2023

May, 2023

The Role of Risk in Farmland Contract Choices

By: Arnold, Chelsea; Yu, Jisang; Taylor, Mykel; Palm-Forster, Leah H.; Banerjee, Simanti
Understanding the role of risk in farmland leasing contract choices is important to assess the welfare consequences of farm policies or environmental changes that affect production risk. We use a unique dataset of landowners and tenants in Kansas to examine the role of risk in their farmland leasing contract choices. We find that greater production risk and more risk-averse landowners encourage fixed cash rent contracts. As many variables can potentially affect contract choices, we use a penalized regression to show that the inclusion of relationship variables leads to little change in the main results.
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May, 2023

Implicit Market Segmentation and Valuation of Angus Bull Attributes

By: Tang, Minfeng; Thompson, Nathanael M.; Boyer, Christopher N.; Olynk Widmar, Nicole J.; Lusk, Jayson L.; Stewart, Terry S.; Lofgren, Donna L.; Minton, Nick
Previous hedonic assessments have largely relied on the assumption that bull buyers have homogeneous demands for bull attributes. However, quality differentiations and heterogeneous demands support the existence of submarkets. This analysis investigates market segments using a finite mixture model and 13 years of bull auction data. Results indicate that valuations of bull attributes vary across implicit buyer segments. Differences in demand may be influenced by a variety of factors, includingÑbut not limited toÑfarm goals, labor availability, and end-use marketing arrangements for calves. Results have important implications for signaling quality cues throughout the industryÕs breeding sectors.
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January, 2023

An Expected Value of Sample Information (EVSI) Approach for Estimating the Payoff from a Variable Rate Technology

By: Queiroz, Pedro W. V.; Perrin, Richard K.; Fulginiti, Lilyan E.; Bullock, David S.
This paper examines the expected payoff to variable rate technology for fertilizer application in terms of a Bayesian expectation of the value of sample information (EVSI). The optimal variable rate for each cell in a field is conditioned on a signal in the form of the electrical conductivity of soil at that cell. Using corn response to nitrogen data from ten on-farm field-level experiments, we calculate the expected payoff from variable rate technology versus a uniform rate applied to all cells to be about $1.81/acre.
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January, 2023

Adopting African Indigenous Vegetables: A Dynamic Panel Analysis of Smallholders in Kenya

By: Vivas, Jonathan; Kim, Man-Keun; Takagi, Chifumi; Kirimi, Lilian
African indigenous vegetables (AIVs) have remained underutilized despite their potential benefits in sub-Saharan Africa. This study identifies determinants of AIV adoption among Kenyan smallholder farmers and explores whether farmers' decisions to adopt exhibit a true state dependence. Using four waves of data and a dynamic probit model, we identify the existence of dynamics in farmers' decisions, implying that farmers adjust their decisions using knowledge gained in previous periods. In addition, a gender disparity exists: Female-headed households are more likely to adopt AIVs. This is not due to differences in household characteristics but rather to gender differences, which may be associated with Kenyan culture.
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January, 2023

Subsidy Rate Changes on Livestock Risk Protection for Feeder Cattle

By: Boyer, Christopher N.; Griffith, Andrew P.
We determine the impact the 2020 Livestock Risk Protection (LRP) subsidy rate structure has on the probability of LRP having a higher price than the actual cash price. Monthly logit models were estimated to determine these probabilities with the previous and new subsidy rate. The preferred coverage lengths and levels vary across months as does LRPÕs effectiveness in managing price risk. The new subsidy structure increases LRPÕs effectiveness as a risk management tool in some months. Results show the LRP contract that provides the best protection by sell month and the impact of the new subsidy rates.
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January, 2023

Spatial Equilibrium Effects of Agricultural Commodity Price Changes on Great Plains Agriculture, 1997Ð2017

By: Barkley, Andrew; Seete, Paul; Tack, Jesse
The effects of changes in agricultural commodity prices on net farm income, land values, and the number of farm operators are quantified using a spatial equilibrium model for 798 Great Plains counties during 1997Ð2017, a period of historically large price changes. The empirical model identifies major features of the agricultural sector, including distance to market and agricultural commodity price movements. Regression results show that crop prices had significant impacts on agricultural outcomes. Volatility in net farm income and land values was greater in locations farthest from market centers for corn and soybeans, but closer to the defined sorghum market center.
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January, 2023

US Household Purchases of Dairy Milk and Plant-Based Milk Alternatives

By: Stewart, Hayden; Dong, Diansheng
US household purchases of fluid dairy milk and plant-based milk alternatives are investigated using household-level data from the 2018 National Consumer Panel. About 58.5% of all households bought only dairy milk and 4.4% bought only plant-based products over the course of that year. Another 37.1% switched between the two types of products, buying dairy milk on most shopping occasions and plant-based products on a smaller number of occasions. Dairy milk will not likely lose out to plant-based products anytime soon given these purchase patterns; rather, the two products may coexist, with plant-based options playing a minor role.
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January, 2023

Price and Welfare Effects of the Food Safety Modernization Act Produce Safety Rule

