2003

December, 2003

By: Blank, Steven C.
The increasing globalization of agricultural markets in recent decades appears to be changing the economics of the American production agriculture sector, reducing its economic importance and raising questions about its life cycle. This study contributes to the product life cycle literature by creating tests of hypotheses about the economic life of American production agriculture. A methodology to test the hypotheses is proposed and then applied in an empirical analysis. In general, it appears that a new stage in American agriculture's life began during the 1973-1983 period. Finally, the results and their implications for the American production agriculture sector are discussed.

December, 2003

By: Alexander, Corinne E.; Fernandez-Cornejo, Jorge; Goodhue, Rachael E.
Prior to the 2000 planting season, some industry observers predicted acreage of genetically modified crops would decline dramatically. However, actual 2000 plantings presented a puzzle. Farmers reduced their acreage of genetically modified corn, but concurrently increased their acreage of genetically modified soybeans. We demonstrate that it may be theoretically optimal for risk-averse farmers to reduce their corn acreage but not their soybean acreage. However, past experience, attitudes, and farm size explained planting decisions to a larger degree than did risk preferences.

December, 2003

By: McCalla, Alex F.
The World Trade Organization (WTO) Agreement on Agriculture was signed in June 1994. It accomplished two things: it brought agricultural trade under the rules of WTO, and it set schedules for reducing barriers to trade under the three pillars of liberalization--market access, export assistance, and domestic support. Nine years later there has been precious little liberalization. The new Doha Round has ambitious objectives for agricultural trade liberalization. However, given recent behavior by rich developed countries, it seems unlikely that developing countries will get increased access to Northern markets or reduced competition from subsidized exports, despite their now representing a majority of WTO members.

December, 2003

By: Mbaga, Msafiri Daudi; Coyle, Barry T.
This is the first econometric study of dynamic beef supply response to incorporate risk aversion or, more specifically, price variance. Autoregressive distributed lag (ADL) models are estimated for cow-calf and feedlot operations using aggregate data for Alberta. In all cases, output price variance has a negative impact on output supply and investment. Moreover, the impacts of expected price on supply response are greater in magnitude and significance than in risk-neutral models.

December, 2003

By: Goodhue, Rachael E.; Rausser, Gordon C.
American agriculture is shifting from homogeneous commodities to differentiated products. Value differentiation, the process by which agrifood chain actors isolate, match, and exploit heterogeneity in consumer preferences and product attributes, is examined. Value differentiation is characterized by complementarities across four activities at each stage of the production chain: product characteristic measurement, product characteristic production, coordination between stages, and customer preference detection. Complementarities at the firm level are modeled using supermodularity. The model's predictions are discussed, as are potential testing approaches, and implications are presented for agrifood firms, marketing orders, and returns to research.

December, 2003

By: Tembo, Gelson; Epplin, Francis M.; Huhnke, Raymond L.
While theoretically more efficient than starch-based ethanol production systems, conversion of lignocellulosic biomass to ethanol is not without major challenges. A multi-region, multi-period, mixed integer mathematical programming model encompassing alternative feedstocks, feedstock production, delivery, and processing is developed. The model is used to identify key cost components and potential bottlenecks, and to reveal opportunities for reducing costs and prioritizing research. The research objective was to determine for specific regions in Oklahoma the most economical source of lignocellulosic biomass, timing of harvest and storage, inventory management, biorefinery size, and biorefinery location, as well as the breakeven price of ethanol, for a gasification-fermentation process. Given base assumptions, gasification-fermentation of lignocellulosic biomass to ethanol may be more economical than fermentation of corn grain. However, relative to conventional fermentation processes, gasification-fermentation technology is in its infancy. It remains to be seen if the technology will be technically feasible on a commercial scale.

December, 2003

By: Huffman, Wallace E.; Shogren, Jason F.; Rousu, Matthew C.; Tegene, Abebayehu
With the continuing controversy over genetically modified (GM) foods, some groups advocate mandatory labeling of these products, while other groups oppose labeling. An important issue is how GM labels affect consumers' willingness to pay for these food products in the market. Using a statistically based economics experiment with adult consumers as subjects, we examine how willingness to pay changes for three food products--vegetable oil, tortilla chips, and potatoes--when GM labels are introduced. Participants in the experiments discounted GM-labeled foods by approximately 14% relative to their standard-labeled counterparts. The evidence also showed that sequencing of food labels affects willingness to pay, and that randomizing treatments is an important methodological feature in experiments of willingness to pay.

December, 2003

JARE Editor's Report, December 2003; Reviewers October 2002-April 2003; WAEA 2002 Award Winners; WAEA Past Presidents 1927-2003; Past Editors; Minutes of 2003 WAEA Joint Executive Committee and Executive Council Meeting; JARE Author Index; JARE Key Words Index

August, 2003

By: Smith, Vincent H.; Goodwin, Barry K.
Recent research has questioned the extent to which government policies, including conservation and risk management programs, have influenced environmental indicators. The impacts of income-supporting and risk management programs on soil erosion are considered. An econometric model of the determinants of soil erosion, program participation, conservation effort, and input usage is estimated. While the Conservation Reserve Program has reduced erosion an average of 1.02 tons per acre from 1982 to 1992, approximately half of this reduction has been offset by increased erosion resulting from government programs other than federally subsidized crop insurance.

August, 2003

By: Loureiro, Maria L.; Umberger, Wendy J.
Consumer willingness to pay for a mandatory country-of-origin labeling program is assessed. A consumer survey was conducted during 2002 in several grocery stores in Boulder, Denver, and Fort Collins, Colorado. Econometric results indicate that surveyed consumers are willing to pay an average of $184 per household annually for a mandatory country-of-origin labeling program. Respondents were also willing to pay an average of $1.53 and $0.70 per pound more for steak and hamburger labeled as "U.S. Certified Steak" and "U.S. Certified Hamburger," which is equivalent to an increase of 38% and 58%, respectively, over the initial given price.