Welfare And Nutritional Implications From Changes In Government Expenditures For U.S. Agricultural Export Promotions

Trade promotion programs that subsidize exports of agricultural products continue to be employed in the United States (e.g., the Market Access Program) and elsewhere. In addition, many countries, including the United States, Canada, Australia and European member states have domestic promotion programs for agricultural products that are funded by both industry and government. Trade promotion programs have been heavily criticized as inefficient government expenditures while recently Kinnucan and Cai (2010) argue that they also can lead to reductions in domestic consumer welfare. Here we extend this line of research to examine the market and welfare effects of the changes in government export promotion expenditures. An equilibrium displacement model that considers domestic and foreign markets, and two types of food products- foods and energy-dense foods-has been employed in this study; Alston et al. (2009) adopted a similar approach that included healthy and unhealthy foods. Several scenarios are investigated within our framework to quantify the impacts of hypothetical changes in government and industry promotion expenditures allocated for different purposes on consumers in domestic food markets: i) increased expenditures on trade promotion programs, ii) reduced expenditures on trade promotion programs, and iii) reduced expenditures on trade promotion programs coupled with increased expenditures on domestic promotional efforts. Furthermore, due to the fact that much of the expenditures for export promotions are applied to specialty crops, we also examine how changes in government monies spent on promotional efforts in foreign markets have impacted domestic consumption of i horticultural and non-horticultural products respectively and domestic dietary-intake as a whole. This is done to shed new light on the potential health consequences (in terms of caloric and nutrient intake) of government support applied to agricultural markets both overseas and in the United States, and further build on a growing literature in this area (e.g., Rickard, Okrent and Alston 2012). Our simulations employ promotional elasticities estimated here and demand elasticities published by previous studies, in combination with information from government and academic sources to parameterize the model. Simulation results show that even modest changes in trade promotion expenditures coupled with a corresponding increase in domestic promotion efforts have the capacity to influence domestic market conditions, nutrient consumption (most notably for dietary fiber and selected micronutrients), and caloric intake. This research is expected to contribute towards a better understanding of likely economic and nutritional effects induced by changes in public funding for export promotions on domestic markets across two food categories, horticultural and nonhorticultural products. We extend previous work in this arena by examining how trade promotions would have influenced domestic food consumption, and moreover consider how alternative promotion strategies might have affected markets and consumption patterns across two food categories in the United States. Overall, our research develops a bridge between economic evaluations of agricultural export promotion programs and relevant policy analyses that look at the impacts of consumer food choices and consequent health effects. i

Essays on the Economics of Policy and Regulation in Agricultural and Food Markets

This dissertation analyzes the empirical implications of selected policies and regulations applied to agricultural and food markets in the United States. It focuses on the policies at the regional level where the role of government influences the dynamics of agricultural markets and consumer behavior. In the first essay, in Chapter 2, I examine how regulation affects household diversity-seeking behavior for alcohol. Here I hypothesize that different state-level regulatory regimes in alcohol retail sales impact shopping convenience. I use a consumer panel dataset to examine household purchases of alcohol between 2004 and 2016. By focusing on a subset of households that moved between regulatory regimes in the pooled cross-sectional dataset, I am able to treat the time-invariant regulatory rules as a natural experiment to identify the causal impact of grocery store sales of alcohol on consumer choice diversification. The key finding suggests consumers further diversify their product selections in states that allow alcohol sales in grocery stores which reduces consumer's shopping costs and increases convenience. In the second essay, in Chapter 3, I focus on the effects of crop insurance on the supply of specialty crops in the United States. I use a nationally-representative farm-level dataset to evaluate the impacts of crop insurance on the acreage and crop value of fruits and vegetables. The empirical strategy addresses the potential endogeneity between the provision of crop insurance and the economic significance of the crops. In assessing how the availability of crop insurance affects supply, I use a number of variables to instrument insurance availability for fruits and vegetables. Instruments include i) the number of policies sold and premium subsidies for field crops within the same county, ii) the number of policies sold and premium subsidies for fruits and vegetable crops in the neighboring counties, which characterize various degrees of insurance demand. The two-stage findings suggest that crop insurance has increased both the harvested acreage and production value of fruits and vegetables. In the final essay, presented in Chapter 4, I worked with a team to evaluate several risk management strategies for cherry growers facing crop losses due to spring frost and excessive summer rain. Here we developed a framework to model stochastic prices, yields, and revenue for sweet cherries in New York and Michigan in a Monte Carlo simulation framework. This research constructed a novel dataset comprised of state-level market information for sweet cherries, station-level weather data, and the monitored performance of high tunnel at horticultural trials from research farms. Our results show that when there are significant price premiums for early season fruit, a high tunnel system could be the optimal strategy as it has the capacity to generate higher net profits compared to a variety of alternative strategies using insurance products

