VERTICAL INTEGRATION AND TRADE POLICY: THE CASE OF SUGAR

The degree of vertical integration in the U.S. sugar industry between raw sugar processing and sugar refining cannot be explained using theories of vertical integration based on transaction costs (e.g. Williamson). We graphically decompose the economic rents accruing to each level in the marketing channel. Different strategies of several major sugar producing, processing and refining entities with regard to sugar quota policy are explored.Agribusiness, Industrial Organization,

A HYPERBOLIC TANGENT YIELD FUNCTION OF FLORIDA CITRUS

This study models Florida citrus production as a function of the age profile of a given tree stock. The age relationship is estimated using a modified hyperbolic tangent function and the parameters is solved by Spatial Process Models and Maximum Likelihood approach. The estimation is based on the production data of four citrus varieties in 25 regions of Florida from 1992 to 2005. The results show smooth S-shaped yield curves of Florida citrus. This analysis offers yield function of citrus as the first step for statistical modeling of the risks associated with citrus cancers aimed at pricing insurance rates.yield function, citrus, hyperbolic tangent, insurance, spatial autoregressive, Demand and Price Analysis,

The Effect of Consumption Based Taxes on Agriculture in the United States

Recently several proposals have arisen to replace the current income tax system in the United States with a consumption based or Fair Tax. This study investigates the effect of such a consumption based tax on agricultural investment decisions using stochastic optimal control to model the investment decision at the farm level. The results indicate that a consumption tax rate of 25.9 percent would be equivalent to the income tax rate paid by very large producers in the United States.Public Economics,

Using APT to Assess the Impact of Farm Policy on Agribusiness Stocks

This study investigates the impact of differing U. S. Farm Policy regimes on the stock prices of publicly traded agribusinesses. Following the Roll and Ross approach, we apply a two step Arbitrage Pricing Model (APM). We analyze the effect of agricultural policy on returns to agribusiness by applying a modified APM to agricultural returns to test for the presence of an agribusiness premium or discount. We further augment our analysis by dividing the sample into two time periods around the implementation of the 1996. The differences in agribusiness premium can then be tested using a paired t-test. The empirical evidence lends support to a switch from negative returns to agribusiness stocks pre-FAIR Act to positive returns to agribusiness stocks after its enactment.Agribusiness, Agricultural and Food Policy,

QUANTIFYING GAINS TO RISK DIVERSIFICATION USING CERTAINTY EQUIVALENCE IN A MEAN-VARIANCE MODEL: AN APPLICATION TO FLORIDA CITRUS

The marginal benefit and cost of diversification for Florida orange producers is analyzed using certainty equivalents. Results indicate that for moderate and high levels of risk aversion, diversification into strawberry, grapefruit, or additional orange production is not optimal. However, moderately risk averse Florida orange producers can gain by diversifying into grapefruit production if the annual amortized fixed costs can be reduced by as little as 10 percent.Risk and Uncertainty,

Natural Disasters and the Yield Curve of Florida Valencias

Crop Production/Industries,

The Effect of US Energy Policy and Farm Program Payments on the Bio-Fuel Sector: A Regime-Switching Approach

Resource /Energy Economics and Policy,

WHERE IS THE WALRASIAN AUCTIONEER FOR AGRICULTURAL MARKETS? AN EXAMINATION OF THE MARKETING INSTITUTION

In the classical development of economic equilibrium and efficiency, transaction costs are seldom considered. This study develops a micro- market model of an agricultural market based on quality differences. The study then develops a model of market structure based on the New Theory of the Firm. Using the two models, we draw conclusions about economic potential for E-Commerce.Marketing,

The brave new world: imperfect information, segregation costs, and genetically modified organisms

The introduction of genetically modified (GM) crops in the mid 1990s appeared to be the latest in a string of technological innovations in agriculture. However, consumer resistance, particularly in Europe has limited the sector’s enthusiasm. One response to the limited enthusiasm has been the emergence of segregated markets for GM and non-GM products. These separated markets reduce economic welfare because they require additional costs in the marketing system. Offsetting these segregation costs, however, the introduction of GM technologies offers increased economic welfare through reduced commodity prices for consumers who are indifferent to the presence of GM traits and increased profits to producers who adopt GM technologies. This study develops the combinations of segregation costs and increased supplies that leave societal surplus unchanged. Any GM technology that yields a larger increase in supply for any segregation cost depicted in this relationship meets the compensation principle and, thus, improves societal welfare. In this case, market based adoption of these technologies improve economic surplus. On the other hand, technologies that yields less increase in supply for any segregation cost reduces societal welfare. Under this scenario, market based adoption will not be welfare improving and, hence, government regulation may be required.genetically modified (GM) crops, compensation principle, segregation costs, Pareto principle, immiserizing growth, Agricultural and Food Policy, Research and Development/Tech Change/Emerging Technologies,

The Effect of Increased Energy Prices on Agriculture: A Differential Supply Approach

The increase in energy prices between 2004 and 2007 has several potential consequences for aggregate agriculture in the U.S. We estimate the derived input demand elasticities for energy as well as capital, labor, and materials using the differential supply formulation. Given that the derived input demand for energy is inelastic, it is more price-responsive than the other inputs. The results also indicate that the U.S. aggregate agricultural supply function is responsive to energy prices.differential input demand, concavity constrained, energy, Agribusiness, Agricultural Finance, Demand and Price Analysis, Financial Economics, Industrial Organization, Labor and Human Capital, Land Economics/Use, Marketing, Production Economics, Productivity Analysis, Research Methods/ Statistical Methods, C30, Q11, Q42,