Showing papers in "Journal of Agricultural and Applied Economics in 2012"
TL;DR: The first decade of the 21st century has perhaps witnessed more structural change in commodity futures markets than all previous decades combined as mentioned in this paper, and this time period also saw historic changes in both trading and participants.
Abstract: The first decade of the 21 st century has perhaps witnessed more structural change in commodity futures markets than all previous decades combined. Not only have trading volumes and open interest increased markedly, but this time period also saw historic changes in both trading and participants. The available literature indicates that the irrational and harmful impacts of the structural changes in commodity futures markets over the last decade have been minimal. In particular, there is little evidence that passive index investment caused a massive bubble in commodity futures prices. There is intriguing evidence of several other rational and beneficial impacts of the structural changes over the last decade. In particular, the expanding market participation may have decreased risk premiums, and hence, the cost of hedging, reduced price volatility, and better integrated commodity markets with financial markets.
200 citations
TL;DR: Wang et al. as discussed by the authors explored the determinants of coffee consumption in China with a specific focus on fair trade coffee and found that on average, consumers were willing to pay 22% more for a medium cup of fair-trade coffee compared with traditional coffee.
Abstract: Coffee consumption in China has seen a significant rise in recent years. This study seeks to explore the determinants of coffee consumption in China with a specific focus on fair trade coffee. In a survey of 564 respondents in Wuhan City, consumers' willingness to pay (WTP) for fair trade labeled coffee was measured. This study uses an interval regression to investigate individual demographic and consumption characteristic impacts on WTP. Results show that on average, consumers were willing to pay 22% more for a medium cup of fair trade coffee compared with traditional coffee. In addition, other variables that indicated a higher WTP included female consumers, consumers who made their own coffee, and consumers who planned to consume more coffee in the following year.
96 citations
TL;DR: In this paper, a structural vector auto-regression model is developed and variance decomposition is applied to measure the contribution of each factor in explaining corn price variation, finding that speculation is important, but only in the short run.
Abstract: Despite extensive literature on contributing factors to the high commodity prices and volatility in the recent years, few have examined these causal factors together in one analysis. We quantify empirically the relative importance of three factors: global demand, speculation, and energy prices/policy in explaining corn price volatility. A structural vector auto-regression model is developed and variance decomposition is applied to measure the contribution of each factor in explaining corn price variation. We find that speculation is important, but only in the short run. However, in the long run, energy is the most important followed by global demand.
91 citations
TL;DR: In this paper, the authors examined the demographic and management factors affecting the adoption and perceived benefit (in terms of improved crop yield) of using winter annual cover crops, and estimated a double selectivity model of cover crop adoption.
Abstract: The inclusion of cover crops in cropping systems brings direct and indirect costs and benefits. Farmers will adopt and utilize cover crops as long as the perceived benefit of using them is positive. This paper examines the demographic and management factors affecting the adoption and perceived benefit (in terms of improved crop yield) of using winter annual cover crops. A double selectivity model of cover crop adoption and perceived yield gain was estimated using survey data of Alabama farmers examining cover crop use and management. Results may help in understanding factors shaping farmers’ perceptions, adoption, and retention of cover crops.
61 citations
TL;DR: In this paper, the authors synthesize the pertinent emerging literature and assesses dynamics of the lags involved between self-employment shocks and subsequent employment growth, concluding that self-employed has tangible positive economic impacts not only on wage and salary employment but also on per capita income growth and poverty reduction.
Abstract: Even as self-employment continues to increase, policymakers remain largely unaware of this trend and fail to see it as an opportunity for addressing enduring joblessness. In part, this is explained by limited data on the self-employed and by widespread perceptions that returns to self-employment are low; that the self-employed are merely patching together piecemeal work opportunities requiring limited skills; and that there are no local economic impacts or spillover benefits into other sectors. Contrary to these perceptions, recent studies suggest that self-employment has tangible positive economic impacts not only on wage and salary employment but also on per capita income growth and poverty reduction. This article synthesizes the pertinent emerging literature and assesses dynamics of the lags involved between self-employment shocks and subsequent employment growth.
52 citations
TL;DR: In this paper, the authors identify and quantify the motivations for organic grain farming in the United States and find that many organic grain producers had more than a single motivation and that younger farmers are more likely to be motivated by environmental and lifestyle goals than older farmers.
