2017

September, 2017

Additionality in Grassland Easements to Provide Migratory Bird Habitat in the Northern Plains

By: Claassen, Roger; Savage, Jeff; Loesch, Chuck; Breneman, Vince; Williams, Ryan; Mulvaney, Bill; Fairbanks, Tammy
Native grassland in the Prairie Pothole Region (PPR) is important habitat for migratory birds, particularly ducks. Much of this grassland is at risk for conversion to cropland. Permanent easements, managed by the U.S. Fish and Wildlife Service, protect high-quality habitat but do not currently consider vulnerability to cropland conversion. We find that (i) grassland easements are protecting native grassland from conversion, although the level of protection is modest; (ii) it may be possible to increase habitat protection by targeting grassland that is vulnerable to cropland conversion; and (iii) conversion estimates that fail to account for easements are biased downward.
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September, 2017

Food Access, Food Deserts, and the Women, Infants, and Children Program

By: Wu, Qi; Saitone, Tina L.; Sexton, Richard J.
We examine the shopping behavior of Women, Infants, and Children (WIC) Program participants located in food deserts in the Greater Los Angeles area relative to peers in GLA located outside of food-desert boundaries. Results indicate that food-desert participants traveled slightly farther to shop than comparison participants. However, food-desert and non-food-desert participants were equally likely to visit multiple vendors and to visit a supermarket vendor. Food-desert participants did not pay more for program foods relative to comparison participants. On balance, the results indicate that WIC shopping behavior is very similar among food-desert and comparison participants.
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September, 2017

The Role of Income in Explaining the Shift from Preserved to Fresh Vegetable Purchases

By: Ferrier, Peyton M.; Zhen, Chen
Between 1991 and 2013, the share of fresh vegetables consumed rose from 47% to 56%. While median incomes grew 7.9%, the growth was uneven, with negligible growth occurring in the bottom two quintiles. Estimating an EASI demand system for fresh and preserved vegetables that accounts for corner solutions, we find that income elasticities are larger for fresh vegetables than for preserved vegetables for consumers in the top three but not the bottom two income quintiles. Simulations accounting for uneven income growth indicate that income growth accounts for 0.7 percentage points of the 9 percentage point increase in fresh share.
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September, 2017

The Trade and Health Effects of Tobacco Regulations

By: Galinato, Gregmar I.; Olanie, Aaron Z.; Yoder, Jonathan K.
We examine how cross-country differences in tobacco regulations affect tobacco imports and consumer health. We find that tobacco imports increase when a rich exporter’s tobacco regulations are stringent relative to the regulations of its poor importing trade partner. The main policy driver may be differences in marketing and counter-advertising tobacco regulations between trading partners. If a rich exporting country adopts counter-advertising tobacco regulations, mortality and morbidity from tobacco-related diseases in the poor importing country increase by four and eighty smokers per million people annually, respectively. Our results highlight the importance of accounting for spillovers in an increasingly multilateral economy.
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September, 2017

Quality, Sourcing, and Asymmetric Exchange-Rate Pass-Through into U.S. Coffee Imports

By: Anders, Sven; Fedoseeva, Svetlana
Few studies to date have investigated the extent of linkages between long-run asymmetries in bilateral trade and fluctuations in real exchange rates and importer demand in non-oil commodity markets. This paper generates estimates of trade elasticities in U.S. raw coffee imports, applying a nonlinear autoregressive distributed lag model and explicitly testing the extent to which nonlinearities matter to U.S. commodity sourcing in the short and long run. Models with asymmetries in both exchange rates and U.S. income point to the critical role that asymmetric pass-through plays in explaining long-run dynamics in U.S. import trade for a major commodity supply chain.
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September, 2017

Challenges to Farm Produce Marketing: A Model of Bargaining between Farmers and Middlemen under Risk

