Showing papers in "Journal of Agricultural and Applied Economics in 2014"
TL;DR: In this article, data envelopment analysis is used to calculate technical, allocative, economic, and scale efficiencies for fields enrolled in the University of Arkansas Rice Research Verification Program.
Abstract: Data envelopment analysis is used to calculate technical, allocative, economic, and scale efficiencies for fields enrolled in the University of Arkansas Rice Research Verification Program. The results reveal most fields have high technical and scale efficiencies, implying inputs are used in minimum levels necessary to achieve given output levels and fields are close to optimal in size. However, most fields exhibit allocative and economic inefficiencies and do not use inputs in the right combinations necessary to achieve cost minimization. Tobit analysis indicated allocative and economic efficiencies could be improved with better variety selection and better irrigation management.
47 citations
TL;DR: This paper examined dairy farmer use offorward pricing methods for milk sales and feed purchases and found that operators with larger herds, higher levels of education, and those farm businesses that were not organized as sole proprietorships were more likely to have used forward pricing.
Abstract: Increasing volatility in milk and feed prices has led to higher levels of market and financial risk for dairy farmers. We examine dairy farmer use offorward pricing methods for milk sales and feed purchases. Operators with larger herds, higher levels of education, and those farm businesses that were not organized as sole proprietorships were more likely to have used forward pricing. We also examine reasons dairy farm operators had not used these tools to date and find that the most common reason was lack of knowledge. These findings may be used to target educational seminars and outreach to dairy farm managers.
28 citations
TL;DR: In this article, consumer preferences for four livestock products were investigated to determine consumer willingness to pay (WTP) for livestock production process attributes, and an inferred method of attribute nonattendance was used to assess the variability of preference intensity for various product characteristics.
Abstract: Consumer preferences for four livestock products were investigated to determine consumer willingness to pay (WTP) for livestock production process attributes. We use an inferred method of attribute nonattendance (ANA) using the coefficient of variation on individual specific parameter estimates to assess the variability of preference intensity for various product characteristics. We find that accounting for ANA did not significantly impact mean estimates of WT P. Implications of our findings on the reliability of existing work in the area of consumer preferences for animal welfare attributes are discussed.
27 citations
TL;DR: In this article, the effect of negative publicity on consumer demand for brands is examined in the context of recall of a peanut butter brand as a result of pathogen contamination, and the recall was associated with negative impacts for the implicated brand and positive effects on the leading competitor brand.
Abstract: The effect of negative publicity on consumer demand for brands is examined in the context of recall of a peanut butter brand as a result of pathogen contamination. The recall was associated with negative impacts for the implicated brand and positive effects on the leading competitor brand. Consumers responded to the foodborne illness outbreak within three weeks. The case demonstrates that consumer response is an incentive for companies to prevent safety lapses and that the problems of one brand do not necessarily harm rivals within the category.
23 citations
TL;DR: In this paper, the effect of numeric calorie labels in two full-service restaurants was studied and it was found that the addition of a traffic light symbol to the numeric label led to a 67.8-kcal reduction in average calories ordered.
Abstract: Field experiment data were used to study the effect of numeric calorie labels in two fullservice restaurants. Ultimately, both field experiments, despite using different experimental designs, reached the same conclusion: the numeric calorie label had no significant effect on total caloric intake. However, results revealed the addition of a traffic light symbol to the numeric label led to a 67.8-kcal reduction in average calories ordered. Furthermore, results showed restaurant revenue is unlikely to be affected by the addition of calorie labels on menus. The results have implications for restaurant labeling laws that are being considered around the world.
21 citations
TL;DR: The authors analyzed the impact of environmental news about selected food companies on their stock prices and found that positive (negative) events that are the result of direct internal company actions lead to higher (lower) predicted returns, whereas events related to third-party opinions lead to smaller changes in predicted returns in short event windows.
