2008

December, 2008

Contribution of Wheat Diversity to Total Factor Productivity in China

By: Jin, Songqing; Meng, Erika C.H.; Hu, Ruifa; Rozelle, Scott; Huang, Jikun
The impact of wheat diversity on the productivity of wheat in China is examined using total factor productivity (TFP) and an instrumental variable approach. TFP in seven key wheat-producing provinces in China shows significant, though variable, growth for all provinces during the period 1982-1995. Analysis of the causes of TFP growth tests alternative taxonomies of wheat diversity (named varieties and morphological groups) and three measures of diversity. The analysis shows significant effects of diversity on TFP with results consistent across taxonomies and measures of diversity. Further decomposition of the estimation results confirms the relative magnitude of impact of wheat diversity on TFP growth.
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December, 2008

Adoption and Abandonment of Precision Soil Sampling in Cotton Production

By: Walton, Jonathan C.; Lambert, Dayton M.; Roberts, Roland K.; Larson, James A.; English, Burton C.; Larkin, Sherry L.; Martin, Steven W.; Marra, Michele C.; Paxton, Kenneth W.; Reeves, Jeanne M.
Adoption of precision agriculture technology has arrived considerable attention, but abandonment has received little. This paper identified factors motivating adoption and abandonment of precision soils sampling in cotton. Younger producers who farmed more cotton area, owned more of their cropland, planted more non-cotton area, or used a computer were more likely to adopt precision soil sampling. Those with more cotton area or who owned livestock were more likely to abandon, while those who used precision soil sampling longer, or used variable-rate fertilizer application were less likely to abandon precision soil sampling.
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December, 2008

What to Choose? The Value of Label Claims to Fresh Produce Consumers

By: Bond, Craig A.; McFadden, Dawn Thilmany; Bond, Jennifer Keeling
We examine consumer response to label information using a hypothetical choice experiment on red leaf lettuce attribute bundles. Using survey responses, several mixed logit models with random parameters and varying correlation assumptions are estimated that provide estimated of marginal utilities ( and marginal values) of various attributes related to general health claims, specific nutrition and health claims, certification logos, and certified organic claims (relative to the conventional reference group) for this fresh produce product. We find that consumers distinguish between labeling claims, and that attribute bundling effects are present, suggesting the results from main effects (linear) models may be misleading. Furthermore, the results imply that consumers may value both privately and publicly appropriable benefits of alternative technologies, such as organic production.
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December, 2008

Trait Stacking, Licensing, and Seed Firm Acquisitions on Genetically Modified Grains: A Strategic Analysis

By: Wilson, William W.; Huso, Scott R.
Commercialization of genetically modified (GM) traits leads to interesting strategic questions for agbiotechnology and seed firms. The purpose of the study is to evaluate equilibrium strategies of agbiotechnology and seed firms regarding commercialization of GM traits. Two game theory models were developed to examine equilibrium strategies. In the first, both agbiotechnology firms have commercialization strategies of licensing or not. In the second, the agbiotechnology firm also has the strategic option to purchase a seed form as a commercialization strategy. Results indicate that the equilibrium strategy would be for each of the agbiotechnology firms to license their traits, and the seed firm would release a stacked trait. However, order of play matters and impacts the equilibrium. Finally, in the second game, the equilibrium is for the agbiotechnology company to purchase a seed firm. Each of these decisions is highly strategic and reflects the current strategic challenges in the agbiotechnology industry.
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December, 2008

Implicit Value of Retail Beef Product Attributes

By: Ward, Clement E.; Lusk, Jayson L.; Dutton, Jennifer M.
To identify the value consumers place on observable characteristics of fresh beef products, primary data were collected on over 1,350 packages of beef from 66 randomly selected grocery stores located in three metropolitan areas--Oklahoma City and Tulsa, Oklahoma, and Denver, Colorado. Estimated linear and log-linear hedonic models reveal ground beef prices were significantly influenced by store location (i.e., metropolitan area) and store type, fat content, package size and type, expiration date, brand category, and special labels. Factors influencing steak prices included store location, product type, quality grade, package size and type, brand category, and special labels.
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December, 2008

Carcass Quality and Genetic Selection in the Beef Industry

By: Vanek, Joseph K.; Watts, Myles J.; Brester, Gary W.
A lack of high-quality beef has been cited as one of the primary factors for the 50% decline in beef demand from the mid-1970s to the last 1990s. Cattle producers argue that appropriate price premiums are not sufficient to encourage the production of high-quality cattle. Although some improvement in carcass quality can be made by the cattle feeding and processing sectors, substantial improvements in quality must include genetic progress. A hedonic analysis of four major U.S. beef seedstock producers indicates that bull purchasers place relatively high values on a bull’s ability to produce progeny with improved carcass-quality traits.
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December, 2008

