Rapid developments in E-commerce can bring efficiency in the food market system by cutting transaction costs. However, it can also bring a battleground between developed and developing countries and also within developed countries because the New Economy emphasizes knowledge-based labor practices and low-skilled workers of trading nations compete for a shrinking need for their services. An Input–Output model is used to examine the effects on high-skilled and low-skilled worker demand, particularly in food and agriculture. The food and agricultural industries are significant employers of low-skilled labor. Food and agricultural trade has reduced low-skilled labor demand in the United States.

The direct and indirect use of information technology (IT) as an intermediate input in the U.S. food system is empirically examined to provide insight into how Information Technology has affected the production processes of the U.S. Food Manufacturing Industry (FMI) over time. The benchmark U.S. Input-Output tables for 1972, 1982, 1992, and 1997 are used to assess how changes in IT use by FMI as an intermediate, business-to-business (B2B) input affected supporting output needed to meet final demands by Consumers (B2C), by Government (B2G), and by Export (B2E). Becausefrom a demand perspectiveeating and drinking places (E&D) are closely related to the FMI, they are also included in this analysis. For the period considered (1972-1997 and projected year, 2000): (1) IT use as an intermediate input was small from 1972 to 1992, but began to increase substantially between 1992 and 1997; (2) the IT input demand by the FMI reduced inventories of agricultural and processed food; (3) the IT input demand did not substantially reduce fulltime equivalent labor demand per unit of output over time; and (4) measured IT use was greater when computer equipment investments in capital investment were endogenized into the production process. Although early in the history of IT, these findings should give some insight into how IT may influence future production processes of the FMI.

Between the 1970s and the 1990s, processed food exports switched from using more skilled labor per unit of output than imports to the opposite. Processed food trade also expanded during this period. More meat and poultry products in processed food trade could explain this switch in skill intensity. Growing meat trade paralleled an urban-to-rural shift in meat processing. Although this could have been a win-win situation for rural areas, many of the jobs related to expanded meat trade benefited commuter and migrant workers because late-1990s jobs slaughtering livestock and processing meat did not appeal to domestic rural workers.

The impact of intermediate input price increases on food prices is analyzed assuming the producers can pass through increased production costs to final consumers. Five scenarios of input price increases are empirically examined. Findings indicate that the meat processing sector has a strong dependence on intermediate inputs (livestock), and an increase in livestock prices would have a greater impact on processed meat prices than would any other intermediate input price increases. Price increases in the service sector would result in overall price increases in food prices comparable to increases in intermediate agricultural commodities. Further, price increases in nondurable goods have more influence on food price increases than durable goods.

In 1972, processed food exports used more skilled labor per unit of output than processed food imports. By 1992, this situation had reversed and the skill intensity of processed food trade had switched. Higher meat and poultry exports compared with other processed food trade could explain this switch in skill intensity. The growth in meat trade paralleled an urban-to-rural shift in the meat packing and poultry processing sectors. Because rural areas have a greater share of low-skilled workers in their labor force and have fewer employment opportunities for their workers, this may appear to be a win-win situation for rural areas. However, the jobs slaughtering livestock and processing meat often do not appeal to domestic rural workers. When sufficient domestic rural workers are not available, accommodating a larger share of commuter and migrant workers has challenged some rural communities that host meat processing plants.

The economic development of South Korea is often considered a model for developing countries. We use 1975 and 1990 data in a general equilibrium framework with a highly disaggregated sector specification to evaluate the opportunity cost of its agricultural protection. We show that although agriculture's share of the gross domestic product (GDP) declined between 1975 and 1990, the cost of agricultural protection, as measured by the loss in GDP, did not fall. The larger gap between domestic and world prices for the protected sectors exacerbated the distortions in resource allocation. Simulated removal of 1990 agricultural border protection reduced the share of agricultural GDP to the level actually observed in 1996, demonstrating how protection can impede economic structural development. The public policy implication is for developing countries to adopt policies that help the agricultural sector become competitive. Otherwise, as in Korea, the resource costs of delaying adjustment grow over time.