Abstract: Few studies to date have addressed the relationship between the food industry's environmental and financial performances although the industry is one of the biggest contributors of greenhouse gas emissions. We analyze the impact of environmental news about selected food companies on their stock prices. Results show that positive (negative) events that are the result of direct internal company actions lead to higher (lower) predicted returns, whereas events related to third-party opinions lead to smaller changes in predicted returns in short event windows. This study highlights the importance of conducting the analysis on a disaggregated basis by incorporating firm-level variables.
20 citations
TL;DR: In this paper, a multiobjective optimization model integrating with high-resolution geographical data was applied to examine the optimal switchgrass supply system in Tennessee that considers both feedstock cost and greenhouse gas (GHG) emissions in the system.
Abstract: A multiobjective optimization model integrating with high-resolution geographical data was applied to examine the optimal switchgrass supply system in Tennessee that considers both feedstock cost and greenhouse gas (GHG) emissions in the system. Results suggest that the type of land converted into switchgrass production is crucial to both plant gate cost and GHG emissions of feedstock. In addition, a tradeoff relationship between cost and GHG emissions for the switchgrass supply is primarily driven by the type of land converted. The imputed cost of lowering GHG emissions in the feedstock supply system was also calculated based on the derived tradeoff curve. Biofuel production from lignocellulosic biomass (LCB) is being advocated as an alternative to fossil-based transportation fuels in the United States. LCB-based biofuel production has the potential to mitigate greenhouse gas (GHG) emissions from the transportation sector and to enhance rural economic activity through more intense use of agricultural lands (English et al., 2006). The Renewable Fuel Standard (RFS) established in 2005 and revised in the Energy Independence and Security Act 2007 mandates 21 billion gallons of advanced biofuel (other than ethanol derived from corn starch) available for transportation use by 2022 with 16 billion gallons to be produced from LCB feedstock (U.S. Congress, 2007). Based on the recently revised One Billion Ton Update study (U. S. Department of Energy, 2011), considerable LCB feedstock, including dedicated energy crops, will be required to fulfill this goal. Notwithstanding the potential availability of LCB feedstock to meet the mandate, the cost of LCB feedstock will be an important factor influencing the sustainability of an LCB-based biofuel industrial sector.
19 citations
TL;DR: In this paper, the authors study the effect of ethanol production capacity on corn acreage and find that the building of a typical plant is estimated to increase corn in the county by over 500 acres and to increase acreage in surrounding counties up to almost 300 miles away.
Abstract: U.S. ethanol production capacity increased more than threefold between 2002 and 2008. We study the effect of this growth on corn acreage. Connecting annual changes in county-level corn acreage to changes in ethanol plant capacities, we find a positive effect on planted corn. The building of a typical plant is estimated to increase corn in the county by over 500 acres and to increase acreage in surrounding counties up to almost 300 miles away. All ethanol plants are estimated to increase corn production by less than their annual requirements.
19 citations
TL;DR: In this paper, economic tradeoffs among harvest date, fertilizer applied, nutrient removal, and switchgrass yield as they vary with respect to input and output prices are analyzed, and it is shown that higher biomass prices lead to earlier harvest.
Abstract: This article analyzes economic tradeoffs among harvest date, fertilizer applied, nutrient removal, and switchgrass yield as they vary with respect to input and output prices. Economic sensitivity analyses suggest that higher biomass prices lead to earlier harvest. Optimal harvest time occurs beyond time of maximum yield because nutrient removal in the biomass is an important economic consideration. Switchgrass price premia that reflect the cost of nonoptimal harvest time are driven by standing crop yield loss, nutrient removal, storage loss, and opportunity cost. These price premia could provide a mechanism to compensate producers for alternative harvest times and aid with logistics management.
19 citations
TL;DR: A survey of 1599 randomly selected Florida households was conducted in 2012 to evaluate the consumer characteristics and economic impacts of local food purchases through retail stores, restaurants, and direct-to-consumer market channels.
