Published Online (Pre-Prints)

Advance articles are accepted but have not yet undergone the copyediting process in preparation for publication. Minor stylistic changes may occur during the publication preparation process.

By: Tara Mitchell
5/24/2021
This paper investigates how the production of high-quality agricultural goods in developing countries depends on various characteristics of the supply chain. The model predicts that there will be a range of values of the price difference between high-quality and low-quality goods for which production of high-quality goods occurs when both tasks are carried out by a single agent but not in the case of separate agents. The range of price values for which this occurs will be decreasing as quality becomes more observable or as the cost of maintaining quality along the supply chain decreases. Policy recommendations are also discussed.
By: Abdel Fawaz Osseni, Alexandre Gohin, and Arnaud Rault
5/24/2021
Animal infectious diseases raise serious challenges for both public health and the livestock sector. This theoretical paper develops an original principal multiple-agents model for the prevention of these diseases where the heterogeneity of risk averse farmers is explicitly considered in addition to production externalities and ex ante informational asymmetries. We define the optimal design of policy instruments promoting socially desirable levels of biosecurity efforts by farmers. Our results confirm that failing to account for the heterogeneity of farmers generates Pareto-inefficient solutions. The management of heterogeneity depends on the instruments available to the government. When the policy uses individual-based instruments, the government should cope with heterogeneity with increased guaranteed payments and reduced average payments. However, when population-based instruments are the only available policy tools, increased average payments are better off to reduce moral hazard issues.
By: Aditya R. Khanal, Ashok K. Mishra, and Gudbrand Lien
5/24/2021
Using primary survey data of onion growers in India, this study tests the relationship and predictability of risk attitude measures on farmersÕ undertaking of various risk management decisions. Findings suggest that risk management decisions like diversification, adopting good agricultural practices, quality-enhancing practices, and participation in off-farm work are likely to decrease with decreasing risk-aversion. High-risk-averse farmers are more likely to adopt farm diversification strategies, good agricultural practices, government-recommended seed varieties and preventive measures against diseases & pests than low-risk-averse farmers. The likelihood of adopting good agricultural practices decreases with farmersÕ perceived higher risks of low-quality production, a higher risk of losing crops due to weather, and insects and pests.
By: Federico Antonioli and Fabio Gaetano Santeramo
5/24/2021
During the last two decades, the EU dairy sector has been interested by considerable changes and two policy reforms, the Fischler Reform and the Common Market Organization Reform, pushing toward economic liberalization. These changes affected the EU supply chains at different levels, altering the mechanisms of vertical price transmission. Against this background, 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.
By: Koichi Yonezawa, Miguel Gomez, and Edward McLaughlin
5/24/2021
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-time 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 to keep serving their customers.
By: Luis A. Gil-Alana and Cecilia Font de Villanueva
5/24/2021
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 1960-2018 period obtained from the World Bank, and the results indicate large degrees of persistence in the majority of the series, especially when using parametric methods. However, with semiparametric approaches mean reversion is obtained in many cases. The possibility of structural breaks is also taken into account and our results confirm the large degree of persistence in the data, which seems to have increased across time.
By: Todd H. Kuethe, Siddhartha Bora, and Ani Katchova
5/24/2021
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 ERS's initial farm income forecasts are biased. This study examines the degree to which ERS's initial forecast of net cash income and its components can be improved using information from USDA's 10-year Agricultural Baseline Projections. We apply several forecast evaluation tools to a unique set of ERS forecasts, Baseline projections, and official estimates from 1997 through 2019. Our forecast encompassing tests show that Baseline 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.
By: Matthew J. MacLachlan, David Boussios, and Amy D. Hagerman
5/24/2021
Export restrictions often exacerbate the direct production losses and control costs from infectious animal disease outbreaks by reducing the pool of consumers of animal products. However, the uncertain timing and the varying extent of the trade restrictions make it challenging to measure these indirect costs of disease outbreaks. We examine two Highly Pathogenic Avian Influenza outbreaks (2004 and 2014/15) that saw few broiler chickens lost but significant trade disruptions from embargoes. We evaluate the timing and estimate the magnitude of the economic shocks from these embargoes, finding brief but considerable trade declines and distinct economic responses to each outbreak.
By: Yongwang Ren, Dayton M. Lambert, Christopher D. Clark, Christopher N. Boyer, and Andrew P. Griffith
5/24/2021
Cattle producers in the Fescue Belt predominantly rely on cool-season grass (CSG) pastures. Supplementing CSGs with warm-season grasses (WSG) can provide economic and environmental benefits. We elicit Tennessee cattle producer willingness-to-adopt WSG using data from a hypothetical choice experiment that offered a monetary incentive to establish WSG pasture. A novel double hurdle regression with Student-t errors was estimated using a Bayesian Hamiltonian Monte Carlo procedure. About 66% of participants were willing to convert 14%-21% of their pasture acres to WSG depending on the incentive amount. A $95 ac-1 incentive is estimated to convert 7,631 acres to WSG costing $0.77 million.
