Department of Agricultural and Resource Economics

Increased transportation and logistical costs in agricultural markets have affected the spatial allocation of production in the agricultural and food sectors of the economy. We develop a spatial model of farm product procurement by a food processor, designed to capture the effects of supply-chain disruptions on the spatial procurement of farm products in the processed food sector.  We use detailed data on production and procurement by a large California tomato processor to estimate the key parameters of the model which allow us to calculate the price elasticity of supply for California tomato paste production and describe how changes in energy prices and transportation costs for primary agricultural products affect the supply of processed food.