Abstract: A survey of 1599 randomly selected Florida households was conducted in 2012 to evaluate the consumer characteristics and economic impacts of local food purchases through retail stores, restaurants, and direct-to-consumer market channels. The total annual value of local food purchases averaged 10.47 billion in value-added, including regional multiplier effects for agricultural production and wholesale and retail distribution. These values are significantly higher than found in previous studies in other states.
17 citations
TL;DR: In this article, the authors examined water system characteristics, managers' attitudes and perceptions toward water conservation, and future planning strategies that influence the adoption of water conservation programs for urban and rural communities.
Abstract: This study examines water system characteristics, managers' attitudes and perceptions toward water conservation, and future planning strategies that influence the adoption of water conservation programs for urban and rural communities. We surveyed water system managers in Oklahoma, Arkansas, Tennessee, and Florida; and we parameterized predictive adoption models for price-based (PC) and nonprice-based (NPC) conservation programs. Notably, results suggest that information about the price elasticity of water demand for a community does encourage PC and NPC adoption; and we found no evidence that PC and NPC adoption is jointly considered by water systems.
TL;DR: This paper found that students had the highest preferences for face-to-face (F2F) courses offered late morning and early afternoon and two to three days per week, depending on course makeup, course topic, online course design technology and when the F2F version was offered.
Abstract: The objectives of this article were to determine: 1) students' preferences for college course attributes; and 2) how the amount of course attribute information impacts enrollment. Results indicate students had the highest preferences for face-to-face (F2F) courses offered late morning and early afternoon and two to three days per week. Students selected online over F2F courses depending on course makeup; for example, course topic, online course design technology, and when the F2F version was offered. Additionally, students selected online courses more frequently when additional online course attribute information was available during course selection.
TL;DR: In this paper, the impacts of different levels of forest productivity, disturbance risk, and salvageable rates resulting from climate change on the economics of loblolly pine in the southern United States were analyzed.
Abstract: This article analyzes the impacts of different levels of forest productivity scenarios, disturbance risk, and salvageable rates resulting from climate change on the economics of loblolly pine in the southern United States. Potential adaptation strategies examined include reduction in planting density and use of slash pine instead of loblolly pine. Economic returns are most sensitive to changes in disturbance risk and productivity changes as compared with the salvage rate, planting density, or species selection. Loblolly pine with low planting density economically outperforms high-density loblolly pine. Slash pine is generally a less viable option compared with loblolly pine in most cases.
TL;DR: In this article, the authors quantify weather effects on output and incomes for a panel of Kansas farmers, showing that negative temperature and precipitation values affecting output and income differently than above average observations, while the impact is positive for crop output in the cooler years.
Abstract: We quantify weather effects on output and incomes for a panel of Kansas farmers. The effects of weather are largely asymmetric with negative temperature and precipitation values affecting output and income differently than above average observations. Precipitation effects depend on timing and seasonal averages. The number of days exceeding 32.2°C (i.e., the ‘‘hot’’ years) negatively impacts production and income measures, although the impact is positive for crop output in the cooler years. The results indicate the importance of including weather in predicting output and income and designing risk management instruments to mitigate weather trends and variability.
TL;DR: In this paper, the adjusted gross revenue-light (AGR-Lite) whole-farm insurance program was evaluated on net farm income risk using panel data from 49 southeast Kansas beef farms.
Abstract: This study evaluates the Adjusted Gross Revenue-Lite (AGR-Lite) whole-farm adjusted gross revenue insurance program on net farm income risk using panel data from 49 southeast Kansas beef farms. On average for the group, but not each individual farm, AGR-Lite reduces the mean and standard deviation of net farm income, raises the average minimum, and lowers the average maximum observations of the net income distribution. Thirty-four farms (69%) received at least one indemnity payment. Stochastic efficiency with respect to a function reveals that AGR-Lite is preferred by 18 of the farm managers (37%) when an upper bound on the risk-aversion coefficient is used.
