Volume 45, Issue 2, May 2020

May, 2020

Is This Food Local? Evidence from a Framed Field Experiment

By: Li, Tongzhe; Ahsanuzzaman; Messer, Kent
This experimental research studies consumer preferences for local food accompanied by various label definitions. 374 adult participants made purchase decisions for local oysters characterized by multiple definitions of the term local. Results show consumers are less willing to pay for local oysters when local is defined as harvested within 400 miles than they are for oysters harvested within 100 miles or 25 miles. Willingness to pay (WTP) also increases when local is defined as being harvested in a watershed from the same state of the purchase location rather than in an adjacent state. Interestingly, the highest WTP is when no definition of local is provided.
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May, 2020

Grower Willingness to Pay for Fruit Quality versus Plant Disease Resistance and Welfare Implications: The Case of Florida Strawberry

By: Li, Zongyu; Gallardo, R. Karina; McCracken, Vicki; Yue, Chengyan; Whitaker, Vance; McFerson, James R.
We assess decision making when growers choose to invest in a new fruit cultivar, given the tradeoffs between superior fruit quality and improved disease resistance. We also estimate the welfare effects of adopting a cultivar with improved disease resistance. Florida strawberry growers are more willing to pay for fruit quality relative to improved disease resistance. When adopting a cultivar with improved disease resistance, Florida strawberry growers save between $182.40 and $204.50 per 1,000 plants every annual harvest period. Our findings improve the understanding of how strategic decisions are made to meet increasing marketplace demands for superior fruit quality and reduced chemical applications.
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May, 2020

Consumers Response to Food Fraud: Evidence from Experimental Auctions

By: Meerza, Syed Imran Ali; Gustafson, Christopher R.
This study uses a laboratory valuation experiment to examine whether food fraud occurring in one country affects the valuation of products from that country as well as products from other countries. We use a between-subject experiment design to compare consumersÕ valuation of extra virgin olive oil (EVOO) from different countries with and without exposure to information about olive oil fraud occurring in one of the countries. Results show that information about olive oil fraud in one country negatively affects the valuation of EVOO not only from that country but also from other countries, indicating negative spillover effects of food fraud.
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May, 2020

Tradeoffs in Farm to School Implementation: Larger Foodsheds Drive Greater Local Food Expenditures

By: Plakias, Zoe T.; Klaiber, H. Allen ; Roe, Brian E.
Local food offerings differ within and across school districts with farm-to-school programs. Using two waves of nationwide data, we estimate the relationship between two supply chain indicatorsÑ local foodshed size and length of local food supply chainÑand districtsÕ local food expenditures. We find that increasing foodshed radius by 50 miles and sourcing from intermediaries increases the average districtÕs local spending by 8% and 26%, respectively. DistrictsÕ actions to increase student access to local foods by widening definitions of local or sourcing through intermediaries thus have the potential to reduce localized benefits to nearby farmers and community members.
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May, 2020

Rating Crop Insurance Contracts with Nonparametric Bayesian Model Averaging

By: Liu, Yong; Ker, Alan P.
Crop insurance is plagued by relatively little historical information but significant spatial information. We investigate the efficacy of using nonparametric Bayesian model averaging (BMA) to incorporate extraneous information into the estimated premium rates. Nonparametric BMA is particularly suited to this application because it does not make any assumptions about parametric form or the extent to which yields are similar. We evaluate the proposed estimator under small-to-medium sample sizes and various geographical restrictions on the distance of spatial smoothing for policy relevance. The nonparametric BMA consistently decreases error and enables statistically significant and economically important rents to be captured.
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May, 2020

Farm-Level Risk-Balancing Behavior and the Role of Latent Heterogeneity

By: Aderajew, Tamirat S.; Du, Xiaoxue; Pennings, Joost M. E.; Trujillo-Barrera, Andres
The risk-balancing hypothesis (RBH) suggests that farms will take less business risk as their financial risk increases, but existing literature provides empirical evidence that the RBH might be invalid under certain circumstances. We present a unified model that explains the conditions under which the RBH holds or is invalidated by recognizing the role of latent heterogeneity among farms. We generalize the RBH idea and trace the source of credit risk back to latent heterogeneity among farms. We then apply recent literature to longitudinal data from a panel of Dutch farms and classify segments using a finite mixture regression fixed-effects model and find that the RBH may not apply to all groups in the same way.
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May, 2020