Labor Issues and Employment Practices on New York Apple Farms

E.B. 2015-02The primary purpose of this study is to gather information from commercial apple farm employers to benchmark employment practices and document labor issues related to the 2013 growing season. Further, the study identifies management responses to labor challenges that apple growers currently face. In January 2014, 580 surveys were mailed to New York apple growers. A total of 95 usable surveys were returned and summarized. Nineteen percent of survey participants had more than 250 acres bearing acres. Slightly less than half of those surveyed (48%) employed seasonal H-2A workers and 24% reported using a crew leader. Specific job requirements for seasonal workers include speaking English, avoiding bruising, lifting a minimum amount of weight, and climbing and descending a ladder with a picking bag. Survey participants also reported requiring experience for specific tasks such as pruning, thinning, sprayer operation, tractor and driving. Apple growers reported two types of wage payment methods; hourly rates and piece rates. Hourly rates average between $10.80 and$11.40 per hour for fresh apples. The average piece rate for fresh apples ranged from $18.30 per bin to$28.30 per bin depending upon the difficulty of picking. Thirty six percent of those surveyed reported they were short of workers in 2013 resulting in both late-harvested fruit and un-harvested apples. Estimated crop losses due to labor shortages for survey participants in 2013 totaled over $7 million. When asked how their business has changed as a result of labor pressures, the top three business changes growers implemented as a result of current labor pressures were the adoption of labor efficient planting systems, reducing production acreage and greater reliance on the H-2A Program

Food Waste: The Role of Date Labels, Package Size, and Product Category

WP 2015-07 May 2015JEL Classification Codes: Q13; Q18The presence of food waste, and ways to reduce food waste, has generated significant debate among industry stakeholders, policy makers, and consumer groups in the United States and elsewhere. Many have argued that the variety of date labels used by food manufacturers leads to confusion about food quality and food safety among consumers. Here we develop a laboratory experiment with treatments that expose subjects to different date labels (Sell by, Best by, Use by, and Fresh by) for six food products; we include both small and large-sized ready-to-eat cereal, salad greens, and yogurt. Our results show that, holding other observed factors constant, that date labels do influence subjects’ value of food waste. We find that subjects will waste food across all date labels, but that the value of waste is greatest in the “Use by” treatment, the date label suggestive of food safety, and lowest for the “Sell by” treatment. Two-way ANOVA tests provide evidence that subjects respond differentially to date labels by product. Pair-wise comparison indicate that the “Sell by” treatment generates a waste value that is different than other date labels. We see subjects have different values of waste depending on date label and product. The value of waste for cereal is more responsive to “Fresh by”; for salad, the value of waste is more responsive to all date labels except for “Fresh by”; for yogurt, subjects adjusted their value of waste the most to the “Sell by” treatment. Date labels influence food waste despite the limited information provided by the labels

Economic and Nutritional Implications from Changes in U.S. Agricultural Promotion Efforts

Promotion programs that subsidize advertising for exported agricultural products continue to be used despite much criticism that they are an inefficient use of taxpayer money. At the same time, others have advocated for an increase in funds to support domestic advertising for fruits and vegetables. We investigate the economic and nutritional effects from changes in both export and domestic promotion expenditures for horticultural and nonhorticultural commodities. Simulation results show that even modest decreases in trade promotion expenditures coupled with a corresponding increase in domestic promotion efforts have the capacity to influence domestic market conditions, caloric intake, and nutrient consumption