TL;DR: In this paper, the economic feasibility of producing cellulosic biofuels from energy cane and sweet sorghum using three technologies: hydrolysis, pyrolysis and gasification.
Abstract: Government support uncertainty, scarce yield information, and the inherent risk in bioeconomic phenomena are some of the deterrents faced by investors in the nascent cellulosic biofuel industry. A financial probabilistic model was developed to contrast the economic feasibility of producing cellulosic biofuels from energy cane and sweet sorghum using three technologies: hydrolysis, pyrolysis, and gasification. Hydrolysis and pyrolysis proved feasible (showed possibilities of a positive net present value) without government support and conditioned to stochastic feedstock yields and biofuel prices. Gasification was feasible with government support. Improved feedstock and biofuel productivity would considerably raise the feasibility probabilities for hydrolysis and pyrolysis without government support.
TL;DR: In this paper, the authors compared the returns of pasture-based and conventional dairy production using matching samples and the U.S. Department of Agriculture's Agricultural Resource Management Survey data.
Abstract: Costs and returns of pasture-based dairy production are compared with those of conventional production using matching samples. Both whole-farm and dairy enterprise-level estimates are made using the U.S. Department of Agriculture’s Agricultural Resource Management Survey data. Conventional farms are matched to pasture-based farms on the basis of operation scale, scope, region, and farmer demographics and adoption of technology. Results show for pasture-based production lower net farm income on per-cow, per-hundredweight milk produced, and total bases. On an enterprise basis, results show for pasture-based production, higher net return over operating cost and lower net return over total cost per hundredweight milk produced.
TL;DR: The authors used voting data in California to predict how voters in other states would respond to a similar initiative and found that a number of states allow such initiatives and possess a demographic profile favorable to the initiative's passage.
Abstract: After California voters decided in a state initiative to ban gestation crates and battery cages, some are asking whether other states will host similar initiatives and if they will pass. This study addresses this question by using voting data in California to predict how voters in other states would respond to a similar initiative. Results suggest that a number of states allow such initiatives and possess a demographic profile favorable to the initiative’s passage. However, because these states host only a small portion of the livestock population, the impact of such initiatives on the well-being of farm animals is questionable.
TL;DR: In this article, the authors examined how much on-farm reservoirs can increase groundwater quantity and improve surface water quality using a spatial-dynamic model of farm profit maximization in the Arkansas Delta.
Abstract: We examine how much on-farm reservoirs can increase groundwater quantity and improve surface water quality using a spatial-dynamic model of farm profit maximization in the Arkansas Delta. Sensitivity analysis of the farm profit objective by including the value of surface water quality and the groundwater buffer value evaluates how accounting for environmental value affects the optimal crop mix, water use, and farm profits. The best policy for a critical water resource area is to have the government cost share construction of on-farm reservoirs because groundwater conservation and surface water quality goals are achieved efficiently for a modest redistribution of income.
TL;DR: In this paper, the authors use matching pairs to calculate the difference in premiums and net returns between adopters and non-adopters and calculate the likelihood of positive net returns (and premiums) for individual practices and practice bundles.
Abstract: Extension faculty have been educating cow-calf producers about value-added calf management programs and the premiums available at auction from these management practices for years. Despite these efforts, producers express doubt regarding the likelihood of premiums and the profitability of value-added management practices. We use matching pairs to calculate the difference in premiums and net returns between adopters and nonadopters and calculate the likelihood of positive net returns (and premiums) for individual practices and practice bundles. The probability of positive net returns ranges from 57% for dehorning to 79% for a certified vac-45 program (calves certified by a third party to be preconditioned for a minimum of 45 days, vaccinated, and dehorned) and probabilities increase with more practices adopted.
TL;DR: This article used the Agricultural and Resource Management Survey to estimate the elasticity of substitution between hired and family labor and found that labor can be unitary and complimentary under certain scenarios and that the results provide little evidence to support the popular homogeneity assumption.