Will increasing the minimum wage increase food prices as well? This study shows that a simulated $0.50 increase in the minimum wage, if entirely passed on to consumers, would have increased food prices by less than 1 percent for most of the foods at foodstores and by 1 percent at eating and drinking places. Because these estimates were simulated using an economic model that assumed that firms did not alter their production processes when faced with higher minimum wages, these estimates are likely upward bounds of the price effects of a minimum wage increase.

An Input-Output model is used to analyze price pass-through effects of a minimum wage increase on prices of the food and kindred product and food-service industry. Although these sectors employ a disproportionate share of minimum wage workers, our results suggest a $0.50 increase in the minimum wage would minimally affect food prices.

An input-output model is used to analyze price pass-through effects of a minimum wage increase on prices of the food and kindred products and food-service industries. These sectors employ a disproportionate share of minimum wage workers, but results suggest a $0.50 increase in the present minimum wage would increase food prices less than 1 percent for most of the 12 food and kindred products prices and 1 percent at eating and drinking places.

We use an input–output model to examine the effects of trade and domestic consumption, technology and labor productivity on skilled and unskilled worker demand. We found that trade was not the major contributor to changes in demand for skilled and unskilled labor during 1972–92, counter to the continuing debate on the trade-widening wage gap linkage. We found that skill intensity, i.e. the ratio of high-skilled to low-skilled workers for exports compared with imports, exceeded one during 1972–92, but did not increase. We explore alternative definitions of skilled and unskilled, and find our results to be robust to these alternative definitions.

Americans are changing the way they eat and the foods they buy. New lifestyles, shifting demographics, and growing concerns about nutrition and health contribute to these changes. In response to American consumers, the food system may be shifting from volume production for general consumer markets to marketing and production for specialized markets. These changes have not influenced all parts of the food system equally, according to ERS researchers who examined how changes in food demand affect the food system's output in different sectors for 1972-92. Within the food system, real output grew during 1972-92 for the processed food sectors and eating and drinking places (table 1). The poultry and egg processing sector showed the largest percentage growth, 269 percent (from $6,472 million in 1972 to $23,865 million in 1992), followed by confectionery, bakery, and macaroni, 85 percent (from $23,252 million to $43,118 million). Output for the meat packing sector grew the least, 11 percent (from $56,340 million to $62,440 million) over the period and refined sugar sector output declined 26 percent (from $8,010 million in 1972 to $5,909 million in 1992). Overall, the total real output of processed food sectors rose 40 percent (from $243 billion in 1972 to $342 billion). The nonfood processing sectors in the food system grew strongly. Output in transportation rose 82 percent from $182 billion in 1972 to $332 billion in 1992. Output for wholesale and retail trade grew 86 percent, from $496 billion to $926 billion. Output for the eating and drinking sector grew 83 percent, from $114 billion to $210 billion.

American Journal of Agricultural EconomicsVolume 80, Issue 5 p. 1134-1138 Principal Paper Session The Weakening Relationships between Farm and Food Prices Gerald Schluter, Gerald Schluter agricultural economist Food Markets BranchSearch for more papers by this authorChinkook Lee, Chinkook Lee agricultural economist Food Markets BranchSearch for more papers by this authorMichael LeBlanc, Michael LeBlanc deputy director Food and Rural Economics Division, Economic Research Service, U.S. Department of AgricultureSearch for more papers by this author Gerald Schluter, Gerald Schluter agricultural economist Food Markets BranchSearch for more papers by this authorChinkook Lee, Chinkook Lee agricultural economist Food Markets BranchSearch for more papers by this authorMichael LeBlanc, Michael LeBlanc deputy director Food and Rural Economics Division, Economic Research Service, U.S. Department of AgricultureSearch for more papers by this author First published: 01 December 1998 https://doi.org/10.2307/1244218Citations: 4AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onEmailFacebookTwitterLinkedInRedditWechat Citing Literature Volume80, Issue5December 1998Pages 1134-1138 RelatedInformation