Abstract: The objective of this research is to identify and quantify the motivations for organic grain farming in the United States. Survey data of US organic grain producers were used in regression models to find the statistical determinants of three motivations for organic grain production, including profit maximization, environmental stewardship, and an organic lifestyle. Results provide evidence that many organic grain producers had more than a single motivation and that younger farmers are more likely to be motivated by environmental and lifestyle goals than older farmers. Organic grain producers exhibited a diversity of motivations, including profit and stewardship.
45 citations
TL;DR: In this paper, factors leading to the adoption of technology, management practices, and production systems by U.S. beef cow-calf producers are analyzed using binary logit regression models.
Abstract: Using USDA’s Agricultural Resource Management Survey data, factors leading to the adoption of technology, management practices, and production systems by U.S. beef cow-calf producers are analyzed. Binary logit regression models are used to determine impacts of vertical integration; region of the U.S.; farm size, diversification, and tenure; and demographics on adoption decisions. Significant differences were found in adoption rates by region of the U.S., degree of vertical integration, and size of operation, suggesting the presence of economies of size and vertical economies of scope. Results also indicate high degrees of complementarity among technologies, management practices, and production systems.
42 citations
TL;DR: In this article, the authors examined two interrelated issues in commodity markets, namely, the cyclical relationship between stocks and commodities and the function of commodity and agribusiness indexes in portfolios.
Abstract: This paper examines two interrelated issues in commodity markets, namely, the cyclical relationship between stocks and commodities and the function of commodity and agribusiness indexes in portfolios. A high negative correlation has existed between stock and commodity prices over the past 140 years. Moreover, the two markets have alternated in price leadership with 29-32-year cycles. The recent price dominance in agricultural commodities started in 2000, a result supported by the empirical results of the portfolio allocation analysis. For a risk-averse investor, irrespective of the period analyzed, placing funds in agribusiness and/or agricultural commodity indexes was sound investing.
40 citations
TL;DR: In this paper, the economic feasibility of corn, soybeans, grain sorghum, and corn in annual rotation with winter wheat using reduced tillage and no-tillage systems in the Central Great Plains was evaluated, with continuous wheat and corn also analyzed.
Abstract: The economic feasibility of soybeans, grain sorghum, and corn in annual rotation with winter wheat using reduced tillage and no-tillage systems in the Central Great Plains was evaluated, with continuous wheat and grain sorghum also analyzed. Net returns were calculated using simulated yield and price distributions based on historical yields, two historical annual price series, and 2011 costs. Stochastic Efficiency with Respect to a Function was used to determine the preferred strategies under various risk preferences. The no-till wheat-soybean and reduced-till wheatsoybean systems are the first and second most preferred, regardless of the level of risk aversion.
34 citations
TL;DR: In this paper, the authors present an application of the model proposed by Herzer and Nowak-Lehnmann to test the hypothesis that export diversification has contributed to economic growth in Costa Rica via externalities of learning-by-doing and learning by exporting over the period of 1965-2006.
Abstract: In the wake of a severe economic crisis in the 1980s Costa Rica abandoned an import substitution model of development adopted in the 1960s and implemented policies supporting foreign investment and the diversification of its exports. This study presents an application of the model proposed by Herzer and Nowak-Lehnmann to test the hypothesis that export diversification has contributed to economic growth in Costa Rica via externalities of learning-by-doing and learning-by-exporting over the period of 1965–2006. After using the autoregressive distributed lags and dynamic ordinary least squares models no long-run relationship was found between export diversification and growth.
34 citations
TL;DR: In this paper, a choice experiment with real products was used to investigate consumer willingness to pay (WTP) for several low-input attributes of turfgrasses, including irrigation, fertilizer, shade adaptation, origin, and price.
Abstract: A choice experiment with real products was used to investigate consumer willingness to pay (WTP) for several low-input attributes of turfgrasses. The choice scenarios consisted of turfgrass plots, which varied in aesthetic quality characteristics and were labeled with differing levels of maintenance requirements (irrigation, fertilizer, etc.), shade adaptation, origin, and price. A mixed logit model was used to analyze the choice data and estimate consumer WTP. Our results suggest that low-input maintenance attributes significantly influence consumer choice behavior and identify a strong consumer preference for reduced irrigation and mowing requirements. The introduction of low-input turfgrasses could be a viable strategy for reducing the maintenance inputs and costs for residential lawn care.
