Cooperatives and Contracting in Agriculture: The Case of West Liberty Foods, October 2005

The West Liberty Foods turkey cooperative was formed in 1996 to purchase the assets and assume operations of Louis Rich Foods (an investor-owned processing rm), which, at the time, announced the imminent shutdown of its West Liberty, Iowa, processing facility. We study the creation and performance of this �new generation� cooperative using eld interviews with grower members and company management. We describe changes, before and after the buyout, in the contractual apparatus used for procuring live turkeys, and in the communication requirements, work expectations, and nancial positions of growers. During the private ownership period, most of the inputs (except labor and facilities) were provided by the rm; there was substantial supervision of the growers' actions; growers faced little price and production risk; and growers' equity was due largely to ownership of land and other farm assets. Our interviews reveal that, after cooperative formation, growers were exposed to considerable additional risk; monitoring of growers by the rm was less intensive; grower time and effort commitments to turkey production increased substantially; and a signicant fraction of rm (cooperative) equity came from growers' willingness to leverage their farm and personal assets (and hence indirectly their existing relationships with local lenders). We argue that some of these changes are consistent with a nancial contract where asset pledging and its corollary risk generate higher work effort by growers and a reduction in agency rents. These economies likely compensate for an organizational deadweight loss traditionally associated with cooperative governance.

Rice Consumption in the United States: New Evidence from Food Consumption Surveys, July 2005

Evidence from recent U.S. food consumption surveys provides new information on the distribution of rice consumption, the characteristics of rice consumers, and the diets of people who consume rice. Recently available data from nationally representative surveys of food consumed by individuals in the United States allowed comparison of consumption today (2001-02) with consumption in the mid-1990s. Data come from the Continuing Survey of Food Intakes by Individuals (1994-96) and the National Health and Nutrition Examination Survey (2001-02). Rice is consumed by a significant portion of the U.S. adult population. In 2001-02, over 18 percent (18.2 percent) of adults reported eating at least half a serving of white or brown rice in one day of observed intake. This share was slightly higher than that of 1994-96 (17.4 percent). Compared with others, individuals who consumed at least half a serving of white or brown rice in the observed day of intake consumed a smaller share of calories per day from fat and saturated fat; less discretionary fat or added sugar; and more fiber, dietary folate, fruit, vegetables, and enriched grains. Consumers eating rice were more likely to eat a diet that included choices of foods consistent with the 2005 U.S. Dietary Guidelines.

Multilateral Trade and Agricultural Policy Reforms in Sugar Markets, September 2005

We analyze the impact of trade liberalization, removal of production subsidies, and elimination of consumption distortions in world sugar markets using a partial-equilibrium international sugar model calibrated on 2002 market data and current policies. The removal of trade distortions alone induces a 27% price increase while the removal of all trade and production distortions induces a 48% increase by 2011/12 relative to the baseline. Aggregate trade expands moderately, but location of production and trade patterns change substantially. Protectionist OECD countries (the EU, Japan, the US) experience an import expansion or export reduction and significant contraction in production in unfettered markets. Competitive producers in both OECD countries (Australia) and non-OECD countries (Brazil, Cuba), and even some protected producers (Indonesia, Turkey), expand production when all distortions are removed. Consumption distortions have marginal impacts on world markets and location of production. We discuss the significance of these results in the context of mounting pressures to increase market access in highly protected OECD countries and the impact on non-OECD countries.