The Role of Price Risk Management in Mitigating Fed Cattle Profit Exposure

By: Belasco, Eric J.
This study identifies the amount and origin of risk in cattle feedlot operations through the use of simulation techniques. Ex ante profit risks are evaluated under scenarios with varying levels of price protection through the use of forward pricing. An empirical probability density function is simulated to capture the mean and variability in prices and cattle production yields within a specified profit under difference assumptions regarding the relative importance of production risk and price risk in overall cattle feeding profits.
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December, 2008

Spatio-temporal Risk and Severity Analysis of Soybean Rust in the United States

By: Bekkerman, Anton; Goodwin, Barry K.; Piggott, Nicholas E.
Soybean rust is a highly mobile infectious disease and can be transmitted across short and long distances. Soybean rust is estimated to cause yield losses that can range between 1%-25%. An analysis of spatio-temporal infection risks within the United States is performed through the use of a unique data set. Observations from over 35,000 field-level inspections between 2005 and 2007 are used to conduct a county-level analysis. Statistical inferences are derived by employing zero-inflated Poisson and negative binomial models. In addition, the model is adjusted to account for potential endogeneity between inspections and soybean rust finds. Past soybean rust finds and inspections in the county and in the surrounding counties, weather and overwintering conditions, and plant maturity groups and planting dates are all found to be significant factors determining soybean rust. These results are then used to accordingly price annual insurance contracts or indemnification programs that cover soybean rust damages.
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December, 2008

Ethics and Agriculture: A Teaching Perspective

By: Diebel, Penelope L.
Ethics and agriculture is a complex debate, but one in which agricultural economics students must be prepared to participate. There are many links between economics and ethic or moral philosophy. Classroom teaching tends to focus on discussion of issues involving behavioral ethics and disregards the teaching of philosophical ethics and its application in agricultural economics. A discussion is presented regarding the ethical context we have inherited in agricultural economics. I offer some broad moral philosophy concepts and an argument for providing students with tools to develop a philosophical ethics perspective of agricultural economics.
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December, 2008

End Materials

This section includes: Abstracts of Invited and Selected Papers and Organized Symposia, WAEA Annual Meetings, Big Sky, Montana, June 25-27, 2008; JARE Editors' Report Presented at WAEA Annual Meeting, Big Sky, Montana, June 25, 2008; JARE Reviewers, October 1, 2007-December 1, 2008; WAEA 2007 Award Winners; Waea Past Presidents 1927-2008; Past Editors, Western Journal of Agricultural Economics, 1977-91, Journal of Agricultural and Resource Economics, 1992-2006
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December, 2008

Influence of Climate Variability on the Market Price of Water in the Gila-San Francisco Basin

By: Pullen, Jennifer L.; Colby, Bonnie G.
Emerging water markets in the western United States have slowly developed as usage patterns have changed over time. This article develops an econometric model for the Gila-San Francisco Basin. Results indicate the market price of water has risen in response to drought and market conditions. Analysis shows a statistically significant relationship between the price and quantity of water transferred, year the transaction occurred, location where the transaction occurred, new use of the water right, and whether the transaction occurred during a drought year. Using the Standard Precipitation Index, we find negotiated prices are higher during dry years.
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August, 2008

Market Power in the Corn Sector: How Does It Affect the Impacts of the Ethanol Subsidy?

By: Saitone, Tina L.; Sexton, Richard J.; Sexton, Steven E.
Market power is discussed in debates about subsidies for ethanol production. The structural conditions in the corn industry create a case for concerns about market power. We develop an analytical model for determining the production and price impacts and the distribution of benefits from the U.S ethanol subsidy when upstream sellers in the seed sector and downstream buyers in the processing sector may exercise market power. Results demonstrate that the impacts on prices and output are probably limited. Distribution impacts are much greater. Seed producers and corn processors with market power capture relatively large shares of subsidy benefits.
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August, 2008

Get a Grip: Should Area Revenue Coverage Be Offered Through the Farm Bill or as a Crop Insurance Program?

By: Paulson, Nicholas D.; Babcock, Bruce A.
The successful expansion of the U.S crop insurance program has not eliminated ad hoc disaster assistance. An alternative currently being explored by Congress in preparation of the 2008 farm bill is a standing disaster relief program. One form such a program could take can be found in the area insurance programs currently offered by the U.S crop insurance program. Total per acre taxpayer costs of offering Group Risk Income Protection (GRIP) in Indiana, Illinois, and Iowa for corn and soybeans are estimated to have the ability to fund a country target revenue program at the 93% coverage level.
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August, 2008

Spatial Dependence in Hedonic Property Models: Do Different Corrections For Spatial Dependence Result in Economically Significant Differences in Estimated Implicit Prices?