By: Jared Hutchins and Brent Hueth
5/24/2021
We estimate short-run, price response in dairy farming using nearly 10 million monthly animal-level observations across 2,311 Wisconsin farms in the years 2011 to 2014. We control for herd size and account for the age distribution of dairy cattle to identify changes in variable inputs in response to price movements. We find heterogeneous supply response across the animal life cycle to lagged movements in monthly milk and beef prices. Specifically, we find the greatest supply response in age cohorts with relatively high marginal returns from feeding, with supply elasticities as high 0.286 for milk price and 0.713 for beef price. The results are primarily driven by significant producer response to prices in 2014, a period of volatile milk and beef prices.
By: Baba Adam and Awudu Abdulai
5/24/2021
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 the treatment effect heterogeneity in both observed and unobserved characteristics and to analyze policy-relevant treatment effect (PRTE). Results show that farmers with high propensity to adopt CA reduce Nitrogen usage from inorganic sources to a greater extent and experience significant increases in maize yields and farm net returns when compared to those with low propensity to adopt. Further, our PRTEs reveal that increasing training sessions, and providing incentives to reduce the cost of implementation are crucial for CA promotion.
By: Ethan Sabala and Stephen Devadoss
5/24/2021
This study formulates a theoretical and empirical spatial equilibrium model that allows for varying market structures, ranging from bilateral monopoly with fringe countries to perfect competition. The empirical analysis examines the effect of the Chinese 25% tariff on the world sorghum market under the various market structures. Under bilateral monopoly, the effects of the tariff are less pronounced than under perfect competition. Specifically, the reallocations of trade caused by the tariff are lessened as the United States uses its market power to mitigate the adverse effects of the tariff. This reduces the tariff's impacts on prices, production, consumption, and welfare for most countries. However, the calibration revealed that the United States and China do not exert significant market power on the world sorghum market, and that international sorghum trade is more accurately represented by perfect competition than a bilateral monopoly with fringe importers and exporters.
By: Clinton Neill and Susan E. Chen
5/24/2021
The USDA has recently undertaken new food safety measures to reduce food safety scares. Yet, in 2018, there were two separate instances of shell egg recalls. Food scares and subsequent recalls can alter consumer confidence in the food they eat. Consumer reaction to scares are dependent on both the event and on the intensity of media coverage surrounding the food scare. A lengthy or intense media response to a food scare could lead to significant reductions in demand, lower prices and decreased short-run profit. An understanding of the impact of media in the presence of food safety scares is critical for egg producers. In this study, we examine the effect of recent recalls in shell eggs on shell egg prices. Using weekly data, we analyze the effect of recall duration and media coverage on egg prices. This model follows the distributional event response model proposed by Rucker et al. (2005). We allow for nonlinear changes at the time of specific egg scares. Also, we account for media coverage about each egg scare to parse out the relative impact of media on egg recalls.
By: J¿rgen DejgŒrd Jensen, Dagim Gashawtena Belay, and Jakob Vesterlund Olsen
5/24/2021
Antimicrobial resistance is a public health challenge. Overuse of antibiotics in livestock production is suspected to contribute to this challenge. Restrictions on antimicrobial use can however influence farm profitability. This study analyzes econometrically the economic consequences for Danish pig producers of reduced antimicrobial use, utilizing a unique combination of economic farm accounts data and herd-level antimicrobial use data. From estimated profit functions, shadow prices of antimicrobials were derived for different groups of farms. Results suggest that the average pig farmerÕs access to antimicrobials represents an economic value around 1.75-4 euro cents for the marginal standard unit dose (recommended daily dose to treat 1 kg live animal) in the short run, both on farms with systematically high and low antimicrobial use, but a lower value (1.02-1.14 euro cents) in the long run, with considerable heterogeneity among farms. On high-use pig farms, the long-run shadow price corresponds to 8 cents per 7 kg piglet, 17 cents per 30 kg pig, or 57 cents per finisher pig per day of antimicrobial treatment. Thus, restrictions on the use of antimicrobials in pig production are likely to imply losses to parts of the Danish pig sector Ð particularly within the production of piglets.
