The vast majority of crop and revenue insurance policies sold in the United States are singlecrop policies that insure against low yields or revenues for each crop grown on the farm. But, increasingly, producer income is based more on the value of crops that have been converted into a value-added product such as ethanol. Moreover, the recent increases in energy and commodity price levels and volatilities emphasize the importance of risk management to ethanol investors. This paper uses an insurance approach to outline a risk management tool which mimics the gross margin level of a typical corn-based ethanol plant. The gross margin, premium, and indemnity levels are calculated on a per bushel basis to enable producers/investors to utilize the product based on their ownership share in the production facility. The fair premium rates are shown to be quite sensitive with respect to corn and energy price levels and volatilities.

Though there are many challenges facing extension economists, there are significant opportunities to serve rural America and fully participate in our profession. National studies have reconfirmed extension as an integral part of our land grant mission, and a survey of chairs of departments of agricultural and resource economics shows that 87% indicate that there is increased or constant pressure by the public for programing by extension economists. Retirement estimates provided by chairs suggest it is likely that at least one-half of new faculty hired over the next five years will have extension appointments. Perhaps most importantly, there are critical societal issues to which extension economists can make valuable contributions.

Nitrous oxide is a powerful greenhouse gas that is emitted from cropland treated with nitrogen fertilizer. Reducing such emissions through nutrient management might be able to produce offsets for sale in a cap and trade program aimed at reducing greenhouse gases. We use the Nitrate Leaching and Economic Analysis Program (NLEAP) model and data from the Agricultural and Resource Management Survey to examine what changes in rate, timing, or method of application a farmer would take to produce offsets. We find that reducing the application rate is the most favored approach for producing offsets. We also find that some management choices may increase nitrate losses to water.

Biofuels such as ethanol and biodiesel are increasingly promoted as green alternatives to petroleum-derived transport fuels. Scaling up feedstock production to produce enough biofuel to displace a significant portion of current petroleum demand will put pressure on land and water resources both domestically and internationally, however, and could potentially be accompanied by unacceptable changes in landscape-level land use patterns and provisioning of ecosystem services. Ensuring that feedstock production is sustainable and that biofuels provide the social and environmental benefits that are often attributed to them will require a carefully designed portfolio of agricultural, forestry, energy, and trade policies related to biofuels and feedstock production. Despite the difficulties associated with development and application of such policies, they should be in place before further policy incentive is provided for expansion of biofuel industries.

We estimate the potential negative effects of underground natural gas storage on local residents using hedonic regression and a sample of Indiana properties transacted between 2004 and 2013. We find that underground natural gas storage activities significantly reduce property values. Property values increase by about 10 percent at a distance of 1 kilometer from a storage field. Each additional storage well and observation well located near a property reduces the property's value by about 0.43 percent and 2.64 percent, respectively. Our research sheds new light on a previously unexplored aspect of natural gas resource activities.

Ice-nucleating bacteria, which are known to occur naturally on many crops and have been associated with frost damage, may be subject to control with genetically engineered bacteria, dubbed “ice-minus” bacteria. Ice-minus technology is designed to depress the critical temperature at which frost damage begins by displacing the natural population of ice-nucleating organisms. A trial product has been tested in the field with strawberries. Although tests with bacteriacidal compounds have suggested other mechanisms for controlling the critical temperature in deciduous fruit crops, ice-minus may prove to be effective. This analysis examines the possibility of ice-minus being adopted by New York tree-fruit growers and the likelihood of it causing a major economic impact on the state's fruit industry. Based on the climatology, phenology of fruit trees, and the record of actual frost damage in New York, the need for ice-minus is apparently not great enough to conclude that its adoption would cause a significant impact on New York fruit production.

A mixed-integer linear programming model was formulated to minimize the cost of transport and processing of excess manure in the Chesapeake Bay watershed. The results showed that primarily poultry manure was moved out of surplus counties for land application or processing. In the base model, annual cost was more than $350 million, with the bulk of the cost arising from construction of energy facilities for poultry manure. Forestland application of poultry manure had the lowest average cost, and more forestland than agricultural land was used for manure application. The lowest cost scenario was $127 million annually when constraints were removed to expand manure application on agricultural land and allow unlimited construction of composting facilities. Such a low-cost solution could not realistically be implemented without further development of markets for compost.

Optimal control models of aggregate milk supply and demand behavior are used to describe the optimal phasing of the deregulatory dairy price support in the presence of supply growth. Producers are assumed to face costs of adjustment, and are myopic with respect to price expectations and the adoption of the new quasi-fixed factor augmenting technology.

Producing biomass energy requires much land, and effects of biomass production on ecosystem services could greatly affect total biomass energy cost. This study estimates switchgrass production cost in western Massachusetts at three levels: private production cost, private cost plus social cost of nitrogen fertilizer externalities, and those costs plus the social opportunity cost of foregone forest ecosystem services. Values for nitrogen externalities and forest ecosystem services estimated with benefit transfer suggest that social cost is much greater than private switchgrass production cost. The benefit-transfer estimates are only first approximations, but conclusions are robust to a large range of values.

Differential property tax policy for farmland is often set under conditions of uncertainty and limited information regarding landowners’ objective functions. This study examines optimal differential tax policy for a parcel of agricultural land facing uncertain development, identifying instances in which common farmland taxation policies may be non-optimal. Optimal tax rates are characterized given three possible causes of uncertain development: exogenous offers from developers, tax-related reductions in landowner wealth, and a combination of these factors. Model results indicate that underlying causes of uncertain development are critical when seeking to assess the optimality of differential taxation policies, and the use of a single, time-invariant differential tax levy is rarely optimal given uncertain development.

