Market environment and valuation of invested capital in food manufacturing and distribution industries

Olive Chiboola and Bruce Bjornson
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Olive Chiboola: Loans and Investments Department, Ministry of Finance, Zambia, Postal: Loans and Investments Department, Ministry of Finance, Zambia
Bruce Bjornson: 200 Mumford Hall, University of Missouri, Columbia, MO 65211, Postal: 200 Mumford Hall, University of Missouri, Columbia, MO 65211

Agribusiness, 1996, vol. 12, issue 2, 135-146

Abstract: Evolving food preferences and business cycles have had differential impacts on the expected performance, risk, and cost of capital among post farm gate food industries. Expected returns to invested capital in 10 food manufacturing and four distribution industries are evaluated with respect to each industry's risk-based cost of capital. In spite of increasing food market share to food service and increasing retailer concentration and bargaining power, capital in distribution industries has been overvalued so that expected returns have been depressed below the cost of capital for extended periods from 1973 to 1992, while manufacturing capital has been efficiently valued. © 1996 John Wiley & Sons, Inc.

Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:wly:agribz:v:12:y:1996:i:2:p:135-146

DOI: 10.1002/(SICI)1520-6297(199603/04)12:2<135::AID-AGR3>3.0.CO;2-3

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