Course:FRE502

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Food Market Analysis
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FRE 502
Section:
Instructor: Dr. Rick Barichello
Email: richard.barichello@ubc.ca
Office: MCML 339
Office Hours: Tue/Thu 12:00-13:00
Class Schedule: Tue/Thu 13:00-14:45
Classroom: MCML 154
Important Course Pages
Syllabus
Lecture Notes
Assignments
Course Discussion


Overview:

This course covers topics related to food prices and how food markets work, both from an aggregate perspective of food and resource markets, and the perspective of specific commodity markets. This includes food price determination and predicted price paths, comparing the functioning of domestic and international food markets, trade in food products and issues related to the integration of commodity markets, market power in food markets, and role of institutions in their operation. The course emphasizes combining theory with data, learning how markets work in the real world, and getting the appropriate data to undertake their analysis. Various models of food markets will be covered, and a sample of specific markets will be analyzed, including some resources.

Learning Objectives:

  • Use a variety of analytical tools to probe questions and important issues concerning food markets, both domestic and international
  • Develop an ability to review critically articles and studies concerning food markets
  • Learn key issues in undertaking sound empirical analyses in the food sector, including importance of data and institutional elements
  • For at least one food commodity, integrate the specific topics below to arrive at a sound understanding of its economics, such as reading into this from price patterns, assessing margins within the marketing chain, understanding technical change at farm and processing levels, interpreting evidence of demand shifts over time, the effects of international competition and trade patterns, market concentration, and any other key economic changes within the recent past. 

Policies and Deadlines

As an important element of a professional program, designed to prepare you for success after you leave UBC, it is assumed that you will arrive in class on time and hand in assignments on time. Late arrival more than twice will result in a loss of 5 percentage points in the grading scheme. If there is an exceptional situation requiring late arrival, early departure, or absence from class, a student with a valid reason must email the MFRE Program Coordinator ([[1]]) at least two days before the date, or as soon as possible in an emergency. Similarly, your full attention in class is expected.  It is a classroom policy to turn off your mobile phones in class (including no sending or reading text messages). Similarly, it goes without saying that I expect when you are using your laptops in class that you are taking notes or accessing materials relevant to our class from your internet access, NOT using Facebook or using MSN or equivalent messaging software. You can do that on your own time, not in class. 

Similarly, plagiarism is a very serious issue at UBC. When you write a paper, you should do your own work. If you use others' work such as to learn from it, that is fine but you must credit them. If you quote from them, you must indicate this appropriately and put their work in quotations. I treat this as a 'plus' for your work to show that you have read the literature widely. So quoting from another person, and showing it as such is an advantage, not a sign of weakness on your part. 

Finally, we do have a paper requirement, and some of your homework assignments will include a written component. This is to be done by yourself, or in the case of your term paper where there will be two authors, done by the two of you. It is illegal to have others write those papers, including custom purchased paper writing. The penalties for using such paper-writing services are severe and include being expelled from the University.

Course Administration:

Lectures:  Tu Th 1300-15:00pm, McM154. We will have our midterm exam on Tuesday October 22. We may have periodic Friday class substitutions if it is necessary to make up for any cancelled class. At present, I do not anticipate the need for this. 

Office Hours: Tue/Thu      12:00-13:00

Grades:

Midterm 20%
Problem Sets (3 @6) 18%
Final 35%
Class Paper 27%
Midterm Date: Oct 22
Final Exam: December 6
Problem Sets: Due dates: Sep 26, October 31 (class presentations), November 26
Paper due: end of lectures (Nov 29)

Textbook and Reading Materials:

No single course textbook.  Various readings will be assigned on a topic-by-topic basis.  See outline of topics listed below.

