COMPETITIVENESS OF US FOOD-PROCESSING - BENEFITS FROM PRIMARY AGRICULTURE

High-value agricultural products such as processed foods are becoming increasingly important for both the production and trade of the United States. Efficiency gains in primary agriculture may be transferred to the processed food sector in the form of cheaper inputs because price declines and productivity growth have been coincidental in agricultur e. In turn. efficiency gains in the processed food sector are transfer red, in part, back to primary agriculture by increasing the derived de mand and, thus, mitigating the decline in the latter's price, Efficien cy gains are relatively more important in primary agriculture than in food professing. Policies which encourage productivity growth that low ers the production costs can increase the competitiveness of both sect ors. The ultimate beneficiaries of the price declines in primary agric ulture and food processing are consumers.