By: Ranjan, Ram
We present a model of bargaining between farmers and middlemen in which long-term risk considerations by farmers constrain their ability to engage in hard bargaining. In order to avoid the risk of middlemen exiting their region in the future due to hard bargaining, farmers settle for lower prices for their produce. The risks of prolonged drought-induced decline in produce quality and future oversupply of the perishable agricultural commodity also result in lower price outcomes under bargaining. If farmers join a collective that enhances their bargaining power, they tend to be better off when the group is homogeneous.
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September, 2017

Managing Catastrophic Risk in Agriculture through Ex Ante Subsidized Insurance or Ex Post Disaster Aid

By: Bulut, Harun
We consider a political economy in which government cares about risk-averse farmers’ loss of income but incurs political cost if it provides monetary support to farmers. Farmers’ expectations of government disaster aid and overconfidence (optimism bias) regarding their risk prevent farmers from purchasing full insurance under actuarially fair rates. Considering this conclusion, government prefers to subsidize farmers’ purchases of insurance ex ante rather than solely relying on disaster aid ex post. The resulting subsidy rate depends on the political environment, the degree of systemic risk, the distribution of farmers’ risk preferences, and the nature and distribution of farmers’ risk perceptions.
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September, 2017

Determinants of Effective Beginning Farmer Programming and Implications for Future Programs

By: Jablonski, Becca B.R.; McFadden, Dawn Thilmany; Sullins, Martha; Curtis, Kynda R.
This research explores the determinants of effective beginning farmer programming and implications for emerging and established programs. We use responses from 100 interviews with participants in the Building Farmers in the West Program, one of the longest-standing beginning farmer training programs in the United States, to understand how key course principles predict improved farm profitability. Results show that specific production changes after taking the course—including the number of cultivated varieties (negative), number of farm enterprises (positive), and length of production season (positive)—are correlated with improved farm profitability. We make recommendations for future beginning farmer programming based on these results.
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May, 2017

The Spatial-Dynamic Benefits from Cooperative Disease Control in a Perennial Crop

By: Fuller, Kate Binzen; Sanchirico, James N.; Alston, Julian M.
We develop a novel spatial-dynamic model of landowners managing a disease in a perennial crop. We use the model to investigate the dynamic gains from cooperation to address the spatial externality resulting from disease vector dispersal. We find that solving for the complete time path of control decisions is important; cooperation leads to each landowner investing more in treatment in early years than in cases where one agent free rides on the other’s control. Our model is based on Pierce’s Disease of grapevines in California’s Napa Valley but is applicable to a range of diseases in perennial crops.
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May, 2017

Weather Derivatives and Water Management in Developing Countries: An Application for an Irrigation District in Central Mexico

By: Juárez-Torres, Miriam; Sánchez-Aragón, Leonardo; Vedenov, Dmitry
This paper analyzes possible improvements to water allocation from introducing weather derivatives as an insurance instrument in irrigation districts with no water markets and two cropping seasons. Dry-season production depends completely on irrigation, while wet-season production depends on irrigation as a supplement to naturally occurring precipitation. Using an analytical model of water allocation and historical data from an irrigation district in Central Mexico, simulations show that weather derivatives could encourage interseasonal reallocation of water from wet to dry season, generating new Pareto-optimal water allocations that improve overall welfare among producers.
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May, 2017

Cow Welfare in the U.S. Dairy Industry: Willingness-to-Pay and Willingness-to-Supply

By: Wolf, Christopher A.; Tonsor, Glynn T.
Consumers are increasingly scrutinizing the animal welfare implications of modern agricultural production processes. We used surveys to examine both the U.S. public willingness-to-pay for and dairy farmer willingness-to-supply or change on-farm production practices related to dairy cattle welfare and find that the public has a positive WTP for all practices examined, while most dairy farms already supply those practices (with the exceptions of employee training programs, third-party certification, and outdoor access). Implications for practice verification and premiums are discussed in the context of dairy markets and policy.
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May, 2017