By: Ferrier, Peyton M.; Zhen, Chen; Bovay, John
We estimate the cost of compliance with the US Food Safety Modernization Act (FSMA) Produce Safety Rule by commodity and own- and cross-prices elasticities of demand for 18 fruits and 20 vegetables. These are used as inputs in an equilibrium displacement model that simulates the price and welfare effects of the rule. We find that consumer and farm prices increase by 0.55% and 1.69% for fruits and 0.15% and 0.59% for vegetables. Costs associated with implementation are estimated to reduce producer welfare by 0.63% for fruits and 0.51% for vegetables (as a share of revenue). If the rule's provisions were enacted unilaterally by growers of individual commodities, producer welfare losses would be 0.93% of total revenue for fruits and 0.31% for vegetables.
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January, 2023

Consumer Preferences for State-Sponsored Designations: The Case of the Missouri Grown Label

By: Grashuis, Jasper; Su, Ye
There is much empirical evidence of consumer preferences for food products with state-sponsored designations. However, the behavioral characteristics that form the foundation of such consumer preferences are unknown. Using a choice experiment, we explain preferences for the Missouri Grown state-sponsored designation from the perspective of consumer ethnocentrism. According to the results, most consumers have a significant willingness-to-pay for the Missouri Grown label. However, the price premium is substantially higher for consumers who think that products from Missouri conform with in-group preferences. These novel findings imply a strong motivation for producers and legislators to expand adoption and support of state-sponsored programs.
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January, 2023

Survival Analysis of New Zealand Fresh Fruit and Vegetable Imports

By: Luo, Yangyuyu; Scrimgeour, Frank; Bano, Sayeeda
This paper explores New Zealand fresh fruit and vegetables import survival from 1989 to 2019 and identifies the key determinants. We find that around 58% of trade relationships survived only 1 year. Significant factors influencing the hazard rate of import survival are the number of entries, distance, per capita gross domestic product, production, import prices, and the number of import origins and export destinations. However, the estimated impacts of the phytosanitary treatments covered in New Zealand Import Health Standards are mixed and associated with exporting countriesÕ level of development.
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January, 2023

Are Intensive Farms More Emission Efficient? Evidence From German Dairy Farms

By: Stetter, Christian; Wimmer, Stefan; Sauer, Johannes
This study compares the greenhouse gas (GHG) efficiency of intensive and extensive dairy farms and determines their GHG mitigation potential. We combine the concept of eco-efficiency with latent class stochastic frontier analysis and the estimation of a stochastic metafrontier. In the case of Bavaria, Germany, we find that intensive dairy farms convert GHG emissions on average more efficiently into farm economic output than their extensive counterparts. Extensive farms could, on average, reduce GHG emissions by 225 t CO$_2$ equivalent per year while intensive farms could reduce emissions by 130 t CO$_2$ equivalent without reducing their economic output.
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January, 2023

Employer-Sponsored Health Insurance Coverage, Government Payments, and Labor Allocation: The Case of US Farm-Operator Households

By: Miller, Cristina D. M.; Mishra, Ashok K.; Villacis, Alexis H.
This study investigates the impact of health insurance coverage and participation in government counter-cyclical, conservation, and risk management programs on off-farm labor allocation decisions among US farm-operator households. Using household-level data, this study employs a simultaneous probit estimation method to estimate the empirical model. Results show that US farm-operator households with employer-sponsored health insurance coverage are also 14% more likely to work off farm. Second, farm familiesÕ off-farm work is associated with a 4% increase in health insurance coverage. Counter-cyclical, conservation, risk management payments have a negative and significant effect on US farm-operator householdsÕ off-farm work decisions.
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January, 2023

Productivity-Based Indicators for Nitrogen Use Efficiency

By: Ancev, Tihomir; Bostian, Moriah; Barnhart, Brad
Nitrogen use efficiency (NUE) is often used to evaluate an agricultural system's relative ability to process nitrogen (N) inputs. However, no universal indicator has simultaneously considered both economic and environmental objectives. We develop Luenberger indicators of NUE that incorporate both economic and environmental objectives to examine spatio-temporal changes in NUE, which we apply to the Upper Mississippi River Basin (UMRB) for the period 2002--2012. We find considerable spatial-temporal variation in NUE, which could be used to inform future agri-environmental policy and conservation targeting decisions in the UMRB. Using this approach could lead to more cost-effective targeting of areas for N reduction in the UMRB.
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January, 2023

Comparative Profitability of Irrigated Cropping Activities for Temporary Water Transfers under Risk Aversion

By: Mooney, Daniel F.; Kelley, Timothy H.
Temporary water transfers are attractive to farmers because they provide revenue, but they also reduce water available for crop production and may affect economic risk. We compare the expected profitability, risk exposure, and water savings (i.e., conserved consumptive use) of irrigated cropping activities for temporary transfers in Colorado. Crop switching, modified harvesting, rotational fallow, and limited irrigation significantly affect gross margins, risk premiums, and consumptive use. Excluding risk from the economic analysis underestimates breakeven water transfer values by 4%Ð36%. Compensating farmers for risks they take and forgone returns from water they transfer will increase willingness to participate in temporary transfers.
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