TL;DR: In this article, the authors analyzed two groundwater conservation policies in the Kansas High Plains located within the Ogallala aquifer: 1) cost-share assistance to increase irrigation efficiency; and 2) incentive payments to convert irrigated crop production to dryland crop production.
Abstract: This research analyzes two groundwater conservation policies in the Kansas High Plains located within the Ogallala aquifer: 1) cost-share assistance to increase irrigation efficiency; and 2) incentive payments to convert irrigated crop production to dryland crop production. To compare the cost-effectiveness of these two policies, a dynamic model simulated a representative irrigator’s optimal technology choice, crop selection, and irrigation water use over time. The results suggest that the overall water-saving effectiveness can be improved when different policy tools are considered under different conditions. High prevailing crop prices greatly reduce irrigators’ incentive to give up irrigation and therefore cause low enrollment and ineffectiveness of the incentive payment program. In areas with low aquifer-saturated thickness, the incentive payment program is more effective, whereas in areas with relatively higher water availability, the cost-share program could be a better choice.
TL;DR: This article used survey data to study the degree to which new farming operations in Alabama were financially constrained after the 2008 financial crisis and found that lending was collateral-driven, although lenders also considered farmers profitability and cash flows.
Abstract: We use survey data to study the degree to which new farming operations in Alabama were financially constrained after the 2008 financial crisis. Next, we control for farmers’ self-selection out of the credit market and identify which farmers were able to secure loans during the period of 2009–2010. The results show that new farmers that started any part of their operation after 2005 were financially constrained but no evidence that their financing constraints were affected by the crisis. As expected, we find that lending was collateral-driven, although lenders also considered farmers’ profitability and cash flows.
TL;DR: Establishing novel endophyte-infected tall fescue on 25% of pasture acres resulted in improved calving rates, weaning weights, and partial returns per acre, and fall-calving cows had higher calve rates and weaning weight gains than spring calving cows.
Abstract: Tall fescue toxicosis adversely affects calving rate and weight gains reducing returns to cow-calf producers in the south–central United States. This grazing study estimated animal and economic performance implications of endophyte-infected fescue and calving season. Establishing novel endophyte-infected tall fescue on 25% of pasture acres resulted in improved calving rates (87% vs. 70%), weaning weights (532 lbs vs. 513 lbs), and partial returns per acre ($257 vs. $217). Additionally, fall-calving cows had higher calving rates (91% vs. 67%), weaning weights (550 lbs vs. 496 lbs), and partial returns per acre ($269 vs. $199) than spring calving cows.
TL;DR: This article provided new estimates of the elasticity of export demand for U.S. corn, soybeans, and wheat using updated data and empirical techniques, which are useful for practical policy analysis as well as for researchers seeking to parameterize large-scale simulation models.
Abstract: Elevated prices for major U.S. commodities have renewed interest in the price sensitivity of foreign demand facing the United States. Although the elasticity of foreign demand plays an important role in discussions of U.S. farm policy, it is also a parameter that is much debated with the majority of studies in this area published over 20 years ago. We provide new estimates of the elasticity of export demand for U.S. corn, soybeans, and wheat using updated data and empirical techniques. Our estimates are useful for practical policy analysis as well as for researchers seeking to parameterize large-scale simulation models.
TL;DR: Results from a choice experiment and survey of cattle feeders indicate preconditioning programs that include weaning, vaccinating against respiratory and clostridial/blackleg, and treating for parasites are worth on average $7.28/cwt to feedlots.
Abstract: Cattle feeders want feeder cattle that have been weaned and preconditioned with a certified health program. Preconditioned calves perform more efficiently in the feedlot with lower morbidity and mortality. Health program claims, however, range from no claim to being USDA-certified. The value of health protocol certification may vary with certifying entity. Results from a choice experiment and survey of cattle feeders indicate preconditioning programs that include weaning, vaccinating against respiratory and clostridial/blackleg, and treating for parasites are worth on average $7.28/cwt to feedlots. Furthermore, a health program certified by USDA carries an additional value of $2.37/cwt on average.
