1998

December, 1998

By: Ker, Alan P.; Coble, Keith H.
For multiple peril crop insurance, the U.S. Department of Agriculture's Risk Management Agency estimates the premium rate for a base coverage level and then uses multiplicative adjustment factors to recover rates at other coverage levels. Given this methodology, accurate estimation of the base coverage level from 65% to 50%. The purpose of this analysis was to provide some insight into whether such a change should or should not be carried out. Not surprisingly, our findings indicate that the higher coverage level should be maintained as the base.

December, 1998

By: Eales, James S.; Hyde, Jeffrey; Schrader, Lee F.
Two approaches have been taken to the modeling of poultry demand in U.S. meat demand studies. One has been to ignore turkey, and estimate demands for beef, pork, and chicken. The second has been to include turkey by combining it with chicken, and estimating demands for beef, pork, and poultry. The validity of these two approaches is examined using quarterly U.S. time-series data from 1980-96. The results indicate that either approach to the modeling of poultry demand is appropriate.

December, 1998

By: Calvin, Linda; Krissoff, Barry
Concern about the use if technical barriers as restrictions to trade has increased since the World Trade Organization Agreement on Agriculture. In this analysis, we quantify the phytosanitary barriers to U.S. apple exports to Japan by calculating tariff-rate equivalents. We examine the trade and welfare impacts of removing phytosanitary barriers and tariffs under two assumptions regarding transmission of the bacterial disease fire blight: first, that transmission via commercial fruit is not possible, and second, that it can occur. The disease losses required to eliminate the grains to trade are estimated to be much larger than those experienced in other countries.

December, 1998

By: Huang, Wen-Yuan; Hewitt, Tracy I.; Shank, David
Timing nitrogen applications to the biological needs of a crop is an effective way to reduce nitrogen losses to the environment. However, this strategy may carry a production risk and conflict with farmers' economic objectives. A field-level production decision model was used to estimate on-farm costs associated with timing nitrogen applications for crop needs in Indiana. For risk-neutral farmer, the estimated cost is less than $1 per acre with a reduction of 11 pounds of residual nitrogen. For a risk-aversion farmer, the estimated cost is up to $37 per acre with a reduction of 96 pounds of residual nitrogen.

December, 1998

By: Bailey, DeeVon; Brorsen, B. Wade
Trends in the accuracy of USDA forecasts of beef and pork production and supply are evaluated for the period 1982-96. Findings of the study show that USDA forecasts underestimated production and supply in the 1980s, but this bias has now disappeared. The variance of forecasts also has declined. Thus the accuracy of the forecasts has improved. The most recent USDA forecasts were found to meet the criteria of optimal forecasts, while those of the 1980s were not optimal.

December, 1998

By: Babcock, Bruce A.; Pautsch, Gregory R.
This study develops a model based on the yield potential of various soil types in 12 Iowa counties to estimate the potential value of switching from uniform to variable fertilizer rates. Results indicate modest increases in the gross returns over fertilizer costs, ranging from $7.43 to $1.52 per acre. The net profitability of variable-rate technology (VRT) is sensitive to the per acre costs of moving to a VRT program. Under the assumptions of the model, applying variable rates would increase yield by 0.05 to 0.5 bushels per acre, and would reduce fertilizer costs by $1.19 to $6.83 per acre.

December, 1998

By: Roosen, Jutta; Fox, John A.; Hennessy, David A.; Schreiber, Alan
Economic assessments of pesticide regulations typically focus on producer impacts and generally ignore possible changes in product demand. These changes may be nonnegligible if real and/or perceived product attributes change. We measure consumers' willingness to pay (WTP) for the elimination of one insecticide and also a whole group of insecticides in apple production using a multiple-round Vickrey auction. The data are analyzed using nonparametric statistical tests and a double-hurdle model. Our findings show that consumer perceptions of product attributes change if pesticides are removed from production, and this is reflected in WTP changes. WTP is shown to be income elastic.

December, 1998

By: Richards, Timothy J.; Patterson, Paul M.
Government-supported promotion in foreign markets may justified when market failures exist, such as spillover externalities, where promotion of one commodity positively influences exports of another, or when market uncertainties cause planning horizons to be shorter than the persistent effects of promotion. A dynamic model of U.S. apple, almond, grape, and wine export supply is developed to test for these market failures. Promotion is viewed as an investment in establishing and maintaining a product's image. Evidence supporting the existence of each market failure is found. Exporters and program administrators may fail to account for them in export promotion planning.