The Impacts of Ugly Agricultural Produce on the Price of Normal Ones and the Social Welfare : The Case of Apple and Carrot

Abstract

Recently major food retailers and the government promote the demand of ugly vegetables and fruits, which gains positive social responses as recognized to contribute to the reduction of food waste and to increase farm income. However it becomes an important issue in that cheap ugly produce may simply replace the normal ones and adversely affect the prices. This study analyzes if this is the case. The results show that the increased consumption of ugly produce lowers the price of normal ones and the producer surplus, while the consumers are better off. But, the social welfare shrinks as a whole and the government should pay more attention when to adopt policies to promote the ugly agricultural produce.