TL;DR: In this article, the authors evaluate, through the use of a producer survey, the level of broadband Internet use, motivations for its use, degree of access to broadband, and willingness-to-pay (WTP) to fund broadband infrastructure investments.
Abstract: Since the Internet’s inception its impact has been felt across the United States, but the distribution and adoption of the Internet has not necessarily been uniform geographically. As more consumers and businesses rely on the Internet to access information, the data transmission requirements have also increased. Consequently, access to broadband has become increasingly more important since dial-up cannot realistically handle the increased requirements. The use of broadband in agriculture can provide better access to price, weather, and management information while also opening new markets. However, many rural communities lag behind urban areas in broadband access and adoption rates. This study evaluates, through the use of a producer survey, the level of broadband Internet use, motivations for its use, degree of access to broadband, and willingness-to-pay (WTP) to fund broadband infrastructure investments. Results from the producer survey suggested farmers utilize the Internet primarily for accessing weather reports, e-mail, market reports, and agricultural news. Notably, the survey’s WTP questions allowed for the use of an interval regression to calculate producer WTP for varying demographics. The results suggested that producers who were younger, farmed larger farms, and those who currently use the Internet but do not have broadband access were WTP more in property taxes to support broadband infrastructure investments than those of a differing demographic. Because WTP levels varied drastically depending on the underlying demographics, it becomes difficult to pinpoint a WTP level for a one-time payment in property taxes that would be acceptable from a policy standpoint.
TL;DR: Examination of the relationship between the consumption of fruits and vegetables and their cost and accessibility among blacks and non-Hispanic whites in a rural area revealed that neither access nor cost was related to fruit or vegetable consumption among white respondents.
Abstract: Fruit and vegetable consumption is associated with improved health outcomes, yet there is limited understanding of the impact of cost and accessibility on fruit and vegetable intake in rural settings. This study examines the relationship between the consumption of fruits and vegetables and their cost and accessibility among blacks and non-Hispanic whites in a rural area. Individual characteristics from a 2006 mail survey (n = 1,510) were combined with store locations and price information from a 2006 ground-truthed census of retail outlets. The mail survey covered seven counties in central Texas with 38 supermarkets/grocery stores. Blacks tended to live closer to a supermarket or grocery store, but they were only slightly more likely than whites to consume two or more servings of fruit daily and much less likely to consume three or more servings of vegetables. Multivariate probit regression analysis revealed that neither access nor cost was related to fruit or vegetable consumption among white respondents. Among blacks, cost was also not associated with consumption. In contrast to whites, however, each additional mile was associated with a three percentage point decline in the probability of consuming two or more servings of fruit daily and a 1.8 percentage point decline in the probability of consuming three or more vegetable servings.
TL;DR: In this article, the authors estimate the demand for imported cotton in China and assess the competitiveness of cotton-exporting countries and show that if U.S. subsidies make other exporting countries worse off, this effect is lessened when global prices respond accordingly.
Abstract: We estimate the demand for imported cotton in China and assess the competitiveness of cotton-exporting countries. Given the assertion that developing countries are negatively affected by U.S. cotton subsidies, our focus is the price competition between the United States and competing exporters (Benin, Burkina Faso, Chad, Mali, India, and Uzbekistan). We further project how U.S. programs affect China’s imports by country. Results indicate that if U.S. subsidies make other exporting countries worse off, this effect is lessened when global prices respond accordingly. If subsidies are eliminated, China’s cotton imports may not fully recover from the temporary spike in global prices.
TL;DR: In this paper, the effects of the North American Free Trade Agreement (NAFTA) and United States farm subsidies on U.S.-Mexican illegal immigration and agricultural trade are analyzed.
Abstract: We analyze the effects of the North American Free Trade Agreement (NAFTA) and United States farm subsidies on U.S.-Mexican illegal immigration and agricultural trade. The theoretical analysis develops an integrated trade-migration model and shows that NAFTA and U.S. subsidies exacerbate the illegal labor flow and increase U.S. exports. The theoretical analysis is empirically implemented by simultaneous estimation and simulation analysis. The analysis shows that NAFTA increased the number of undocumented workers to U.S. agriculture and U.S. farm exports to Mexico by an average of 1573 and $6.82 billion, respectively. U.S. farm subsidy reduction decreases unauthorized entry marginally and U.S. farm exports by an average of $3.2 billion.