By: Xin Ning, Jason H. Grant, and Everett B. Peterson
5/24/2021
This article conducts a retrospective empirical assessment of Bovine Spongiform Encephalopathy (BSE), which was discovered in the U.S. in December 2003, on Japanese beef imports from the U.S. and competing suppliers. Using a source-differentiated almost ideal demand system of fresh/chilled and frozen beef imports with endogenous smooth transition functions, we find that a nonlinear structural change has occurred in the Japanese beef import market in the wake of BSE. The BSE outbreaks led to both an instantaneous and persistent impact on Japanese beef imports lasting for over a decade, causing a significant shift in Japan's consumer preferences for beef imports from different origins. Over one-half of the estimated expenditure, own-price, and cross-price elasticities have changed in the aftermath of BSE, both in terms of magnitude and variance, and some have not returned to their pre-BSE levels even after the trade recovery period. Our results have important policy implications concerning beef substitutes and import competition following animal disease outbreaks.
By: Charng-Jian Yu, Xiaodong Du, and Daniel Phaneuf
5/24/2021
We quantify the impact of the Clean Water Act (CWA) on farm waste management practices of U.S. dairy concentrated animal feeding operations (CAFOs), including storage capacity, land application, and manure removal. A double-hurdle model is employed to examine how dairy farmers adjusted their practices in response to the major policy revision of the CWA in 2003. Using the 2000 and 2010 Agricultural Resource Management Survey data, we find that the 2003 CWA revision significantly increased the adaptation rate of nutrient management plan (NMP) of dairy CAFOs and those following management standards of NMPs were on average more likely to have manure storage facilities and to apply manure to land. However, for those who had already implemented these practices, there is no strong evidence of storage and land application adjustments. Furthermore, for CAFOs that failed to comply with NMPs, no significant changes are found for both participation and level of implementation for major manure management practices. The results suggest a heterogenous and limited impact of the CWA on waste management practices of dairy CAFOs.
By: A. Ford Ramsey, Jesse B. Tack, and Maria Balota
11/18/2020
While the economic impacts of climate change on crop yields are well documented, less is known about the relationship between climate and crop quality. This discrepancy persists despite the economic importance of quality in determining agricultural revenues. Using a unique data set from the multi-state Peanut Variety and Quality Evaluation (PVQE) program, we quantify the economic impact of projected warming on revenue of Virginia-type peanuts for which grade and kernel size are important determinants of price.We calculate changes to revenue using Commodity Credit Corporation (C.C.C.) loan values as a proxy for market prices; C.C.C. peanut loan values depend on kernel size in a given batch of peanuts. In contrast to studies for other crops, the impacts of warmer temperatures on yield and quality are symmetric and negative, resulting in acutely depressed farm revenues. Our model predicts a roughly 11% decline in revenue under warming of 1 degree Celsius. Examining varietal improvement as an adaptation strategy, we find that gains in yield and quality from breeding could offset revenue losses under moderate warming up to 1 degree Celsius, but are unlikely to sustain farm revenues under more extreme changes in temperature.
By: Jungho Baek and Jiangqin Xu
11/18/2020
Up until now, relatively little attention has been given to the asymmetric effects of exchange rates on global trade flows of forest products. Thus, the primary thrust of this article is to probe the asymmetry influences exchange rate fluctuations have on bilateral trade flows of various forest products between the U.S. and Canada. To this end, we use the method of the nonlinear autoregressive distributed lag (NARDL). We discover that there is strong evidence that the ups and downs of exchange rates appear to have asymmetric impacts on U.S. exports and imports of forest products in the long-run. However, there is little evidence that the exchange rate asymmetry is present in the short-run.
By: Ashok K. Mishra, Joaquin Mayorga, and Anjani Kumar
11/18/2020
The study uses a stochastic frontier approach corrected for self-selection to separate technology and managerial gaps between the treatment and control groups of smallholders in baby corn production in India. Secondly, the study assesses the impact of CF on output prices, profitability, and resource usageÑfertilizer and marketing expenses. Findings show that technical efficiency is consistently higher for contract farmers than independent farmers. Also, we find that significant technology and managerial gaps exist between contracted and independent growers. Results show that baby corn producers who are engaged in CF, after controlling for characteristics of both control and treatment groups, receive lower output prices and contract farmers have smaller marketing and fertilizer and expenses. However, results reveal that CF results in higher profitsÑmainly due to reduced marketing expenditures. Thus, CF intervention benefits the livelihood of smallholders, increases efficiency, and reduces environmental degradation without compromising yield.
