Breaking Boundaries: Analysing competition and trade in food and agriculture
Research at the University of Exeter has analysed competition and trade in food and agricultural markets and developed a framework to forecast retail food prices in the UK.
Professor Steve McCorriston and the team have focused on competition in the food chain, a complex and often ignored dimension of food and agricultural markets in both developed and developing countries. Across different contexts, the sensitivity associated with food and agricultural markets has been highlighted in recent negotiations with the EU and the opposition arising from the government’s attempt to reduce the role of the state in agricultural markets in India.
Research at the university provided one of the first detailed explanations of the importance of imperfect competition – a situation where the characteristics of an economic market do not fulfil all the necessary conditions of a perfectly competitive market. The research emphasised its importance in vertically-linked food chains and its effect on trade and agricultural policy outcomes, particularly for consumers.
Professor McCorriston and his colleagues also investigated the role of price transmission, how prices in one market effect those in another, in the presence of competition throughout the food chain. This determines whether it is producers or consumers that bear more of the consequences of shocks.
Professors James Davidson and Steve McCorriston addressed the consequences of world agricultural prices and macroeconomic shocks such as exchange rates and oil prices on UK food inflation. The focus was the commodity crises of 2007 and 2011, with the results emphasising the importance of exchange rates as well as world commodity prices in driving UK food inflation. This was based on a framework provided for the UK government in response to price shocks emanating from world markets. This research has been used to further understand the effects that changes to policy have. The food price forecasting tool has helped to test and predict impact on future policy reform in the UK, seeing where increases will come from and when. By predicting this information, it will make for more educated decisions and potential to pre-warn or pre-plan for the consequences of policy reform.
Finally, using a framework to assess government reforms, they analysed manipulation of market structures to deliver food policy objectives. A particular issue in developing countries due to concerns about food security (such as India), McCorriston and colleague Professor Donald MacLaren found that market deregulation does not necessarily lead to enhanced welfare. They also showed that policy changes relating to procurement and distribution didn’t necessarily improve food security. These issues are at the heart of the recent reforms undertaken most recently in India.
Breaking boundaries provides a bitesize look into the variety of leading research that has, and still is changing the world from the University of Exeter.
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