Economic and Nutritional Implications from Changes in the U.S Agricultural Promotion Efforts

WP 2012-16 December 2012JEL Classification Codes: Q13; Q17; Q18Promotion programs that subsidize advertising for exported agricultural products continue to be employed in the United States and elsewhere despite much criticism that they are an inefficient use of taxpayer money. At the same time others have advocated for an increase in funds to support domestic advertising for fruits and vegetables; they see a role for public investment in such an effort given consumer trust in the government regarding messages about food choice and health. Because much of the U.S. trade promotion expenditures are applied to fruit and vegetable crops, we investigate the economic and health effects from changes in both export and domestic promotion expenditures for horticultural and non-horticultural commodities. Simulation results show that even modest decreases in trade promotion expenditures coupled with a corresponding increase in domestic promotion efforts have the capacity to influence domestic market conditions, caloric intake, and nutrient consumption

Crop Switching and Farm Sustainability: Empirical Evidence from Multinomial Treatment-Effect Modeling

Crop switching has been examined in the literature addressing the production effects of irrigation or as viable strategy in the adaptation to climate change, which is closely related to agricultural resilience. Attention to the identification of the direct linkage between crop switching and farm profitability, and, thus, farm sustainability, however, has been quite limited. This study attempts to provide a significant complement to the extant research by identifying the treatment effect of crop switching on the net returns of crop growers in Taiwan. A multinomial endogenous treatment effects model with the latent-factor structure is used to take self-selection into account. The result suggests that farm households’ economic resilience is closely related to their choice of crops, which constitute the major source of farm income. Specifically, among the six cash crop categories, fruit crops and other crops are found to be most remunerating and, thus, suggests possible improvements in farm households’ economic resilience through crop switching. A further analysis of the distributional implications of crop switching through quantile regression confirms the persistent and stronger effects of crop choice on net returns when moving from the bottom to the top quartiles along the net-return distribution. This result suggests a close association of crop choices with farm income inequality among the crop farm households in Taiwan, which in turn implies possible distributional effects of crop switching

TRADE LIBERALIZATION IN THE PRESENCE OF DOMESTIC REGULATIONS: IMPACTS OF THE PROPOSED EU-U.S. FREE TRADE AGREEMENT ON WINE MARKETS

The United States and the European Union (EU) have embarked on ambitious negotiations to create a comprehensive free trade agreement known as the Transatlantic Trade and Investment Partnership (TTIP). Agricultural markets receive relatively high levels of support and protection in both regions, and therefore are sensitive to the discussions surrounding the TTIP. Wine is the highest valued agricultural product traded between the United States and the EU, and any reduction in trade barriers resulting from the TTIP has the capacity to generate additional trade in this sector. We carefully develop parameters to characterize the effects of tariffs and domestic regulations that affect production and consumption of wine in these two regions. Results show that reductions in tariffs would have relatively small effects in these wine markets, whereas reductions in EU domestic policies that affect wine grape production would have much larger trade and welfare implications

Crop Switching and Farm Sustainability: Empirical Evidence from Multinomial Treatment-Effect Modeling

Crop switching has been examined in the literature addressing the production effects of irrigation or as viable strategy in the adaptation to climate change, which is closely related to agricultural resilience. Attention to the identification of the direct linkage between crop switching and farm profitability, and, thus, farm sustainability, however, has been quite limited. This study attempts to provide a significant complement to the extant research by identifying the treatment effect of crop switching on the net returns of crop growers in Taiwan. A multinomial endogenous treatment effects model with the latent-factor structure is used to take self-selection into account. The result suggests that farm households’ economic resilience is closely related to their choice of crops, which constitute the major source of farm income. Specifically, among the six cash crop categories, fruit crops and other crops are found to be most remunerating and, thus, suggests possible improvements in farm households’ economic resilience through crop switching. A further analysis of the distributional implications of crop switching through quantile regression confirms the persistent and stronger effects of crop choice on net returns when moving from the bottom to the top quartiles along the net-return distribution. This result suggests a close association of crop choices with farm income inequality among the crop farm households in Taiwan, which in turn implies possible distributional effects of crop switching