Some background material is found in the following:

R. Schrimper, Economics of Agricultural Markets, Prentice Hall 2001; HD1433 .S37 2001

(on reserve in Woodward Library)           

Alex McCalla and Tim Josling, Agricultural Policy Analysis, Macmillan, 1985

(on reserve in Woodward or Koerner Library)

unpublished Rich Sexton paper to be made available

FRE 502: Course Topics/Schedule 2019

  • Aggregate Food Price Dynamics     [Sep 3, 5, 10, 12, 17, 19] [Sumner, McCalla, Ch2 S&H, N&L Ch3,5]
  1. LR commodity price trends, past/present (Lecs 1, 2)
  2. Seasonal Price Movements: storage, seasonality (Lecs 3, 4)
  3. Volatility: evidence, mkt thickness/liquidity, dynamics (Lec 5)
  4. Biofuels Issues: a revised view of price movements (Lec 6)
  5. Equilibrium Displacement Models and modelling P movements (Lec 7)
    • Problem Set #1: handed out Sep 19; due date Sep 26
  • Trade [6 lectures: Sep 24, 26, Oct 01, 03, 08, 10] [McCalla-Josling Ch 2, Reed Ch. 3, 4, 8 (2001)
  1. Excess Supply and Demand models (Lec 7)
  2. Effects of various government programs on world prices (Lec 8)
  3. Applications of ESED: currency depreciation (Reed pp.118-120), transport costs (Lec9)
  4. Trumpian tariff wars: tariff increases by US, then by China; effects on (a) farm prices, (b) currencies (currency value determination), (c) nonfarm prices from US tariff and US consumers, (c) national income (via farm sector, consumer sector, welfare losses) (Lec10)
  5. Trade Institutions: WTO Rules and Topics, Anti-Dumping (Lec 11)
  6. Currencies as commodities: What will cause a depreciation or appreciation of country X's currency? What underlies the supply of and demand for a country's currency. How do exports and imports affect it? How does foreign investment affect it? What is the price of a currency?  (Lec 12)
  • Concentration [2 lectures; Oct 15, 17] Reading: N&L Ch 4, 6, 10, 11; Sexton, etc)
  1. Food margin analysis (farm-retail price spread model) (Lec 13)
  2. Monopoly, monopsony, vertical integration (Lec 14) (Dairy data;)
  3. Supply chains, cases; Reardon, Sexton paper, Rapsomankis, Baulch. (Lec 14)
    • MIDTERM EXAM: Oct 22
    • Problem Set #2: handed out about Oct 24; due date Oct 31: Class presentations by each of 10 team on Oct 31: 10 minutes each
  • Market integration [2 lectures Oct 24, 29; Oct 31 for class presentations, problem set 2]
  1. Overview, Rural urban markets model (Timmer et al Ch. 4)    (Lec 15)
  2. Domestic-world market integration (Sarris-Hallam, Ch 8)       (Lec 15b)
  3. Two cases: Indonesian Labour Mkt (rural/urban); Korea beef  (Lec 16, 17)
  • Institutions in Food Markets [Nov 5, 7, 12]
  1. Canadian Dairy sector, Options for Dairy Exports                 (Lec 18)
  2. STEs, BULOG, and International Trade (cif, fob) pricing        (Lec 19)
  • Trade Agreements:  [2 lectures, Nov 14, 19]
  1. USMCA, TPP, CETA: effects on Canada, dairy/poultry          (Lec 20-21)
  • Domestic, World Markets, Cases: [2-3 lectures, Nov 21, 26, 28]
  1. Case studies: selected Vietnamese Commodity Markets       (Lec 22-23)
    • Problem Set #3: handed out Nov 19, due date Nov 26

Selected Readings:

Rapsomanikis, G., D. Hallam, and P. Conforti. 2006. “Market Integration and Price Transmission in Selected Food and Cash Crop Markets of Developing Countries: Review and Applications.” (Ch.8) In A. Sarris and D. Hallam, ed., Agricultural Commodity Markets and Trade: New Approaches to Analysing Market Structure and Instability. London: Edward Elgar for the Food and Agriculture Organization.

C.P. Timmer, W. Falcon, and S. Pearson, Food Policy Analysis, Johns Hopkins Press for World Bank,1983. Ch.4. [http://iis-db.stanford.edu/pubs/10361/food_policy_analysis.pdf]

Alex McCalla and T. Josling, Agricultural Policies and World Markets, Prentice Hall, 1985, Ch. 2.

Michael Reed, International Trade in Agricultural Products, Prentice Hall, 2001.

Sarris and Hallam (see above), Ch. 2 (Gilbert); Ch 8 (Rapsomanikis et al), Ch 6 (McCorriston)

Daniel Sumner, AJAE, 2009

McCalla overheads, U of Manitoba presentation, on Course Website

Market Power: Sexton papers (3), Baulch, Reardon