Abstract: The substitution of capital for labor and new labor-saving technologies has reduced the labor required for farming, yet many farms today depend on hired labor in some form. Common in the literature is the assumption of perfectly substitutable farm labor. This has implications for the operator's off-farm labor decision. Intuitively, different forms of farm labor have different impacts on production. We use the Agricultural and Resource Management Survey to estimate the elasticity of substitution between hired and family labor. The results provide little evidence to support the popular homogeneity assumption and find labor can be unitary and complimentary under certain scenarios.
TL;DR: This paper applied an inverse, almost ideal demand model with seasonal adjustments to estimate price-quantity relationships among major cut flower species traded at the Dutch flower auctions and found that a potential for market timing seems to exist, i.e., flower producers may use easily available calendar information to predict prices and quantities.
Abstract: This research applies an inverse, almost ideal demand model with seasonal adjustments to estimate price–quantity relationships among major cut flower species traded at the Dutch flower auctions. Trigonometric functions are used as a flexible and efficient alternative to standard seasonal dummies. The estimated price and scale flexibilities were all found to be statistically significant with signs as expected. The demand for all flower groups is inflexible, and most of them are quantity substitutes. Based on the estimated values for price and scale flexibilities, a potential for market timing seems to exist, i.e., flower producers may use easily available calendar information to predict prices and quantities.
TL;DR: In this paper, the authors evaluate the impact of public water and sewer infrastructure projects on economic growth over both the short (one to 10 years) and long (10 to 20 years) term.
Abstract: One of the U.S. Department of Agriculture Rural Development’s most popular programs is the funding for public water and sewer infrastructure projects in rural communities. This article reviews the water and sewer infrastructure projects funded in the state of Oklahoma between 1990 and 2000 and evaluates their impact on different measures of economic growth over both the short (one to 10 years) and long (10 to 20 years) term. Evaluation techniques include multivariate regression and average treatment effects. Results suggest that although most economic growth measures (population, income levels, and poverty levels) are not impacted by the program, housing values do show a statistically significant increase in communities receiving water or sewer infrastructure funding over the long term.
TL;DR: In this article, an evaluation of the risk-reducing effectiveness of the LGM-Dairy insurance program, using historical futures price data, predicts economically significant reductions in downside margin risk (24-41%) across multiple regions.
Abstract: An evaluation of the risk-reducing effectiveness of the Livestock Gross Margin–Dairy (LGM-Dairy) insurance program, using historical futures price data, predicts economically significant reductions in downside margin risk (24–41%) across multiple regions. Supply analysis based on the estimated risk reduction shows a small supply response, assuming minimal subsidization. A decomposition of the simulated indemnities into milk price and feed price components shows comovements in futures prices moderating the frequency and levels of indemnities.
TL;DR: In this article, the displacement hypothesis was tested by estimating export demand and advertising-goodwill relations using time series data for 1975-2008, and three of the nine tests showed an inverse relationship between industry and government expenditures.
Abstract: Federal subsidies for nonprice export promotion of farm products have been criticized on the grounds that they merely substitute taxpayer dollars for private promotional expenditures. This ‘‘displacement hypothesis’’ is tested by estimating export demand and advertising–goodwill relations using time series data for 1975–2008. The displacement hypothesis receives some support in that three of the nine tests show an inverse relationship between industry and government expenditures. However, the remaining tests show no relationship. These results, coupled with the finding of Kinnucan and Cai (2011) that expenditures for export promotion may be too high when consumer impacts are taken into account, suggest it is time to let the Market Access and Foreign Market Development programs operated by the U.S. Department of Agriculture lapse.
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TL;DR: In the case of farm support programs, the farm bill can temporarily amend permanent legislation as discussed by the authors, which would put in place price supports, at extremely high levels, for many agricultural commodities, distorting markets and greatly increasing federal costs.
