Spillovers

Interstate and international spillovers from public agricultural research and development (R&D) investments account for a significant share of agricultural productivitygrowth. Hence, spillovers of agricultural R&D results across geopolitical boundaries have implications for measures of research impacts on productivity, and the implied rates of return to research, as well as for state, national and international agricultural research policy. In studies of aggregate state or national agricultural productivity, interstate or international R&D spillovers might account for half or more of the total measured productivitygrowth. Similarly, results from studies of particular crop technologies indicate that international technology spillovers, and multinational impacts of technologies from international centres, were important elements in the total picture of agricultural development in the 20th Century. Within countries, funding institutions have been developed to address spatial spillovers of agricultural technologies. The fact that corresponding institutions have not been developed for international spillovers has contributed to a global underinvestment in certain types of agricultural research.Research and Development/Tech Change/Emerging Technologies,

An exact approach for evaluating the benefits from technological change

It is commonly believed that taxing agricultural commodities in developing countries, and subsidizing agricultural commodities in industrial countries, reduces incentives in the developing countries for both current production and longer-term investments in capital, knowledge, technology, and infrastructure. It is argued that distortions in agricultural markets have kept investments in research and development, and productivity rates low in agriculture in developing countries. Martin and Alston lay the theoretical foundation for empirical studies of how such distortions affect returns to agricultural research and development in developing countries. Earlier studies of the benefits from technological change have typically used partial equilibrium models with Marshallian welfare measures. Such models have not allowed for a general set of market distortions and market interactions. Techniques recently developed for evaluating welfare in the context of general equilibrium models better measure the implications of trade distorting policies. Martin and Alston describe how to harness these approaches to evaluate the benefits and costs of technological changes. They show that a modified trade expenditure function can be used to measure welfare changes exactly, with a model consistent with the optimizing behavior of both producers and consumers. They do so in a general setting that allows for multiple market distortions and multiple paths of general equilibrium feedback. They illustrate this approach using a quadratic form for a profit function that is a component of the trade expenditure function. They spell out, in principle, how to apply this approach with minimal requirements for additional information, using the results from a computable general equilibrium model. They provide a diagram to illustrate the application of the technique.Environmental Economics&Policies,Economic Theory&Research,Access to Markets,Markets and Market Access,Consumption

Farm Commodity Policy and Obesity

Many commentators have claimed that farm subsidies have contributed significantly to the “obesity epidemic” by making fattening foods relatively cheap and abundant and, symmetrically, that taxing “unhealthy” commodities or subsidizing “healthy” commodities would contribute to reducing obesity rates. This paper makes three contributions. First, we review evidence from the literature on the impacts on food consumption and obesity resulting from subsidies applied in the past to production or consumption of farm commodities. Second, we develop and present new arguments and preliminary evidence on the impacts of past government investments in agricultural R&D on food consumption and obesity—through research-induced increases in agricultural productivity and the consequences for prices, production, and consumption of farm commodities. Third, we consider and compare the economic efficiency of hypothetical agricultural research policies (changing the orientation of agricultural research investments) versus hypothetical agricultural commodity subsidies and taxes as alternative mechanisms for encouraging consumption of healthy food or discouraging consumption of unhealthy food, or both.Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Health Economics and Policy,

CONSUMER DEMAND ANALYSIS ACCORDING TO GARP

The nonparametric approach to consumer-demand analysis-based on revealed-preference axioms-is reviewed. Particular attention is paid to questions of size and power of tests for consistency of data with the existence of a stable, well-behaved utility function that could have generated the data. An application to Australian meat demand is used to show how these notions can be quantified and how prior information about elasticities, following Sakong and Hayes, may be used to increase the power of the approach.

CAN WE TAKE THE CON OUT OF MEAT DEMAND STUDIES?

Whimsy in specification choices leads to fragility of inference in econometric studies of structural change in meat demand. The literature contains a variety of results, with many contradictions, attributable largely to differences in specifications. This article reviews that literature, uses synthetic data to demonstrate the sensitivity of results to specification choices and to evaluate the power of nonparametric tests, and uses Canadian data to demonstrate a preferred approach to testing the hypothesis of structural change.Demand and Price Analysis,

A COMPARISON OF CAPITAL MEASURES IN U.S. AGRICULTURE

This study compares two panel data sets that measure capital input at the state-level in U.S. agriculture. Despite a number of similarities between the data sets, such as the composition of assets, aggregation procedures, and time frame, an examination of the final estimates of capital service flows reveals that they are drastically different for all 48 contiguous states. We examine the methods used to construct the capital series for each data set, consider some important differences in data sources and the types of data used to construct the capital measures, and outline the main assumptions concerning depreciation, service lives, interest rates, aggregation, and the scope of goods included in each of the data sets. The analysis indicates that an important statistic in the index of capital services in U.S. agriculture is the stock of buildings on farms. We conclude that the primary difference between the measures of capital input in the data sets relates to differences in estimates of the stock of buildings on farms. Given the apparent importance of the measure of the stock of buildings in the aggregate index of capital services in U.S. agriculture, more research is needed to ensure that the measure of the stock of buildings is accurate and meaningful. Once this has been accomplished there should be more agreement on an accurate measure of capital services in U.S. agriculture.Agricultural and Food Policy,

The effects of the U.S. Plant Variety Protection Act on wheat genetic improvement:

The U.S. Plant Variety Protection Act (PVPA) of 1970 was meant to strengthen intellectual property protection for plant breeders. A model of investment under partial excludability is developed, leading to the hypotheses that any increase in excludability or appropriability of the returns to invention, attributable to the PVPA, would lead to increases in investment or efficiency gains in varietal R&D, improved varietal quality, and enhanced royalties. These hypotheses are tested in an economic analysis of the effects of the PVPA on wheat genetic improvement. The PVPA appears to have contributed to increases in public expenditures on wheat variety improvement, but private-sector investment in wheat breeding does not appear to have increased. Moreover, econometric analyses indicate that the PVPA has not caused any increase in experimental or commercial wheat yields. However, the share of U.S. wheat acreage sown to private varieties has increased–from 3 percent in 1970 to 30 percent in the 1990s. These findings indicate that the PVPA has served primarily as a marketing tool with little impact on excludability or appropriability.Intellectual property., Plant breeding., Wheat., Economics.,

Generic advertising without supply control: implications of funding mechanisms for advertising intensities in competitive industries

Producer profit‐maximising rules for generic commodity advertising programs and associated funding levies are derived. Lump‐sum, per unit and ad valorem levies, and government subsidy funding arrangements are compared and contrasted. The initial single‐product competitive market model is extended to incorporate international trade, government price policies, and multiple commodity interactions.Marketing,

Public Funding for Research into Specialty Crops

Replaced with revised version of paper 08/14/07.Crop Production/Industries,

The Demand for Food in the United States: A Review of the Literature, Evaluation of Previous Estimates, and Presentation of New Estimates of Demand

Demand and Price Analysis, Food Consumption/Nutrition/Food Safety,