2013

December, 2013

Price- and Policy-Induced Innovations: The Case of U.S. Biofuel

By: Jang, Heesun; Du, Xiaodong
Using patent counts and citation data from 1977 to 2011, we explore the determining factors of innovative activities of the U.S. biofuel industry.We take into account both demand-side factors— such as crude-oil price, government R&D expenditure on biofuel, and federal-level support policies—and supply-side factors, represented by constructed knowledge stocks, to quantify the effects on biofuel-related innovations. The citation generation process is quantified using patent citation records and the estimates are used to construct the simple and weighted stocks of knowledge with weights of patent productivity. We confirm that both the demand and supply factors have positive and statistically significant effects on technological biofuel innovations in the United States.
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December, 2013

Decomposing Productivity and Efficiency among Western Australian Grain Producers

By: Tozer, Peter R.; Villano, Renato
We provide empirical evidence to decompose productivity growth of a group of producers into technical change and efficiency measures at the farm level. Using four years of farm-level data from forty-five grain producers in the low- to medium-rainfall zone of Western Australia, we decompose productivity numbers to analyze total factor productivity. The results show that producers are generally technical, mix, and scale efficient, but the results for input and output mix efficiencies vary. The outcomes for input mix efficiency suggest that producers face some rigidity in their production decisions. In contrast, output mix efficiency suggests that most producers adjust their output mixes to account for different seasonal conditions and enterprise mixes.
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December, 2013

Do Residual Development Options Increase Preserved Farmland Values?

By: Schilling, Brian J.; Sullivan, Kevin P.; Duke, Joshua M.
Previous research has reached inconsistent, if not paradoxical, conclusions regarding the impact of conservation easements on farmland prices. Expectations of price reductions, strongly grounded in economic theory, are not always observed.We develop a hedonic model to examine the sale prices of 325 New Jersey preserved farms. We find strong evidence that residual development options retained under farmland deeds of easement have significant and positive effects on preserved farmland prices. This suggests that appraisals are undervaluing deed-restricted farmland, resulting in possible overpayment for conservation easements. This may explain the limited price differentials researchers have observed between preserved and unpreserved farmland.
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December, 2013

Measuring Environmental Quality: Ecosystem Services or Human Health Effects

By: Strong, Aaron
The relationship between income and environmental quality is poorly understood at best. We expand the Environmental Kuznets Curve (EKC) literature by considering not only the role of emissions but also the role of the environment’s absorptive capacity in the relationship between income and environmental quality. Building off of a simple conceptual model, we construct two different aggregate measures of environmental quality. Using these measures, we find that emissions and emissions toxicity exhibit a relationship consistent with the EKC hypothesis, while biodiversity and ecosystem services do not.
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December, 2013

The Economic Impact of Services Provided by an Electronic Trade Platform: The Case of MarketMaker

By: Zapata, Samuel D.; Carpio, Carlos E.; Isengildina-Massa, Olga; Lamie, R. David
Despite the touted potential of e-commerce to improve agriculture profits, the literature on effectiveness of e-commerce is very limited. This paper assesses the economic impact of an electronic trade platform (i.e., MarketMaker) on agricultural producers. Contingent valuation techniques are employed to estimate the monetary value that producers placed on MarketMaker services. Results indicate that producers are willing to pay $47.02 annually for the services they receive. Registration type, amount of time registered, amount of time devoted to MarketMaker, type of user, number of marketing contacts received, and firm total annual sales have a significant effect on producers’ willingness to pay.
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December, 2013

Consumer Preferences for Tomatoes: The Influence of Local, Organic, and State Program Promotions by Purchasing Venue

