PRODUCT DEVELOPMENT, COST SEASONALITY, REGION MARGINALIZATION, AND A MORE DEMANDING CONSUMER

Agricultural production is becoming more like manufacturing in the routinization of processes, the extent to which raw materials are processed, capital intensity, and its emphasis on throughput. Some ascribe the changes to demand-side factors while others look to technological innovations. Emphasizing cost seasonality as a reference indicator for nature's role in agricultural production, this paper develops a simple model that includes both supply and demand sides. We show how cost seasonality can impede product development to meet consumer needs and find that there may be a ceiling level of cost seasonality below which a non-seasonal equilibrium production profile occurs. Price seasonality is decreasing in cost seasonality. An increase in demand for more-processed products induces a shift toward non-seasonal production. Regions with strongly seasonal cost advantages will produce lower-value products while less-seasonal regions will produce higher-value products. If a region with high-cost seasonality has a non-seasonal cost disadvantage, then an increase in demand for processing can reduce the region's competitiveness.


Issue Date:
2004
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/18529
Total Pages:
17
Series Statement:
CARD Working Paper 04-WP 378




 Record created 2017-04-01, last modified 2017-08-24

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