By: Syed Imran Ali Meerza, Konstantinos Giannakas, and Amalia Yiannaka
11/18/2020
We analyze the optimal government response to food adulteration and mislabeling while accounting for heterogeneity in consumer preferences and producer efficiency, endogeneity in producer quality choices, and asymmetries in food fraud detection. The analysis shows that when more efficient producers commit fraud, the optimal policy response is a strict monitoring and enforcement system. In contrast, when less efficient producers commit fraud, both increased certification costs and monitoring and enforcement can deter food fraud with their efficiency ranking determined by their relative costs. In addition, when the government desires the increase in the average product quality while combating food fraud, the optimal policy is strict monitoring and enforcement. Finally, we show that corruption of policy enforcers increases food fraud and that increasing monitoring and enforcement in the presence of corruption provides increased incentives for collusion between dishonest producers and corrupt policy enforcers.
By: Kar H. Lim, Wuyang Hu, and Rodolfo M. Nayga, Jr
11/18/2020
Consumers may perceive grass-fed beef as superior in terms of food safety due to false impression and an unproven narrative that persists. Such misperception can distort the market, which may require policy intervention. Using a discrete choice experiment, results indicate that those who perceive higher food safety risks from consuming beef and those who hold the belief that grass-fed is safer than grain-fed have a stronger preference for grass-fed beef. This is an important finding as there is no scientific consensus that grass-fed is safer. This potential misperception warrants further scrutiny.
By: Anthony R. Delmond and Haseeb Ahmed
11/18/2020
Over- or under-provision of antimicrobials under free-riding and resistance externalities can be economically important through their impacts on animal health, human health, and food security. This paper models antimicrobial use given disease dynamics with (i) free-riding incentives and (ii) antimicrobial resistance. Our results suggest a strong potential for overprovision of antimicrobials when ignoring resistance dynamics. Numerical simulation indicates an increase in the cost of disease management with increases in resistance levels. Policy implications are discussed in light of the animal health and disease-control subsidy programs of the developing world as well as unregulated sale of antimicrobials.
By: Simone Angioloni, Claire Jack, and Ronan McCarry
11/18/2020
Agriculture is one of the most hazardous sectors in terms of occupational injuries resulting in more working days being lost. This paper employs a dataset of 7,500 Northern Irish farms over the period 2015-2019 to investigate what factors affect the number of working days lost in agriculture. Results indicate that public policies aimed to improve farm safety should focus on dairy farms, young workers, family members different from the main farmer, and dangerous working practices related to machineries and vehicles. Besides, results indicate that more than 18,000 workdays are lost every year in Northern Irish farms.
By: Yunhan Li and J. Scott Shonkwiler
10/13/2020
We re-examine the existence of cattle cycles based on U.S. beef cow inventories from 1979 to 2019. Our analysis begins with a basic first-order stochastic cycle model and finds a cattle cycle of 16.54 years, significantly longer than the presumed 10- to 12-year cycle. Typically cycles become longer before they disappear. Upon further investigation, we re-estimate the length of the cycle by applying a second-order stochastic cycle model which improves goodness-of-fit. Surprisingly, the cycle length is estimated to be infinitely long, implying the complete disappearance of the beef cow cycle.
By: Chengcheng J. Fei, Dmitry V. Vedenov, Reid B. Stevens, and David P. Anderson
10/13/2020
The paper analyzes the effectiveness of joint- vs. single-commodity hedging for inputs and outputs of the cattle feeding cycle using the second-order lower partial moment (LPM2) as the risk measure. Joint hedging always results in higher hedging effectiveness than the singlecommodity hedging, but the difference is often small. The difference in performance is found to be explained by the commodity price dependence measures (KendallÕs tau). Ranges of taus leading to substantial improvement in risk reduction due to joint hedging are identified. The joint hedging strategy is worth implementing when the observed price dependence measures falls within the identified ranges.
By: Christopher C. Pudenz and Lee L. Schulz
10/13/2020
Changing market fundamentals have made fed dairy cattle basis more variable. Our study estimates empirical models of fed dairy basis and utilizes tests that endogenously identify structural breaks following one large packerÕs decision to exit the fed dairy cattle market. We quantify the impact and find sale type, cattle weight, seasonality, ground beef prices, byproduct values, and fed cattle slaughter capacity utilization to be important basis determinants, although the impact of some of these factors has changed over time. Finally, we assess multi-year moving average basis forecast accuracy and draw implications for formulating basis expectations.
By: Wei Zhang
10/13/2020
The welfare consequences of any climate program depend on preexisting market and regulatory distortions. This paper studies the impact of CaliforniaÕs climate policy on the dairy manufacturing industry with explicit modeling of major milk pricing policies. Numerical simulations indicate that climate policy leads to a diversion of farm milk from manufactured products to fluid products. The establishment of a Federal Milk Marketing Order in California reduces the distorting effect of milk pricing policies. As a consequence, consumers of fluid products would enjoy a bigger welfare gain from climate policy under the Federal Milk Marketing Order