Volume 47, Issue 2, May 2022

May, 2022

By: Adam, Baba ; Abdulai, Awudu
We employ farm household data to investigate the heterogeneous treatment effects of conservation agriculture (CA) practices on farm performance and inorganic fertilizer use in Ghana. We use the marginal treatment effect (MTE) framework to account for treatment effect heterogeneity in both observed and unobserved characteristics and to analyze policy-relevant treatment effects (PRTE). Farmers with a high propensity to adopt CA reduce nitrogen usage from inorganic sources and experience significant increases in maize yields and farm net returns compared to those less likely to adopt. PRTEs reveal that increasing training sessions and providing incentives to reduce implementation costs are crucial for promoting conservation agriculture.

May, 2022

By: Kuethe, Todd H. ; Bora, Siddhartha ; Katchova, Ani
The USDA Economic Research Service's (ERS) farm income forecasts play an important role in decision making and planning across the agricultural sector, yet recent studies suggest that their initial farm income forecasts are biased. This study examines the degree to which the initial forecast of net cash income and its components can be improved using information from USDA 10-year agricultural baseline (AB) projections. We apply several forecast evaluation tools to a unique set of ERS forecasts, AB projections, and official estimates from 1997 through 2019. Our forecast-encompassing tests show that the AB projection provides important information for predicting livestock receipts, direct government payments, farm-related income, and cash expenses. Our findings are potentially useful for both ERS forecasters and a variety of farm income forecast users.

May, 2022

By: Gil-Alana, Luis A. ; Font de Villanueva, Cecilia
This paper deals with the analysis of world commodity prices by examining 15 categories of commodity prices using fractional integration and including thus fractional points. We use data corresponding to the 1960Ð2018 period obtained from the World Bank, and the results indicate high degrees of persistence in the majority of the series, especially when using parametric methods. However, mean reversion is obtained in many cases when using semiparametric approaches. The possibility of structural breaks is also considered, and our results confirm the high degree of persistence in the data, which seems to have increased across time.

May, 2022

By: Schmiess, Jacob S. ; Lusk, Jayson L.
Despite many consumers' intuitions to the contrary, improvements in farm animal welfare can conflict with environmental objectives, particularly regarding greater intensification of production systems. Using a discrete choice experiment, this study determines how consumers make trade-offs between increased animal welfare and lower levels of environmental impact. We assess the sensitivity of results by varying how attributes were presented and what information was available to respondents. Overall, results suggest consumers are willing to trade environment for animal welfare, but the extent of this trade-off strongly depends on how the information is conveyed to consumers.

May, 2022

By: Zapata, Samuel D. ; Peguero, Felipe ; SŽtamou, Mamoudou ; Alabi, Olufemi
Citrus greening (HLB) is an incurable bacterial disease severely affecting most citrus production regions. Evaluating the economic feasibility of control practices is challenging due to the complex intertemporal interactions among the pathogen, the vector, and the host. We propose a stochastic evaluation framework to systematically analyze the long-term economic performance of a broad range of management strategies. Different control approaches are evaluated in a hypothetical application in Texas. Results highlight the detrimental effects of the disease and the importance of developing cost-effective control options. A substantial loss in value is expected regardless of the intervention actions implemented.

May, 2022

By: Yonezawa, Koichi ; G—mez, Miguel I. ; McLaughlin, Edward W.
State and federal minimum wage hikes are likely to impact the retail industry, including grocery stores, which employs a large number of less-well-compensated part-time workers. Despite its relevance, it is not clear whether minimum wage increases affect full- and part-time retail employees differently. We use state-level monthly data from the Current Population Survey (CPS) to show that minimum wage hikes lead to rising part-time wages but not to declining part-time employment. Instead, retailers reduce their full-time employment and the hours worked by full-time workers in order to stay within a labor budget and continue serving their customers.

May, 2022

By: Antonioli, Federico ; Santeramo, Fabio Gaetano
During the last 2 decades, two policy reformsÑthe Fischler Reform and the Common Market Organization ReformÑhave pushed the EU dairy sector toward economic liberalization. These changes affected the EU supply chains at different levels, altering the mechanisms of vertical price transmission. Against this backdrop, we apply error correction models to assess how price signals are passed through before and after the Italian milk supply chain reforms. In particular, we study the degree of price transmission asymmetries and conclude that market sluggishness has increased in the post-reform period, but the asymmetric dynamics are less evident. Reflections on future research needs are discussed.

May, 2022

By: Osseni, Abdel Fawaz ; Gohin, Alexandre ; Rault, Arnaud
Infectious animal diseases raise serious challenges for both public health and the livestock sector. We develop an original principalÐmultiple agent model for preventing these diseases that explicitly considers the heterogeneity of risk-averse farmers in addition to production externalities and ex ante informational asymmetries. Our results confirm that failing to consider farmersÕ heterogeneity generates Pareto-inefficient solutions. When using individual-based instruments, the government should cope with heterogeneity by increasing guaranteed payments and reducing average payments. However, when population-based instruments are the only available policy tools, increasing average payments is better for reducing moral hazard issues.

May, 2022

By: Li, Xuemei ; Saitone, Tina L. ; Sexton, Richard J.
The Women, Infants, and Children (WIC) Program has changed its food benefit issuance method from paper vouchers to electronic benefit transfer (EBT). WIC participation among the eligible population base has been declining since 2010, and EBT has been viewed as a way to arrest the decline. We utilize county-level WIC data from Oklahoma to analyze the impact of EBT on participation and food cost. We find no significant effect on program participation due to the EBT transition, but EBT reduced average participant food costs about $8.18/month, the equivalent of $56 million annually if similar savings apply nationally.

May, 2022

By: Shi, Ruoding ; Isengildina Massa, Olga
This study develops a comprehensive framework to measure, explain, and anticipate the costs of futures hedging. Using historical futures prices and margin requirements, we simulate hedging costs for corn and soybeans over 2004Ð2018. Empirical distributions derived from the simulation results provide unconditional estimates of the costs of hedging as well as the probability of hedging failure. Conditional estimates assess the impact of margin requirements, price volatility, and price changes as well as seasonal patterns using quantile regressions. Our findings demonstrate that price volatility is a main driver of the costs of hedging and can be used to anticipate future hedging costs.