, futures prices, and stock prices of relevant companies (e) Compare the size and persistence of the impact across different market sectors Procedure for Objective 4: (a) Identify a food scare event (b) Obtaining homescan data from USDA-ERS relating to the identified food scare event (c) Compile and clean up data sets (d) Specify an econometric model that will allow us to investigate potential
changes in brand choices and consumption patterns as consumer react to the identified food scare event. (e) Estimate the effect of food scares on brand choice and consumption to detect differentiate responses between brands (f) Identify demographic profiles of two consumer segments when facing food scare events - those who are more likely to switch to a high quality brand and those who are more likely to stop consuming the adversely affected product category regardless of brands
<p>PROGRESS: 2011/10 TO 2012/09<br/>OUTPUTS: Activities: (1) Analyze the impact of the 2007 peanut butter recall on consumers' brand choice (2) Analyze how self-perception of body weight affects weight control efforts/behaviors including food consumption (3) Mentor/supervise both undergraduate and graduate students (4) Teach an undergraduate course on food safety and health policy in fall 2012; Co-teacher a junior/senior colloquium, problem Solving Using Food, Nutrition, and Business Information in spring 2012 (5) Craftsmanship and efforts: a. "Enhancing the Competitiveness of the Chinese Agricultural Biotech Industry in China and Globally: An Analysis of Strengths, Constraints, and Benefits of Chinese Agricultural Biotechnology." National Natural Science Foundation of China. Beijing Institute of Technology Univ.: R. Hu (PI), Zhang, Wang, and Cai; Rutgers Univ.: C. Pray
and Y. Jin. RMB3, 000, 000 (US$480,000), 2012-2016. Awarded. a. "Increasing Food Security for the Homebound via Novel Farm-Retail Connections and Nutrition Education." USDA AFRI 2012. W. Hallman (Program Director), D. Palmer, N. Fitzgerald, C. Cuite, M. Elias, Y. Jin, B. Lohse, L. Nettervile, B. Schilling, and S. Snider. $5 million, 2012-2017. Rejected. Events: (1) Conference presentation (presenting author in bold) a. M. Fan and Y. Jin. "Do Neighborhood Parks and Playgrounds Make Children More fit?" Presented at the annual meeting of Agricultural and Applied Economics Association, Seattle, August 2012. (2) Invited talk and seminars a. School of Management and Economics, Beijing Institute of Technology Univ., Aug. 7, 2012. b. Department of Agricultural, Food and Resource Economics, Rutgers Univ., Mar. 3, 2012. Services: (1) Serve as Chair or Co-Chair a. G. Rich (M.Sc.'12, non-thesis
option, Co-Chair with Prof. O'Nell. b. Y. Hu (M.Sc.'12). Co-Chair with Prof. Pray. c. W. Duan (M.S.) d. C. Chen (M.S.) (2) Serve as Committee Member a. Gupta (Ph.D.'12). TAMU b. J. Mu (Ph.D.'12). TAMU c. I. Grinberg (M.S.'12). a. X.L Yu (M.S.) (4) Mentoring 15+ undergraduate students in DAFRE, Rutgers Univ. (5) Selection Committee for the Best Economics Paper in Food Safety and Nutrition, Agricultural and Applied Economics Association, 2012. (6) Editorial boards of Agricultural and Resource Economics Review of the Northeastern Agricultural and Resource Economics Association. (7) Referee for 5 journal articles and 27 conference abstracts for the 2013 AAEA meeting. Products (1) MS students graduated in 2012 that Dr. Jin supervised as a major advisor (Rich and HU, MS'12) and served on the committee (Grinberg MS'12; Mu and Gupta PhD'12). Dissemination (1) Served on the Produce Safety Task
Force of New Jersey and Food Safety and Quality Committee of New Jersey Food Council since 2011. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
<p>PROGRESS: 2011/01/01 TO 2011/12/31<br/>OUTPUTS: Activities: (1) Analyzing the 2008 China Milk scandal data collected from surveys and compiled from secondary data sources. (2) Analyzing the AC Nielson home scan data and investigating the impact of the 2007 peanut butter recall. (3) Mentoring and supervising both undergraduate and graduate students (see the service section). (4) Teaching an undergraduate level course on food safety and health policy in fall, 2011. (5) Invited to co-teach a SEBS (School of Environmental and Biological Science) Junior/Senior Colloquium on problem solving using food, nutrition, and business information in spring 2011. (6) Submit a NIFA proposal as a project leader titled "Childhood Obesity and Neighborhood Characteristics: Causal Links and Interventions" ($1,396.037 in total) in May 2011, but failed to get the grant. Events: (1) Y.H. Jin,
L.G. Lin, L. Zhao. "Do Consumers Trust the National Inspection Exemption Brands Evidence from Infant formula in China". Presented at the annual meeting of American Agricultural and Applied Economics Association, Pittsburgh, July 2011. (2) Invited talk titled "Stock market responses to the 2008 China Milk Contamination Events" in Department of Agricultural and Resource Economics at University of Connecticut, March 18, 2011. (3) Participated in the workshop on "Using Scanner Data to Answer Food Policy Questions" sponsored by ERS in June, 2011. Services: (1) Served as a thesis advisor for Gao Chen (M.Sc. 2011) and as a thesis committee member of Beinan Zhang (M.S., '11) and Suchi Zhang (M.S., '11) in Department of Agricultural, Food and Resource Economics (DAFRE), Rutgers University. (2) Serving as a major thesis advisor for four MS students (Yahong Hu, Guiliana Rich, Chen Chen, and Wei
Duan) in DAFRE, Rutgers University. (3) Serving as thesis committee members for two doctoral students (Jianhong Mu, Rajorshi Sen Gupta) and one MS student (Alicia Israel) in Department of Agricultural Economics, Texas A&M University. (4) Mentoring 18 undergraduate students in DAFRE, Rutgers University. (5) Served on the Selection Committee for the Best Economics Paper in Food Safety and Nutrition, Agricultural and Applied Economics Association, 2011. (6) Served on the editorial boards of Agricultural and Resource Economics Review, the official journal of the Northeastern Agricultural and Resource Economics Association. Products (1) New applied knowledge and findings about the market responses of food safety events learned from the 2008 China milk scandal and the 2007 peanut butter recall in the U.S. (2) Learning new information and techniques of using the scanner data to analyze food
policy questions through the 2011 ERS workshop in June. (3) Establish collaboration with two assistant professors at Shanghai University of Finance and Economics in China through the project on the 2008 China milk scandal. (4) MS students graduated in 2011 for whom Dr. Jin supervised as a major advisor (Gao Chen, MS '11) and Dr. Jin served on the committee (Beinan Zhang, MS '11 and Shuci Zhang MS '11). Dissemination (1) Served as a member the Produce Safety Task Force of New Jersey and Food Safety and Quality Committee of New Jersey Food Council since 2011. PARTICIPANTS: The following two master students in Department of Agricultural, Food and Resource Economics at Rutgers University provided research assistance to the project: (1) Chen Gao, who helped on the 2008 China milk scandal project; and (2) Yahong Hu, who helped on data compiling for Dr. Jin's research. Dr. Jin has been
collaborating with two faculty members at Shanghai University of Finance and Economics, China (Dr. Liguo Lin and Dr. Lan Yao) on the 2008 China milk scandal project. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.