Analysis Group Consultants, Affiliate Discuss the Impact of Food Safety Concerns on Prices Received by Agricultural Producers in FDLI's Update

February 12, 2013

In the January/February issue of Update, a publication of the Food and Drug Law Institute (FDLI), North Carolina State University agricultural economics professor Walter Thurman, Vice President George Kosicki, and Manager Ted Davis explore the effects of food safety incidents, such as the discovery of cases of "mad cow disease" in the United States, on the prices received by agricultural producers.

In "Food Safety Concerns: Impact on Prices and Producers," the authors note that food safety incidents have led to class action litigation by producers over depressed prices, and that such litigation is likely to increase as traceability in the food supply continues to improve and the chances of assigning liability to a particular party increase. Professor Thurman, Dr. Kosicki, and Mr. Davis then discuss the proper use of data from centralized agricultural futures markets in assessing the extent and permanence of any price impacts on individual producers.

The authors caution that while "futures prices are appealing as barometers of market-wide economic forces, their use in litigation to assess specific damages claims poses challenges," and they describe three economic questions that are important to examine before using futures prices to estimate damages.

Read the article (with permission from FDLI's Update)