Risk management tools are at the core of farm policy in many developed countries, and their effectiveness relies on the appropriate mechanism design. This study developed a gain-loss framework based on prospect theory to examine the reasons for the declining use of the main risk management tool offered to farmers despite growing volatility in returns. Using the administrative Ontario Farm Income Database (OFID) 2003 to 2013 and taking the beef sector as the example, this study found that the gain-loss framework predicts and explains the dynamic program participation pattern better than the conventional expected utility framework. Farms were found to be more likely to stay enrolled in the program when they experienced either larger gains or losses in revenue compared to previous years, suggesting that they were using the insurance programs both as an investment strategy (to seek government subsidies) and as a risk management tool (to protect against business risks), though the effects of revenue losses and hence risk management needs were stronger than gains. In addition, the program payment history and farm characteristics also shape the dynamic participation patterns. The findings increased the understanding of the drivers of withdrawal behavior associated with government-sponsored business risk management programs.

A translog cost function was estimated using pooled time series-cross section data from five Northeastern States to study structural changes in the dairy industry. The approach given in the duality theory was found useful in estimating the input demand structure under changing input prices and technology conditions. The estimated Allen partial elasticities of substitution show the existence of substitution between energy and non-energy inputs in dairy farming. Despite input price increases the dairy industry maintained competitiveness as seen by the returns to scale parameters.

A structural time series model is used to estimate the supply response function for broiler production in the United States using quarterly data and a structural time series model. This model has the advantage of expressing trend and seasonal elements as stochastic components, allowing a dynamic interpretation of the results and improving the forecast capabilities of the model. The results of the estimation indicate the continued importance of feed costs to poultry production and of technology as expressed by the stochastic trend variable. However, seasonal influences appear to have become less important, since the seasonal component was not statistically significant.

This article examines the flexibility of the Johnson system of distributions by assessing its performance in terms of modeling crop yields for the purpose of setting actuarially fair crop insurance premiums. Using data from corn farms in Illinois coupled with Monte Carlo simulation procedures, we found that average crop insurance premiums computed on the basis of the Johnson system provide reasonably accurate estimates even when the data are normal or come from a non-normal distribution other than the Johnson system (i.e., a beta). These results suggest that there is potential for using the Johnson system to rate previously uninsured crops that do not have historical insurance performance data upon which to base premium calculations.

The implicit price (hedonic) equation for the housing market in a coastal town in southern Rhode Island was estimated using a conditional Box-Cox maximum likelihood procedure. Linear, log-linear, and semi-log functional forms were rejected with 95% confidence. Estimates of marginal implicit prices for water related attributes (view of, frontage on, and proximity to a coastal salt water pond) derived from these rejected models were quite different from those determined from the optimal functional form. This result has important ramifications for public policy, as is shown in an example, since these attributes were found to be highly valued in the housing market.

This study examines several aspects of the Environmental Horticulture Industry (EHI) in the northeastern United States. First, the EHI is compared to other agricultural sectors in the region. The sector's growth is found to far outpace growth in traditionally important crops and commodities. The study then takes a closer look at the EHI in Pennsylvania, utilizing survey data and the IMPLAN input-output model to estimate the overall economic contributions of the industry to the state's economy. Results suggest that the EHI generates nearly $3.3 billion in value-added and more than 107,000 state jobs through direct, indirect, and induced effects. Finally, survey data are used to identify and discuss important issues that land grant universities throughout the Northeast can address as they seek to strengthen the sector.

Community-supported agriculture (CSA) operators are becoming more innovative in their efforts to attract consumers to become CSA shareholders. Therefore, CSA operators must understand which attributes consumers value. Using an online survey of Connecticut consumers in conjunction with a choice experiment, we evaluate consumer preference and willingness to pay for various attributes, including risk mitigation. We find younger consumers are more likely to prefer CSAs with organic products, while a greater diversity of products in the CSA share will increase preference for a CSA for some consumers. Further, we find that consumers with and without CSA experience value the risk-mitigation attribute.

A telephone survey of all of the surviving families of people killed in farm accidents in New York between 1985 and 1987 (52 of 87 families interviewed, 60% response rate) found the average total annual present value of expected income foregone because of fatal farm accidents in New York is over $8.6 million (in 1987 dollars). Less than five years after the accidents, 67% of the families who operated the farms where the accidents occurred no longer operate them and 44% no longer live on the farms.

This study investigates the environmental impacts of several forms of policies that offer farmers subsides in return for the adoption of conservation tillage. The policies differ as to whether the tillage practice or one of several environmental benefits is targeted. We develop an Environmental Lorenz Curve which fully represents the performance of the targeting policies, and show that this curve can be directly used to help select the optimal targeting strategy for special classes of social welfare functions. The model is applied to the state of Iowa.

In the last 20 years, both public and private expenditures on resource conservation and environmental protection have increased dramatically. However, there are numerous technical and political barriers to the efficient use of conservation funds. This paper discusses some of these barriers and approaches to overcoming them. It argues that ecosystem complexities such as threshold effects, ecosystem linkages, and spatial connections often mitigate against politically palatable criteria for resource allocation. Ignoring these complexities is likely to result in substantial efficiency losses. While challenges are daunting for the efficient management of conservation investments, payoff is potentially high for the use of sciences.

Major increases in energy prices since 1973 have raised considerable interest in the effect of a continuation of these increases on interregional competition. There is speculation in the Northeast that a general increase in energy prices will cause agricultural production to shift closer to the consumers. This production shift supposedly will lead to self-sufficiency in many products which were once grown in the Northeast and are now largely imported from other regions. This paper uses a simple interregional trade model to estimate the possible impact of higher energy prices on interregional competition, and on the Northeast in particular. It does this by assuming values for the relevant variables in the model and estimating the changes in the system. A range of values are used to estimate the sensitivity of the conclusions to the assumptions.

