The Cost of Food Safety Technologies in the Meat and Poultry Industries.

∂lnC

3) nrn= = P_X_ = β + ∑ β in P +γ in LB + δ in T + δ in 5
_∂lnP_i     C i _j ij j LBi          Ti         Si

Variable Definitions

The variabies are defined as foiiows. Totai cost (C) is the sum of iabor, meat and materiais, and
capitai input expenses. The price of iabor (Piabor) is totai empioyee wages and benefits divided by
totai empioyees. The meat and materiai input price (Pmat) is the cost of the iive-weight of animais
for siaughter pius any packed fresh or frozen meat or pouitry pius materiais divided by pounds of
meat inputs. The price of capitai (Pcapitai) foiiows Aiien and Liu (1995) and MacDonaid and
Oiiinger (2000, 2005), and Oiiinger, MacDonaid and Madison (2005). It has two components.
The first is the weighted sum of machinery and buiiding rentai vaiues, which equais rentai prices
for machinery and buiidings divided by their respective book vaiues. Annuai capitai rentai prices
are caicuiated by the Bureau of Labor Statistics separateiy for buiidings and for machinery in the
two-digit Food and Kindred Products Industry Group, using methods described in chapter 10 of
the BLS Handbook of Methods, Buiietin 2490 and on the Muitifactor Productivity Website
(stats.bis.gov/mprhome.htm). The measures inciude components for depreciation, changes in
asset prices, and taxes. Since the weights (book vaiues of structures and equipment) differ across
piants, capitai prices are piant-specific. The second component adds the ratio of new investment
to beginning of year assets, as a way to capture costs of adjustment.

Output (LB) equais pounds of meat and pouitry products (aii categories in SIC 201). The
measure of food safety technoiogy use comes from Oiiinger, Moore, and Chandran (2004) and is
an index vaiue of food safety piant technoiogy. It is a monotonic, continuous index vaiue

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