By: Carroll, Kathryn A.; Bernard, John C.; Pesek, John D. Jr.
A choice experiment of consumers from five Mid-Atlantic states was conducted to compare marginal willingness to pay for fresh tomatoes with the attributes locally grown, state marketing program promoted, and organic from either a grocery store or farmers’ market. Data were analyzed using a mixed logit model. Results show that consumers in Maryland, Pennsylvania, and Virginia prefer local tomatoes, while those in Delaware and New Jersey prefer state program versions. Unexpectedly, price premiums for organic over conventional tomatoes were only exhibited in Maryland, and Virginia was the only state with a significant premium for the farmers’ market venue.
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December, 2013

Consumer Preferences for Verified Pork-Rearing Practices in the Production of Ham Products

By: McKendree, Melissa G.S.; Olynk Widmar, Nicole; Ortega, David L.; Foster, Kenneth A.
A hypothetical choice experiment was conducted to determine consumers’ willingness to pay for three verified production practice attributes (pasture access, antibiotic use, and individual crates/stalls) in smoked ham and ham lunchmeat. These attributes were verified by the USDA Process Verified Program (PVP), a retailer, or the pork industry. Willingness to pay for verified attributes varied across attributes and verifying entity for both products. Consumers were willing to pay the most for attributes verified by the USDA-PVP. No statistical differences, relative to the product price level, were found across products for the same attribute-verifier combination.
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December, 2013

Consumer Attitudes toward Farm-Animal Welfare: The Case of Laying Hens

By: Heng, Yan; Hanawa Peterson, Hikaru; Li, Xianghong
Concerns over laying hens’ welfare have led to many different labels for eggs and changes to state regulations. Consumer attitudes toward farm-animal welfare were examined using a national survey in the context of preferences for eggs differentiated by layer management practices. Most respondents perceived caged housing and other conventional management practices as reducing hens’ welfare and were willing to pay a premium for eggs produced in cage-free and other nonconventional production systems. Although participants responded to information about environmental consequences of management practices, they placed more weight on animal welfare issues than environmental issues in their egg-purchase decisions.
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December, 2013

Factors Affecting Cow-Calf Herd Performance and Greenhouse Gas Emissions

By: Wang, Tong; Park, Seong C.; Bevers, Stan; Teague, Richard; Cho, Jaesung
A Cobb-Douglas stochastic frontier function is estimated for the cow-calf enterprises in the Texas Rolling Plains using Standardized Performance Analysis (SPA) data. We find that factors promoting higher herd productivity include machinery investment, pasture-quality improvement, and protein supplement. In contrast, herd productivity is compromised by a longer breeding season, percentage of hired labor, and deviation from mean annual rainfall. Interestingly, more technically efficient farms tend to emit fewer greenhouse gas units per unit of output. For example, net greenhouse gas emissions are 6.12 and -8.70 pounds of carbon equivalent, respectively, for farms with technical efficiency below 0.8 and above 0.96.
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December, 2013

JARE Editors’ Report

The JARE editorial team of Chris McIntosh, Hayley Chouinard, Greg Galinato, and Larry Makus began their three-year term with manuscript 2012-December33, submitted April 1, 2012. This report covers the period from June 1, 2012, through May 31, 2013. Publication details for the three issues published during the past year (2013) are reported in table 1.
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August, 2013

A Benefit-Function Approach to Studying Market Power: An Application to the U.S. Yogurt Market

By: Hovhannisyan, Vardges; Bozic, Marin
This article provides a structural framework for studying the market performance of various food industries. It revisits the benefit-function approach to modeling demand and extends its application to the empirical industrial-organization literature. We illustrate the empirical value of our model in an econometric analysis of competitive conditions in the retail market for branded yogurt. The results show that retailers are engaged in imperfect competition. Furthermore, national brand yogurt remains an important tool for retail profitability.
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August, 2013