Abstract: “Farm bill†is a colloquial term for omnibus legislation that authorizes various government programs related to agriculture, food, and rural areas. Some of these programs have their roots in New Deal legislation. Others were initially authorized after the New Deal and subsequently included in farm bills. Some debate exists about exactly which omnibus legislation was the precursor of modern-day farm bills. However, since at least 1973, farm bills have included titles related to farm programs, trade, rural development, farm credit, conservation, agricultural research, food and nutrition programs, and marketing. Beginning in 2008, crop insurance-authorizing language was also included in the farm bill. Farm bills generally have a life of approximately five years. In the case of farm support programs (typically authorized in Title 1), the farm billtemporarily amends permanent legislation. When the farm bill expires, theseprograms revert to permanent legislation (from the 1930s and 1940s) unless a new farm bill is adopted that again temporarily amends permanent legislation. The permanent legislation would put in place price supports, at extremely high levels, for many agricultural commodities, distorting markets and greatly increasing federal costs. The specter of reverting to permanent legislation has, through the years, been used by Congress to ensure that future Congresses will replace expiring farm bills with new legislation.
TL;DR: In this paper, the authors discuss three ideas in the field of environmental valuation held by many environmental economists and non-environmental economists that appear to be outdated: 1) that it is better to estimate willingness-to-pay values than willingness to accept values; 2) that stated preference valuation methods are questionable because they are based on hypothetical choices rather than real choices; and 3) that using a repeated-choice question format than a single-choice format in choiceexperiments.
Abstract: Environmental valuation is the branch of environmental economics in which researchers estimate the economic value of environmental goods and services. Environmental valuation has been practiced for decades. However, there are some ideas in the field of environmental valuation held by many environmental economists and nonenvironmental economists that appear to be outdated. This article discusses three such ideas: 1) that it is better to estimate willingness-to-pay values than willingness-to-accept values; 2) that stated preference valuation methods are questionable because they are based on hypothetical choices rather than real choices; and 3) that it is better to use a repeated-choice question format than a single-choice format in choiceexperiments. We discuss the origins of each idea and why the idea became prevalent in the first place. We then review recent literature, which casts doubt on the idea. We conclude with a reminder for researchers—in environmental economics and in other economic fields—to periodically reassess ideas they currently hold in light of recent research developments and in light of the context in which they are used.
TL;DR: In this paper, the cost-effectiveness of three agricultural best management practices (no-till, filter strip, and permanent vegetation) under three modeling scenarios: random assignment, the globally most cost effective approach, and a cost-effective targeting approach.
Abstract: Erosion of agricultural croplands is a significant contributor of sedimentation to reservoirs. Here, physiographic and economic models for a large agricultural watershed (2377 square miles with 27 subwatersheds) are integrated for the reduction of sedimentation of one Midwestern reservoir. Sediment reduction and the cost-effectiveness of three agricultural best management practices (no-till, filter strip, and permanent vegetation) implementation were considered under three modeling scenarios: random assignment; the globally most costeffective approach; and a cost-effective targeting approach. This study demonstrates how physiographic and economic data can be harnessed to yield readily comprehendible costeffective targeting maps. Cost-effective targeting may be preferable to watershed managers for its ‘‘user-friendliness’’ without too great a sacrifice of the globally most cost-efficient solution.
TL;DR: This article examined how various components of the certified South Carolina campaign are valued by participating restaurants and found that the type of restaurant, the level of satisfaction with the campaign, and the factors motivating participation significantly affected restaurants' WTP for the campaign components.
Abstract: This study examined how various components of the Certified South Carolina campaign are valued by participating restaurants A choice experiment was conducted to estimate the average willingness to pay (WTP) for each campaign component using a mixed logit model Three existing campaign components—Labeling, Multimedia Advertising, and the “Fresh on the Menu” program—were found to have a significant positive economic value Results also revealed that the type of restaurant, the level of satisfaction with the campaign, and the factors motivating participation significantly affected restaurants' WTP for the campaign components