TL;DR: In this paper, the authors examined the impact of Bt corn adoption in the Philippines using an econometric approach that addresses simultaneity, selection, and censoring problems, and showed that Btcorn adoption provides modest but statistically significant increases in farm yields and profits.
Abstract: This article examines the impact of Bt corn adoption in the Philippines using an econometric approach that addresses simultaneity, selection, and censoring problems. Although previous literature emphasizes the importance of simultaneity and selection problems, this is the first study that addresses the issue of censoring in estimating the effects of Bt corn adoption at the farm in a developing country context. We show that Bt corn adoption provides modest but statistically significant increases in farm yields and profits. Furthermore, our results provide some evidence of inference errors that can potentially arise when censoring in the pesticide application variable is ignored in the estimation procedures.
TL;DR: In this paper, the authors compared results from an in-store field experiment and a mail survey choice experiment (CE) to investigate CE's capacity in predicting grocery store market share, and found that the level of control in the grocery store experiment and the choice of econometric model influenced the capacity of CE to predict grocery stores market shares.
Abstract: In this paper we compare results from an in-store field experiment and a mail survey choice experiment (CE) to investigate CE’s capacity in predicting grocery store market share. For the comparison, we used three seafood products: freshwater prawns, marine shrimp, and lobster. CE estimates were obtained via four econometric models: the conditional logit, the random parameter logit, the heteroskedastic extreme value, and the multinomial probit. We found that the level of control in the grocery store experiment and the choice of econometric model influenced the capacity of CE to predict grocery store market shares.
TL;DR: This article used a latent segmentation model to identify the heterogeneity of willingness-to-pay estimates for quality attributes and country-of-origin in the Korean beef market and found that the very concerned group values such attributes as antibiotics-free, genetically modified organism-free and domestic production the most among the three groups.
Abstract: A latent segmentation modeling is used in this study to identify the heterogeneity of willingness-to-pay estimates for quality attributes and country-of-origin in the Korean beef market. Three distinctive groups of grocery shoppers are identified based on their level of concern (very, moderately, and not too concerned) about the use of antibiotics and genetically modified organism feed ingredients in beef production. Results indicate that the very concerned group values such attributes as antibiotics-free, genetically modified organism-free, and domestic production the most among the three groups. Results also suggest that the most important factor in determining grocery shoppers' willingness-to-pay is country-of-origin for all three groups.
TL;DR: In this article, the economic impact of wildlife-associated recreation in the Southeast United States was evaluated using a general equilibrium model based on estimates of expenditures by wildlife recreationists on hunting, fishing, and wildlife watching activities.
Abstract: The economic impact of wildlife-associated recreation in the Southeast United States was evaluated using a general equilibrium model. Exogenous demand shocks to the regional economy were based on estimates of expenditures by wildlife recreationists on hunting, fishing, and wildlife watching activities. Counterfactual simulations were carried out, making alternative assumptions about labor and capital mobility and their supply. Without wildlife-associated recreation expenditures, regional employment would have been smaller by up to 783 thousand jobs, and value added would have been $22 to $48 billion less. These findings underscore the significance of regional factor market conditions in economic impact and general equilibrium analysis.
TL;DR: The authors identified factors that influence agricultural economics professionals' job choice between academic and government employment and found that having a positive work environment, good salary, family time, adequate resources, and professional and social interaction were important job attributes.
Abstract: This article identifies factors that influence agricultural economics professionals' job choice between academic and government employment. Respondents agreed that job responsibilities were the most important factor in choosing their current position. They also agreed that having a positive work environment, good salary, family time, adequate resources, and professional and social interaction were important job attributes. Proportionally more women than men regarded partner opportunities, nondiscrimination, time for child care, and supportive colleagues as very important attributes influencing their decisions. A binomial probit of respondents' current job sector indicates significant job choice determinants include sector preference (academic or government), previous professional experience, a positive work environment, and advancement opportunities.
TL;DR: In another study, this article found that 80% of turkey farmers versus 5% of beef farmers transferred manure to other farmers and 50% of those who transferred manure indicated it had been tested.