State programs promoting their agricultural products have proliferated in response to increased consumer interest in locally grown foods. Tennessee, for example, currently has two state-funded programs promoting its agricultural products. This study examines the factors associated with participation by Tennessee fruit and vegetable farmers in those programs. The results suggest that farmer participation is associated with farm income, use of extension resources, and fresh produce sales. These results should be of interest to anyone attempting to increase producer participation in such programs.

In this study we attempt to understand the relationship between regional growth in population, employment, and per capita income, and farmland development in Maryland, Pennsylvania, and West Virginia. A spatial simultaneous equations model is estimated using county-level data. Results indicate that while county income growth and agricultural land value increases in neighboring counties increase the rate of farmland loss, growth in county agricultural land values, increases in agricultural land density in neighboring counties, and increases in agricultural income per farm reduce farmland losses. Farmland protection policies were not significant in reducing agricultural land development. This approach, focused on regional growth, provides insight into linkages between growth and agricultural land development that can potentially enhance land use planning.

We use nonparametric production function methods to decompose farm-level labor productivity growth into components attributable to efficiency change, technical change, and factor intensity. The estimation is accomplished using balanced panel data drawn from the Kansas Farm Management Association for the period 1993 to 2007. We find that labor productivity growth is primarily driven by factor intensity and technical change. Efficiency change is declining with increasing productivity growth, and technical change is not Hicks-neutral and occurs at high levels of factor intensity, suggesting that innovation is embodied in factor intensity.

The Uruguay Round Agreement on Agriculture (URAA) put in place a set of rules that may, in the future, have significant effects on the conditions for market access for agricultural products. Bound tariffs replaced non-tariff barriers in most cases, and rules facing exporters are now more transparent. In addition, minimum access commitments were made through the use of import quotas, with a lower tariff for imports within the quota. Although agriculture is now integrated into the multilateral trading system, most commentators agree that the URAA did little actually to liberalize agricultural trade. Bound out-of-quota tariffs remain very high while quotas have resulted in the institutionalization of rents for specific countries and firms or state trading enterprises, thereby potentially increasing resistance by these stakeholders to any trade liberalization initiatives.

This paper provides a decomposition of output growth among olive-growing farms in Greece during the period 1987–1993 by integrating Bauer's (1990) and Bravo-Ureta and Rieger's (1991) approaches. The proposed methodology is based on the use of self-dual production frontier functions. Output growth is attributed to the size effect, technical change, changes in technical and input allocative inefficiency, and the scale effect. Empirical results indicate that the scale and the input allocative inefficiency effects, which were not taken into account in previous studies on output growth decomposition analysis, have caused a 7.3% slowdown and a 11.0% increase in output growth, respectively. Technical change was found to be the main source of TFP growth while both technical and input allocative inefficiency decreased over time. Still though, a 56.5% of output growth is attributed to input growth.

Withdrawal from the Trans-Pacific Partnership (TPP) could be costly for U.S. beef exports to Japan given existing trade agreements such as the Japan-Australia Economic Partnership Agreement (JAEPA). We estimate the demand for imported beef in Japan by source and product and assess the impact of tariff reductions on exporting countries. Our results suggest JAEPA will result in considerable increases in Australian beef exports to Japan, largely at the expense of the U.S. beef. However, similar tariff reductions for U.S. beef could eliminate these negative effects and even result in a net increase in beef imports from both countries.

The hedonic approach has been advanced recently as an important tool for assessing the value of non-market environmental attributes. In its most usual form, the method involves an attempt econometrically to capture differential prices for homes attributable to variations in the environmental characteristic. This technique has been applied with success for a variety of attributes – most notably the study of air pollution. However, the case studies reported here for water quality valuation were much less successful. We advance several reasons why the hedonic approach may be ill-suited to measuring the value of water quality.

The study examines the impacts of implementing mandatory country of origin labeling (COOL) on producer and consumer welfare in the U.S. meat industry. The equilibrium displacement model developed in this study includes twenty-nine equations representing retail-, processing-, and farm-level equilibrium conditions for the beef, pork, and chicken industries. Unlike previous studies, the model allows trade between domestic- and foreign-origin products and considers the imperfectly competitive market structure of meat processers. Empirical results show that without a significant increase in domestic meat demand, producers are not expected to benefit from the mandatory COOL implementation. Results of a sensitivity analysis indicate that consumers tend to bear more COOL costs than producers, as the own-price elasticity becomes more inelastic, and that producers’ benefits increase as the elasticity of domestic demand becomes more elastic with respect to the price of imported products. The existence of market power in upstream and downstream markets of processors negatively affects both consumer and producer surplus. One implication of our findings is that U.S. beef and pork producers’ promotion and advertising programs would be successful in expanding domestic demand when the programs make the own-price elasticity of domestic demand more inelastic and the cross-price elasticity of domestic demand more elastic with respect to import price.

Tariff rate quota administration and implementation are empirically evaluated for the fourteen developing countries notifying the WTO of the use of TRQs. FAO trade data, UNCTAD data on applied tariffs and the WTO notifications permit us to assess underfill of quotas, discrimination among exporters, use of state trading as an implementation mechanism, and the extent of protection under these TRQs. Substantial liberalization was found, generally due to use of low MFN tariffs rather than through TRQs permitting greater market access. High tariff bindings and endogenous quotas allow these countries to pursue flexible trade regimes within their WTO commitments.