SLU AFEPA European MSc in Agricultural, Food & Environmental Policy Analysis Agribusiness Environment & Policy: practice questions

1 · Definition and components of agribusiness · hard

An exporter of fresh grapes wants a single macro-environment factor that is BOTH a threat and outside the firm's control, but that can be monitored in advance through published drafts. Which is the best example?

1. The firm's own cold-store capacity
2. A proposed reduction in an importing country's maximum residue limit for a pesticide
3. The exporter's contract terms with its growers
4. The skill level of the firm's quality team

2 · Structure of agribusiness and linkages among farm supplies, production, processing and marketing · hard

In a well-designed agribusiness PPP, demand risk for a new terminal market for fruit and vegetables is best

1. always allocated entirely to the government
2. allocated to the party best able to influence or bear it, shared when traffic depends on public policy such as market rules
3. always allocated entirely to the private operator, since the operator collects the user fees and so must carry all the traffic risk
4. ignored, because PPP contracts cover only construction risk and the operator's revenue is always fixed in advance by the concession

3 · WTO Agreement on Agriculture compliance · hard

Under the SPS Agreement, an importing country sets a stricter pesticide residue limit than the Codex standard. The measure is consistent with WTO rules if

1. it is based on a scientific risk assessment and applied without arbitrary discrimination
2. the importing country is a developed country with a higher level of consumer income and food safety awareness
3. the product is also produced domestically
4. it is notified as a green box measure

4 · FDI policy in agribusiness · hard

A foreign food processor proposes a large plant in a developing country that will source raw material through contract farming. Which consideration most directly concerns the host country's competition policy rather than its FDI rules?

1. Whether the sector is on the automatic or approval route under the host country's consolidated FDI policy
2. Whether the foreign equity cap is 51 or 100 per cent
3. Whether the investor will become the only buyer of the crop in the region and exercise monopsony power
4. Whether the investment must be reported to the central bank within thirty days of receiving the foreign funds

5 · Import and export policy · hard

Wheat is quoted at 250 US dollars per tonne FOB. Freight is 30 dollars and insurance 5 dollars per tonne, the exchange rate is 83 currency units per dollar, the import duty is 10 per cent of CIF value, and port handling is 500 currency units per tonne. What is the import parity price at the port, in currency units per tonne?

1. 23,655
2. 25,730
3. 26,520.50
4. 26,020.50

6 · Food safety and quality policy · medium

A consumer cannot verify, even after eating it, whether a coffee was grown without synthetic pesticides. In economic terms, 'organic' is a

1. search attribute
2. experience attribute
3. public good
4. credence attribute

7 · Food safety and quality policy · hard

Under risk analysis as used by Codex and in modern food law, deciding what level of a contaminant is acceptable in food, after considering the scientific evaluation, is part of

1. scientific risk assessment
2. risk management
3. risk communication
4. hazard identification only

8 · Import and export policy · medium

When the domestic price of a product lies between its export parity price and its import parity price, the product is

1. effectively non-traded at the margin: exporting is unprofitable and importing too costly
2. certain to be imported, because domestic buyers always prefer the cheaper foreign product
3. certain to be exported
4. subject to a WTO violation, since its domestic price differs from both world parity prices

9 · Structure of agribusiness and linkages among farm supplies, production, processing and marketing · medium

Which organisational form involves the greatest vertical coordination in an agribusiness chain?

1. Spot market sale
2. Common ownership of successive stages
3. Marketing contract
4. Strategic alliance

10 · Environmental issues in agribusiness · medium

The European Union's deforestation due-diligence regulation covers imports of which set of commodities?

1. Wheat, rice and maize
2. Milk, eggs and poultry
3. Cattle, cocoa, coffee, oil palm, rubber, soya and wood
4. Cotton, jute and wool