By: Mueller, Julie M.; Loomis, John B.
While data used in hedonic property models are inherently spatial in nature, to date the majority of past regression analyses have used OLS models that overlook possible spatial dependence in the data when estimating implicit prices for environmental hazards. This paper explicitly addresses spatial dependence in a hedonic property model. We use robust testing procedures to determine the existence and type of spatial dependence in our OLS model. After identifying the nature of the spatial dependence, OLS estimates of the implicit price of wildfire risk are compared to implicit prices obtained using a spatial error model with three different spatial weighting matrices. Spatially corrected estimates of implicit prices are often found to be nearly the same as those obtained using OLS. Our results indicate that the inefficiency of OLS in the presence of spatially correlated errors may not always be economically significant, suggesting nonspatial hedonic property models may provide results useful for policy analysis, and spatial and nonspatial hedonic property models may provide results useful for policy analysis, and spatial and nonspatial hedonic property models might be pooled in meta-analysis.
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August, 2008

Public Policy and Endogenous Beliefs: The Case of Genetically Modified Food

By: Lusk, Jayson L.; Rozan, Anne
When individuals have limited information and are uncertain about the quality of a good, government policy, or the lack thereof, can serve as a signal to consumers about the likelihood of realizing alternatives states of nature. In this paper, we focus on a controversial beliefs about government intervention: the market for genetically modified food. Data from a mail survey were used to estimate an econometric model where beliefs about labeling policy, beliefs about the safety of genetically modified food, and willingness to consume genetically modified food are endogenously determined. Results indicate that consumers who believe the government has a mandatory labeling policy for genetically modified food are more likely to believe genetically modified food is unsafe than consumers who believe no such policy is in place.
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August, 2008

Balancing Grower Protection Against Agency Concerns: An Economic Analysis of Contract Termination Damages

By: Lee, Myoungki; Wu, Steven Y.; Fan, Maoyong
This study examines legislation that would grant growers termination damages if their contracts are terminated. Our model suggests that, with no contracting frictions, damages would not reduce ex ante efficiency as processors can contract around damages through contract restructuring. Growers would earn less under continuation but would be protected if terminated, although overall expected profits would be unaffected. However, when contracting friction exist, then efficiency losses can occur as processors would be constrained in restructuring contractual incentives to deal with moral hazard. Growers' expected profits would increase while processors' profit would decrease.
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August, 2008

Forest Amenities and Location Choice in the Southwest

By: Hand, Michael S.; Thacher, Jennifer A.; McCollum, Daniel W.; Berrens, Robert P.
Locations with natural characteristics, such as forest, are thought to be attractive residential locations. This proposition is tested in the Southwest United States, composed of Arizona and New Mexico. This paper presents a conditional logit model of location choice estimated with household observations from the U.S census, geographic information system (GIS) data, and county-level data. Results suggest that forest area, both in one's own location and nearby, increases the probability of choosing a location. But significant heterogeneity in location choices exists; an income effect and life-cycle effects on the demand for forest amenities appear to determine location choices.
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August, 2008

Modeling of Avian Influenza Mitigation Policies Within the Backyard Segment of the Poultry Sector

By: Elbakidze, Levan
This study presents a conceptual model for the analysis of avian influenza mitigation options within the small poultry farm sector (backyard flocks). The proposed model incorporates epidemiological susceptible-infected-recovered (SIR) methodology into an economic cost-minimization framework. The model is used to investigate the implications and interdependencies of mitigation options that influence inter-flock contact rates of asymptomatic and symptomatic flocks, and reduce the duration of symptomatic and asymptomatic periods. The results indicates that for shorter asymptomatic periods the efforts to control inter-flock contract rates should concentrate on symptomatic flocks, while for longer asymptomatic periods the control of inter-flock contacts should be focused on asymptomatic flocks. Efforts to reduce the length of asymptomatic and symptomatic periods and efforts to reduce inter-flock contact rates function as substitute strategies.
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August, 2008

Testing Whether Field Auction Experiments Are Demand Revealing in Practice

By: Corrigan, Jay R.; Rousu, Matthew C.
Recent evidence suggests that participants' misunderstanding of experimental auction mechanism can systematically bias auction results. We present a simple technique for testing whether field auction mechanism and, by extension, whether auction bids provide an unbiased estimate of participants' willingness to pay.
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