Price Transmission in Pakistans Poultry Supply Chain

By: Chaudhry, Muhammad Imran; Miranda, Miranda J.
Increasing levels of concentration in the upstream sector of poultry supply chains have led to concerns about the influence of producers on farm-gate prices. Against this background, we employ threshold cointegration models to study price transmission mechanisms in Pakistan‰Ûªs poultry sector. We do not find evidence of asymmetric price transmission in the chicken supply chain, but evidence of asymmetric price transmission in the egg supply chain points towardsthe exercise of market power by egg producers. Differences in the short-run price transmission mechanisms of eggs and chicken can be traced to the underlying production and marketing activities, particularly degree of product storability.
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May, 2020

Hedonic Functions, Heterogeneous Consumers, and Wine Market Segmentation

By: Caracciolo, Francesco; Furno, Marilena
This study extends the classical hedonic price model by taking advantage of the heterogeneity of consumer preferences and testing the existence of different price functions. A finite mixture model identifies consumer segments in the Italian wine market and estimates the hedonic functions within each group. The analysis is extended beyond the mean to the tails of the distribution for each group via quantile regressions. The analysis in classes proves to be more efficient both on average and at the quantiles and presents a more accurate wine market segmentation, unveiling sources of heterogeneity and asymmetry.
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May, 2020

Factors Influencing the Gulf and Pacific Northwest Soybean Export Basis: An Exploratory Statistical Analysis

By: Bullock, David W.; Wilson, William W.
The response of U.S. soybean export basis (Gulf and Pacific Northwest) to changes in supply and demand (domestic and international), transportation costs, logistics conditions, and export activity variables was examined from both a market-year average and seasonal analog perspective. The market-year average results indicated that basis at both locations were highly correlated and influenced primarily by international and domestic competition. The seasonal analog results indicated a wide variation in seasonality across marketing years for both locations with transportation costs, logistic conditions, and export activity having the greatest influence on the seasonal analog grouping.
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May, 2020

An Experimental Inquiry of Gender Differences in Negotiation Strategy and Outcomes: Agricultural Market Implications

By: Ritten, Chian Jones; Bastian, Christopher T.; Gerace, Selena; Phillips, Owen R.; Nagler, Amy
The number of women in agricultural management positions and as business owners is increasing. A critical part of agricultural managers' success is negotiating profitable sales, which depends on negotiation strategy. We use laboratory market experiments to measure gender differences in negotiation strategy and related outcomes in three market contexts common to agricultural product sales. Results show that women tend to choose a negotiation strategy that focuses on trading a higher quantity but at a lower per trade profit than men. Our results further show that women will be disproportionately hurt as agricultural markets move away from traditional market environments toward privately negotiated contracts.
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May, 2020

Adoption of Pressure Irrigation Systems and Scientific Irrigation Scheduling Practices by U.S. Farmers: An Application of Multilevel Models

By: Fan, Yubing; McCann, Laura
Water scarcity is becoming more acute, necessitating better understanding of farmer adoption of improved irrigation technologies. Using data from the national 2013 Farm and Ranch Irrigation Survey, this study employs a multilevel modeling approach to analyze irrigation decisions. The variation in pressure irrigation adoption is mainly accounted for by state-level factors, while adoption of scientific scheduling practices is more associated with farm-level factors. Adoption increases with larger acreage, groundwater use, information sources other than neighbors, and recent higher temperatures. Adoption is negatively associated with on-farm surface water and barriers related to increased costs, management time, and time horizon.
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May, 2020

Factors Explaining Hypothetical Bias: How to Improve Models for Meta-Analyses

By: Atozou, Baoubadi; Tamini, Lota D.; Bergeronm, Stephane; Doyon, Maurice
Using a set of 462 observations from 87 public and private goods economic valuation studies, this study reviews and updates meta-analyses on hypothetical bias using a metaregression hierarchical mixed-effect (MRHME) model that corrects the effects of the unobservable characteristics, within-study error correlation, and potential heteroskedasticity specific to each study. The findings indicate that the MRHME model is more efficient than the log-linear models used in previous meta-analyses. Moreover, this modeling approach and the use of interaction variables by type of goods highlight significant differences relative to previous meta-analyses in the explanatory variablesÕ effects, significance levels, magnitudes, and signs.
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