A Method for Evaluating the Economic Contribution of a Local Food System

By: Watson, Philip; Cooke, Stephen; Kay, David; Alward, Greg; Morales, Alfonso
Despite growing interest in local food, modeling the economic contribution of this endogenous system is inherently problematic. We present a combined hypothetical extraction and import-substitution social accounting matrix model that overcomes these problems in a theoretically consistent and computationally feasible manner. The method can be applied broadly to many different definitions of a “local food system” and uses the same underlying method as traditional economic-base contribution models. We apply this model to the state of Idaho and compare the economic contribution of the local food system against the economic contribution of the export food system.
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May, 2017

Valuing Genetically Modified Traits in Canola Using Real Options

By: Wynn, Katherine; Spangenberg, German; Smith, Kevin; Wilson, William
This study specifies a framework to evaluate an investment strategy combining a market assessment with a valuation method using a stochastic binomial real option model. The market assessment uses multi-criteria analysis to determine which markets should be targeted for commercialization of a genetically modified trait in a target crop. The stochastic binomial real option model is developed to determine whether commercialization is financially viable. The framework was applied to canola being developed using gene technology to increase its drought tolerance. Our results showed that drought-tolerant canola would be more profitable than conventional varieties, but it would only be sufficiently profitable to pursue commercialization in targeted regions or countries.
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May, 2017

The Economic and Environmental Benefits of Sheath Blight Resistance in Rice

By: Tsiboe, Francis; Nalley, Lawton Lanier; Durand, Alvaro; Thoma, Greg; Shew, Aaron
The producer, consumer, and environmental impacts of a counterfactual of ShB-resistant rice production were calculated using data from U.S. county-level rice production in the Mid-South and simulated Sheath Blight (ShB) infection and yield-loss rates. Results indicate a $43 million increase in consumer surplus via ShB alleviation, with enough additional rice produced to feed 1.7 million people. A life cycle assessment (LCA) also shows that the counterfactual has lower environmental impacts than the status quo of ShB-prone rice production. These estimates provide important economic and environmental information to donors, policy makers, and breeding programs globally on the importance of increasing and maintaining genetic disease resistance.
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May, 2017

Households’ Adoption of Drought Tolerant Plants: An Adaptation to Climate Change?

By: Fan, Yubing; McCann, Laura; Qin, Hua
Adopting drought tolerant plants (DTPs) to conserve water is a potential adaptation to the predicted effects of climate change in the Midwest. Survey responses from 624 Missouri households were analyzed using a univariate probit model. DTP adoption was positively correlated with both low and high household incomes, living in rural subdivisions, time spent gardening, pro-environment attitudes, and concerns about drought. Policy interventions in newly drought-prone areas might include subsidizing the up-front cost of DTPs, requiring their use in new housing developments so DTPs are the default for buyers, and targeted educational efforts to environmental and gardening groups and rural residents.
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May, 2017

Anchoring, Information, and Fragility of Choice Experiments: An Application to Consumer Willingness to Pay for Rice with Improved Storage Management

By: Su, Lianfan; Adam, Brian D.; Lusk, Jayson L.; Arthur, Frank
This study uses an experimental auction and a discrete choice experiment to determine consumers’ willingness to pay (WTP) for rice with improved insect control and for rice stored using Integrated Pest Management and investigates potential reasons—anchoring and information—why some studies have found inconsistencies between the two methods. Results indicate that WTP estimates from the choice experiment are lower than consumers’ average auction bids. Anchoring in the choice experiment appears to be an explanation for the discrepancy. Providing consumers with additional information about the products improved choice experiment results, producing consistent preference ordering and increasing WTP estimates.
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May, 2017

Emerging Markets for U.S. Pork in China: Experimental Evidence from Mainland and Hong Kong Consumers

By: Ortega, David L.; Chen, Maolong; Wang, H. Holly; Shimokawa, Satoru
A major concern for international marketers is how products will be received by foreign consumers in other markets. This study uses choice modeling to assess Chinese consumer preferences for pork and evaluate the potential demand for U.S. pork in the cities of Guangzhou and Hong Kong. We find that differences in preferences for domestic versus imported pork can be explained, in part, by consumers’ level of patriotism. Marketing pork with a food safety claim can increase market demand for U.S. products, and accounting for differences in nationalistic attitudes can aid marketing efforts.
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