The objective of this article is to estimate historical economic surpluses for the subsectors involved in the U.S. sugar market. Annual producer and consumer surpluses were computed based on a five-equation model and 1958–87 data. In the last decade, the welfare position of cane- and beet-sugar producers has been roughly maintained, the domestic consumer surplus and the export quasi-rents to foreign countries have both declined, and quasi-rents of the corn-sweetener industry now surpass those that accrue to the cane industry and are about the same as those of the beet-sugar industry. Some policy implications are discussed.

Data from a sample of Rhode Island households indicate that firewood use along with wood stove use is increasing in response to increases in conventional heating fuel costs. More than half the sample of households reported the intention to reduce their heating fuel costs as their primary reason for burning wood. For nearly 20 percent of the households, the 1977–78 study season was the first heating season that these households had burned firewood. Among wood stove users, 50 percent began using a wood stove for the first season, the 1977–78 study season. Regression results indicate that the variables price, income and primary reason firewood is burned are important in the household's decision on the quantity of firewood burned.

Trade theorists have demonstrated that different trade policy instruments have different effects on the quality and source of imports. Countervailing duties (CVDs), like specific tariffs, should induce quality upgrading. However, the magnitude and timing of the quality adjustments are influenced by the credibility of the duties that can be legally contested and modified after annual administrative reviews. Index numbers are used to assess the timing and magnitude of the product mix and country mix substitution effects in U.S. pork imports in response to the U.S. CVDs on Canadian exports of live hogs and fresh, chilled, and frozen pork.

This paper develops a stochastic model for comparing payments to U.S. corn producers under the U.S. Senate's Average Crop Revenue Program (ACR) versus payments under the price-based marketing loan benefit and countercyclical payment programs. Using this model, the paper examines the sensitivity of the density function for payments to changes in expected price levels. We also assess the impact of the choice of yield aggregation used in the ACR payment rate on the mean and variance of farm returns. We find that ACR payments lower the producer's coefficient of variation of total revenue more than does the price-based support, although ACR may not raise mean revenue as much. While corn farmers in the heartland states might still prefer to receive the traditional forms of support when prices are low relative to statutory loan rates and target prices, this outcome is not necessarily the case for farmers in peripheral production regions.

Demand for selected nursery plants sold in North Carolina (i.e., begonia, dianthus, geranium, impatiens, marigold, petunia, and vinca) was found to be affected more by prices than by income, demographic, and other variables. By using cross-sectional data, a modified AIDS model, incorporating demographic variables and quadratic income response, was estimated. Inverse Mills's ratios were also included in the model to correct for selectivity bias, resulting from zero purchases. Significant own-price elasticities ranged from − 0.71 to − 1.65, and income elasticities ranged from − 0.78 to 0.41.

The eleven state area of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont comprises the Northeast agricultural area. According to the latest farm number estimates in 1980, there are over 159,000 farms in the Northeast with the largest number of farms concentrated in Pennsylvania, New York and Maryland, respectively. Given the large number of farms and the diverse topography of the region, farmers in the Northeast produce a wide variety of agricultural commodities. In 1980, farm cash receipts in the Northeast were estimated at $8.2 billion with livestock and products accounting for about two thirds of the total and crops (including specialty crops) accounting for the balance. In terms of cash receipts, Pennsylvania is the largest agricultural production state in the Northeast followed by New York and Maryland.

Climate change will increase variability in temperature and precipitation on rangelands, impacting ecosystem services including livestock grazing. Facing uncertainty about future climate, managers must know if current practices will maintain rangeland sustainability. Herein, the future density of an invasive species, broom snakeweed, is estimated using a long-term ecological dataset and climate projections. We find that livestock stocking rates determined using a current method result in lower forage production, allowable stocking rate, and grazing value than an economically efficient stocking rate. Results indicate that using ecology and adaptive methods in management are critical to the sustainability of rangelands.

Decision support systems are generally geared to short-term tactical decision making. As an alternative, this paper develops a mathematical programming model to evaluate long-term strategic alternatives in the context of farm-level agricultural production where a broiler farm considers long-term implications of diversification into commercial aquaculture. The model considers a ten-year strategic planning horizon, incorporates financial risk and return considerations, and accommodates capacity variations. Results indicate that a diversification strategy significantly increases farm profitability over a strategic planning horizon while simultaneously maintaining financial risk below a predetermined tolerance level and return on investment above a predetermined level.

This paper provides the model, analysis, and results of the investigative research by the U.S. International Trade Commission (USITC) staff on the U.S. lamb market impacts from the countervailing duty (CVD) order imposed on certain U.S. imports of New Zealand lamb meat during 1985–90. Presented here are the monthly three-stage least squares model of the U.S. lamb meat industry at the wholesale or meat-packing level, along with the econometric results and analyses obtained from the USITC investigation. Analysis of model results quantifies average estimated CVD-attributed effects on U.S. lamb price, demand and supply of domestically produced lamb, and U.S. lamb import levels. A number of economic parameter estimates and inference results concerning U.S. wholesale lamb market relationships are reported and are of interest, given the scarce published research on the U.S. lamb industry.