Volume 27, Issue 1, July 2002

July, 2002

By: Muth, Mary K.; Karns, Shawn A.; Wohlgenant, Michael K.; Anderson, Donald W.
Implementation of the Pathogen Reduction and Hazard Analysis and Critical Control Points (PR/HACCP) regulations has occurred across all U.S. meat and poultry plants. A probit model is estimated to determine which factors have affected the probability of red meat slaughter plant exit during implementation of the regulations. While controlling for plant-level, company-level, regional-level, and supply conditions that may affect the probability of plant exit, smaller plants are found to exhibit a much greater probability of exit than larger plants. Other factors affecting plant exit include plant age, market share relative to the degree of market concentration, regional entry rates, and state-level wage rates.

July, 2002

By: Wu, JunJie; Adams, Richard M.
Because requisite micro data frequently are unavailable, it is common practice to use aggregate data to estimate economic relationships representing the behavior of individual agents. A substantial body of literature has examined conditions under which inferences between micro and aggregate specifications can be made. Less attention has been focused on the relative accuracy of predictions for each scale of model. In an empirical application, we compare the goodness-of-fit measures of eight sets of acreage response models, varying in aggregation from field- (micro-) level to regional- (macro-) level models. Results suggest aggregate models are superior to the micro model in predicting acreage response, even thought the micro models contain substantially more data on site-specific characteristics.

July, 2002

By: Sherrick, Bruce J.
The accuracy of producers' subjective probability beliefs is examined through a survey of large cash-grain farmers in Illinois. Findings reveal that their subjective probability beliefs about important weather variables are systematically mis-calibrated. The nature and extent of differences between subjective probability beliefs and probabilities based on long-term historic weather data are shown empirically, and through fitted calibration functions. The economic significance of inaccurate subjective probability beliefs is established in the context of insurance valuation. The results demonstrate that significant errors in producers' risk assessments and insurance valuation arise as a consequence of producers' systematically inaccurate probability beliefs.

July, 2002

By: Lichtenberg, Erik; Zilberman, David
A dynamic framework is presented for analyzing regulations affecting the use of spoilage-reducing inputs with potential negative environmental effects, such as pesticides, growth regulators, chemical preservatives, and irradiation. Such regulations change intertemporal consumption patterns as well as total output. Consumers may benefit from restrictions on storage technology, giving them a reason to support regulation even when it may not be warranted to correct environmental externalities. Static analyses do not take into account changes in intertemporal consumption, and thus may give misleading depictions of the effects of imposing new regulations. Implications of the framework for development and trade policy are discussed, as are extensions to cases of uncertainty and multiple time periods.

July, 2002

By: Schwabe, Kurt A.; Schuhmann, Peter W.; Tonkovich, M.
The costs of deer-vehicle collisions (DVCs) nationwide are estimated to be in excess of $1 billion annually. In this study, factors contributing to the abundance of DVCs are identified and the potential effectiveness of various deer management strategies in reducing DVCs is investigated. The added benefits of such strategies are also evaluated in a bioeconomic context by comparing alternative outcomes achievable from implementing DVC mitigation techniques. Focusing on Ohio, results suggest potentially large economic gains exist from reducing DVCs, especially with strategies that combine both deer management schemes and DVC mitigation techniques.

July, 2002

By: Antle, John M.; Capalbo, Susan Marie
One of the greatest challenges facing agriculture for the foreseeable future is to resolve conflicts caused by a growing competition for the services of the soil, water, and other natural resources on which agriculture depends-driven by growing demands for food, fiber, and for nonagricultural services these resources provide. To meet this challenge, research is needed which is integrated across the relevant sciences to better understand and predict the properties of agricultural production systems in all of the dimensions that have come to be represented by the concept of sustainability. If we were to achieve this capability to analyze agriculture as a managed ecosystem, it would be possible to move beyond the current regime of agricultural policies, driven largely by interest-group politics, toward science-based policies that recognize the tradeoffs associated with competing uses of natural resources.

July, 2002

By: Sanders, Dwight R.; Manfredo, Mark R.
One-step-ahead forecasts of quarterly beef, pork, and poultry production are examined and evaluated based on traditional criteria for optimality-efficiency and unbiasedness-as well as their performance versus a univariate time-series model. However, traditional regression methodology for evaluating forecasts is avoided due to interpretive issues. Instead, an empirical framework focusing on forecast errors in employed. Results suggest USDA forecasts are unbiased, but generally not efficient. That is, they do not fully incorporate the information contained in past forecasts. Moreover, USDA's predictions do not encompass all the information contained in forecasts generated by simple time-series models. Thus, practitioners who use the USDA forecasts may want to supplement them with time-series forecasts.

July, 2002

By: Kan, Iddo; Schwabe, Kurt A.; Knapp, Keith C.
Water management and reuse at the field level are analyzed under saline, limited drainage conditions. A function relating crop yield and deep percolation flows to applied water and salinity concentration is developed. This function fits simulated data well and is tractable for theoretical and empirical analysis of irrigation economics. With a single irrigation source, irrigation water for cotton and tomatoes at first increases and the decreases with salt concentration. Drain-water reuse is found to be an efficient strategy in events of high surface-water prices and costly solutions to drainage-related environmental problems. However, blending freshwater and drainage appears plausible only under surface water scarcity