Abstract: Using manure as a substitute for commercial fertilizer could potentially reduce fertilizer costs and also reduce non-point source pollution. Livestock farmers in Missouri and Iowa were surveyed regarding their manure management practices. Eighty-one percent of turkey farmers versus 5% of beef farmers transferred manure to other farmers. Fifty-one percent of farmers who transferred manure indicated it had been tested. Factors decreasing adoption included higher off-farm incomes, solid versus liquid manure, and more animal units per acre. Factors increasing adoption included distance transferred, a contract for the manure, payment, and thinking that manure testing was profitable.
TL;DR: In this paper, the authors explored the link between local integrator concentration and grower compensation under production contracts using data from the 2006 broiler version of the USDA's Agricultural Resource Management Survey.
Abstract: The exercise of market power by broiler processing firms (integrators) is plausible because local markets for growers are concentrated and because growers face hold-up risks arising from substantial investments in specific assets set against limited integrator purchase commitments. This article explores the links between local integrator concentration and grower compensation under production contracts using data from the 2006 broiler version of the USDA’s Agricultural Resource Management Survey. Results of this study, which account for characteristics of the operation and specific features of the production contract, suggest that greater integrator concentration results in a small but economically meaningful reduction in grower compensation.
TL;DR: In this paper, the impact of growers' business characteristics on shares of sales to these channels by firm size was estimated using the two-limit Tobit model, and the results indicate a stronger than expected role for the rewholesaler channel as a preferred channel for ornamental plant sales.
Abstract: Market channel alternatives that include garden centers, landscapers, mass merchandisers, and rewholesalers have contributed to the growth of ornamental crops sales in the United States. The impact of growers’ business characteristics on shares of sales to these channels by firm size was estimated using the two-limit Tobit model. Important explanatory variables were regions of the United States, sales of plant groups, kinds of contract sales, and channel diversity. There were important differences in behavior by grower size. Overall, the results indicate a stronger than expected role for the rewholesaler channel as a preferred channel for ornamental plant sales.
TL;DR: For example, this article found that the role of immigrant labor on U.S. dairies is significant, accounting for 40% of the dairy farm workforce in 2008 compared with almost no immigrant labor before 2000 (Harrison, Lloyd, and O'Kane, 2009).
Abstract: Although immigration is a controversial issue, it is also of major importance to the United States and to agriculture. Immigration policy has been discussed in the recent presidential debates and will likely be debated again in Congress at some point in the near future. Agricultural producer organizations, commodity associations, and lobbying groups have been at the forefront of this issue for many years. Our profession certainly has a role to play by informing constituent groups and the public with objective analytical results. Immigrant labor is an important component of many, if not most, U.S. agricultural enterprises. The Current Population Survey estimates that in 2010, 57.2% of the agricultural hired labor force was foreign-born (U.S. Census Bureau, 2010). Approximately 62% of those foreign employees worked in crop production, while the remainder worked in livestock operations (U.S. Department of Agriculture—Economic Research Service, 2012). Recent evidence suggests the role of immigrant labor on U.S. dairies is significant. In Wisconsin, for example, it was estimated that immigrant labor accounted for 40% of the dairy farm workforce in 2008, compared with almost no immigrant labor before 2000 (Harrison, Lloyd, and O’Kane, 2009). Immigrant labor is particularly important to dairies in the Southwest. Our results indicate that those farms employ many more foreign workers than farms in other regions of the country. With increased enforcement of U.S. immigration regulations, lack of congressional action to resolve immigration policy issues, and economic recovery of the U.S. economy, concerns have been raised about the prospects of reduced labor availability in many sectors of agriculture. Dairy farming is no exception.
TL;DR: In this article, the authors utilize a treatment effects model to examine if there are differences in costs/profits for manure-using corn producers versus non-users, and find that manure users have lower peracre operating costs via reductions in fertilizer and soil conditioner costs; however, the use of manure reduces grain yields and ultimately leads to no difference in profit.
Abstract: We utilize a treatment effects model to examine if there are differences in costs/profits for manure-using corn producers versus non-users. We find that manure users have lower peracre operating costs via reductions in fertilizer and soil conditioner costs; however, the use of manure reduces grain yields and ultimately leads to no difference in profit. Separate results indicate that manure-use restrictions do not affect costs or profits; thus policies could be in place to regulate manure usage without impacting the costs/profit structure of the farm.