The source of the variance in profitability among firms is an important issue in the field of food and agribusiness economics. The objective of this study is to analyze firm profitability in the food economy and determine the source of variance of firm profitability. The results indicate that firm effects account for the largest variance in business-segment performance within the food economy. Firm specific factors are less important for the vast majority of firms that are not the industry high or low performers. These results provide support that industry structure matters more for firms that are not high or low performers, which is characteristic of the majority of firms in an industry. [EconLit citations: Q130, L100.] © 2005 Wiley Periodicals, Inc. Agribusiness 21: 97-108, 2005.

The persistence of industry, firm-specific, and corporate-parent effects on firm profitability in the food economy are calculated and further analyzed within its four major sectors: food processing, wholesale grocery, retail supermarket, and restaurant. Profits are more persistent within an industry than within a corporation. The retail supermarket sector has had stable profits as has individual retail supermarket firms relative to the other three sectors. Copyright 2005, Oxford University Press.

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This study investigated the cost structure of the floriculture industry in the United States. Economies of scale and input elasticities were estimated with a normalized quadratic cost function. Results suggest that economies of scale exist in the floriculture industry. As producers become large and more automated, they have a cost advantage relative to smaller producers who are producing the same output product mix. The existence of economies of scale suggests that average grower size can increase in the future as growers increase in size to take advantage of cost efficiencies.

In this study, we develop a conceptual bioeconomic model of floriculture production with aesthetic benefits, wherein optimal decision rules depend on an intertemporal economic objective to maximize profits subject to economic and biological processes. Necessary conditions of the model identify optimal trajectories (e.g., simultaneous, single, or cycling controls) that define decision rules and economic thresholds for profit maximizing growers producing crops with aesthetic attributes. The necessary conditions also highlight intertemporal trade-offs between aesthetic benefits and expected future net benefits of arthropod stocks, which have important policy implications. The model is applied to the greenhouse production system of ivy geranium. Copyright 2006 International Association of Agricultural Economics.