Economic Effects of a Potential Foodborne Disease: Potential Relationship between Mycobacterium Avium Subs. Paratuberculosis (MAP) in Dairy and Crohn’s in Humans

Welfare costs of a potential food shock were estimated by disseminating information to milk drinkers on the prevalence of Mycobacterium avium sub. paratuberculosis (MAP) in the U.S. milk supply, its potential linkage to Crohn’s disease in humans, and subsequent government intervention to minimize MAP in the milk supply. We found that 19.6% of milk consumers exposed to MAP information would stop milk consumption at current market prices, and that only 5% of those would return to their original milk consumption levels after the government intervention. Societal costs of the food shock after the intervention were estimated at $18.2 billion

A Risk Analysis Of Farmers In Mexico: Prices, Risk Rationing And Conflict

Farming is, by its own nature, a risky enterprise. Farmers are subject to many exogenous risks, for instance, price and production volatility, and credit default risk. Although there exists insurance products that help mitigate these types of risks, most of them are offered in developed countries. Farmers in developing countries, in general, lack the financial instruments to cope with production uncertainty. Mexican farmers are no exception. Mexican farmers face multiple risks that have been largely understudied. Some of these risks are common to farmers in developed as well as in other developing countries, but a few of them are unique to Mexico due to its current state of events. The overall objective of this dissertation is to investigate risks faced by Mexican farmers. The specific objectives are: to provide a basic understanding of Mexican agriculture and the risks they face from production and markets; to investigate mechanisms for price risk management for Mexican farmers; to investigate the relationship between risk rationing and credit demand; and to investigate the impact of narcoterrorism on agriculture and rural life. This dissertation provides alternatives for risk management and new insights for understanding Mexican farmers' risks. These alternative solutions and analysis are based on financial engineering theory; on a novel approach to risk rationing; on the dual process and the ecological psychology theories to understand fear and risk perception

Perception and Action in a Conflict Zone: a Study of Rural Economy and Rural Life amidst Narcos in Northeastern Mexico

This paper analyzes the effect of drug cartel violence on farmers in Northeastern Mexico. Using tools from the psychology literature on risk perceptions, dual process theory and behavioral economics, we investigate factors correlating with fear among farmers, and how that fear is affecting rural life and production decisions. Farmers' actions in response to risk can be explained under the dual process approach, and the degree of emotional and deliberative response for each action is estimated. We find evidence that drug related violence in Mexico is affecting rural life and production decisions of small holder farmers

Geostatistics, Basis Risk, and Index Insurance

This paper describes the application of geostatistics to weather index insurance in order to systematically analyze spatial basis risk inherent in index insurance contracts. The notion of spatial autocorrelation is in general overlooked by index insurance practitioners, but has profound implications for the effectiveness of the insurance offered. The analysis shows that it is possible to offer contracts from multiple weather stations to a single farmer, and that doing so will likely reduce the basis risk from a single contract. The two major implications of the paper are 1) that index insurance should be offered in more flexible contracts that allow farmers to hedge their production according to their perceptions of basis risk and their appetites for risk, and 2) the tradeoff between local (yield) correlation and spatial correlation needs to be more carefully considered, as it may even be better to offer contracts with poor yield correlation if they can include more spatial coverage

Anticipatory Signals of Changes in Corn Demand

Contemporaneous observations on expected supply and on prices of post-harvest futures contracts for corn are used to estimate expected demand relationships. These equations are used to forecast the prices of the post-harvest contracts based on new supply estimates. Each forecast can be compared with a corresponding futures price, i.e., the market’s forecast. The differences help discern the market’s expectations about the expected demand for the new crop relative to historical experience, which can help support outlook analyses. The discussion also deepens understanding of the term “anticipatory prices,” as used by H. Working (1958)