Polarized Preferences in Homegrown Value Auctions

By: Hurley, Terrance M.; Yue, Chengyan; Anderson, Neil O.
Homegrown value-auction experiments are useful for exploring preferences for controversial product attributes. These auctions have emphasized estimating the effect of the attribute on the willingness to pay (WTP) for a product. The likelihood that individuals are willing to purchase any products with the attribute has received less attention, even though this could also be useful to researchers, marketers, and policy makers. This article shows how simultaneous, single-unit auctions can be used to estimate not just WTPs, but also the likelihood that individuals are willing to purchase any products with a controversial attribute.
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August, 2013

Effects of Cost and Campaign Advertising on Support for California’s Proposition 37

By: McFadden, Brandon R.; Lusk, Jayson L.
Proposition 37 would have required genetically engineered food in California to be labeled. This paper reports the results of a survey designed to determine Californians’ voting intentions prior to the vote, perceptions about the prevalence of genetically engineered foods in the United States, willingness to pay for a mandatory label, and effectiveness of advocacy advertising. Overall, Californians had inaccurate knowledge about the prevalence of genetically engineered foods, and stated they were willing to pay up to 13.8% higher food costs on average for a mandatory label. Findings suggest that the effectiveness of opposition advertising was likely a formative factor in the defeat of Proposition 37.
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August, 2013

A Meta-Analysis of Geographical Indication Food Valuation Studies: What Drives the Premium for Origin-Based Labels?

By: Deselnicu, Oana C.; Costanigro, Marco; Souza-Monteiro, Diogo M.; McFadden, Dawn Thilmany
We conduct a meta-analysis of studies estimating price premiums for agricultural products differentiated by Geographical Indication (GI). Models accounting for differences across product characteristics (food categories) and institutions (PDO, PGI, trademarks) explain a large portion of the variance in estimated premiums. Specifically, GIs capture the highest percentage premium in markets for products with short supply chains and relatively low added value (e.g., agricultural commodities). The premium is lower for wine and olive oil, where alternative means of product differentiation (e.g., branding) exist. Controlling for product characteristics, GIs adopting stricter regulations (PDO) yield larger premiums than less regulated ones (PGI).
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August, 2013

Dairy Farmer Policy Preferences

By: Wolf, Christopher A.; Tonsor, Glynn T.
Dairy policy often becomes a contentious topic during U.S. farm bill negotiations. The dairy subtitle of the 2012 farm bill has been debated and discussed since 2009. This research uses best-worst scenario methods to analyze dairy farmer preferences for policy options, including eliminating existing dairy policies, implementing new dairy policies related to income support and growth management, and ending ethanol subsidies. Results indicate that large and small dairy herd operators have differing preferences. Large herd operators prefer to end ethanol subsidies rather than specific dairy policy changes, while small herd operators most preferred support for income over feed-cost margins.
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August, 2013

Revealed Demand for Country-of-Origin Labeling of Meat in the United States

By: Taylor, Mykel R.; Tonsor, Glynn T.
Proponents of the U.S. mandatory country-of-origin labeling (MCOOL) law have argued that consumers prefer domestic meat and value labels confirming domestic origin. Following legislation enacted in March 2009, an ex post analysis of demand is possible to evaluate relative costs and benefits of MCOOL. This study uses retail grocery-store scanner data to estimate a Rotterdam demand model of meat products. The model results failed to detect changes in consumer meat demand post-MCOOL. Given the costs of compliance incurred by meat processors and no evidence of increased demand, our results suggest that producers and consumers have experienced a welfare loss.
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August, 2013

Ex Ante Economic Impact Analysis of Novel Traits in Canola

By: Naseem, Anwar; Singla, Rohit
This study evaluates the potential economic impacts of ten novel traits in canola by employing a stochastic economic surplus model. Nitrogen use efficiency, water use efficiency, flea-beetle resistance, cold/freeze tolerance, and drought tolerance traits would have the largest economic impacts. Major beneficiaries of the surplus benefits are consumers as well as Canadian producers and innovators. The magnitudes of economic impacts varied substantially across the three major canola-growing Canadian provinces. Net benefits were sensitive to supply elasticity and R&D lags.
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