A Two-Step Auction in the Presence of Negative Values: An Application to “Farm-Raised†Pre-Cooked Roast Beef

Uniform auctions are commonly used to elicit willingness to pay for new or novel products, product attributes, or non-market goods. However, most auctions or other contingent-valuation techniques do not allow for negative values, despite the fact that many consumers hold negative values for these products or product attributes. We conducted a WTP auction for a new product along with a within-sample WTA second auction allowing for negative responses. We find that failing to allow for negative values significantly inflates willingness to pay estimates and estimates of expected market share. This paper provides a method of incorporating negative values into auctions and willingness to pay elicitation.Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,

THE POTENTIAL VIABILITY OF BIOMASS ETHANOL AS A RENEWABLE FUEL SOURCE: A DISCUSSION

Much attention has been paid to alternative fuel sources of late. Ethanol has been a politically popular alternative fuel additive and has recently been pushed to the forefront as a leading replacement to MTBE as an oxygenate. This paper examines the potential markets for ethanol, including biomass ethanol, and discusses the strengths and weaknesses of different oxygenate products. We find that the market for ethanol is tenuous and dependent on government support at this time. Biomass ethanol is more expensive to produce, but does have the advantage of being able to be produced near petroleum refineries, thus reducing transport costs, compared to other sources of ethanol.Resource /Energy Economics and Policy,

Using Portfolio Theory to Enhance Wheat Yield Stability in Low-Income Nations: An Application in the Yaqui Valley of Northwestern Mexico

This study applies portfolio theory to wheat varietal selection decisions in order to find risk-minimizing outcomes while holding historical yields constant. Potential correlation across wheat cultivar yields increases the complexity of cultivar selection decisions, with gains in one attribute (yield potential) often associated with losses in another (yield stability). Using location-specific empirical data, portfolio theory can provide producers in low-income countries a tool for developing a recommended portfolio of varieties given a desired risk-aversion level. Based on data from Mexico’s Yaqui Valley, results suggest that sowing a portfolio of wheat varieties could have lowered yield variance by 22% to 33% in Northwest Mexico.optimal variety selection, portfolio analysis, wheat, Crop Production/Industries,

Modeling the Effects of Cap and Trade and a Carbon Offset Policy on Crop Allocations and Farm Income

A static, producer profit maximization framework is used to capture county level land use choice on the basis of profitability, greenhouse gas (GHG) emissions to the farm gate as well as soil carbon sequestration as affected by tillage and soil type. Policy scenarios of a 5% GHG cap on agricultural emissions in conjunction with a carbon offset payment system, designed to provide producer payments for net carbon footprint (GHG emissions – soil carbon sequestration) reductions compared to a baseline are evaluated to determine potential changes to land use and or producer income as a result of different policy scenarios. Results suggest that a policy solely targeted at emissions can be counterproductive in the sense that acreage reductions of more input-intensive crops also lead to soil carbon sequestration reductions. Producer income effects are largely negative unless carbon prices reach nearly $100 per ton.Cap and Trade, Carbon Sequestration, GHG Emissions, Agriculture, Agricultural and Food Policy, Environmental Economics and Policy, Q50, Q58, Q54,

The Impact of the CIMMYT Wheat Breeding Program on Wheat Yields in Mexico's Yaqui Valley, 1990-2002: Implications for the Future of Public Wheat Breeding

CIMMYT has invested a large and significant amount of public expenditures in wheat breeding research each year for several decades. Estimates of the impact of the wheat breeding program on wheat yield increases provides information to scientists, administrators, and policy makers regarding the efficacy and the rate of return to these investments, providing important information for future funding decisions. Using CIMMYT test plot data from the Yaqui Valley in Mexico from 1990-2002, regression results indicate that the release of modern CIMMYT varieties has contributed approximately 53.77 kg/ha to yield annually. The growing conditions of the experiment fields located in the Yaqui Valley approximate 40% of the developing world's wheat growing conditions. A rough estimate of the gains attributed to CIMMYT's wheat breeding program on a global scale is 304 million (2002) USD annually during the period 1990-2002. CIMMYT's total wheat breeding cost in 2002 was approximately 6 million dollars, making the benefit cost ratio approximately 50 to 1.Crop Production/Industries,

The impact of income on nutrition: A case study of Northern Mozambique

In 2017, Mozambique ranked as one of the least developed countries in the world by measures of health, education, and income. With a minimal annual income, purchasing adequate food to meet recommended levels of nutrients for a healthy diet is difficult, leaving 40% of the country undernourished. This study analyzed what foods are available during the dry months (hungry season) of May through October in the Nampula province of Mozambique to determine if it is possible to meet recommended levels of nutrients from purchasing and growing food. Three different levels of income were used to determine what percentage of the country could purchase the recommended levels of nutrients: per capita income, government minimum wage, and the minimum wage at a private firm. Based on these income groups, 36% of the country would not be able to meet their needs from only buying food from the market at any time of the year. Those who grow their own food made meeting their nutrient needs more feasible, as they did not spend as much of their income (8% to 17%) on food. Different models were constructed to analyze the effect of the supplementation of specific vitamins and minerals that are continuously difficult to obtain. The most significant supplementation was of calcium, reducing the theoretical percentage of annual income spent on food from 325% to 65%. Based on these results, non-governmental organizations (NGO) or the Mozambican government should focus on a wide-scale supplementation program focusing on calcium to ensure proper nutrition

The Relationship between Oil, Exchange Rates, and Commodity Prices

Exchange rates have long been thought to have an important impact on the export and import of goods and services, and, thus, exchange rates are expected to influence the price of those products that are traded. At the same time, energy impacts commodity production in some very important ways. The use of chemical and petroleum derived inputs has increased in agriculture over time; the prices of these critical inputs, then, would be expected to alter supply, and, therefore, the prices of commodities using these inputs. Also, agricultural commodities have been increasingly used to produce energy, thereby leading to an expectation of a linkage between energy and commodity markets. In this paper, we examine the price relationship through time of the primary agricultural commodities, exchange rates, and oil prices. Using overlapping time periods, we examine the cointegration relationship between prices to determine changes in the strength of the linkage between markets through time. In general, we find that commodity prices are linked to oil for corn, cotton, and soybeans, but not for wheat, and that exchange rates do play a role in the linkage of prices over time.cointegration, commodity prices, crude oil, exchange rates, Agribusiness, Consumer/Household Economics, International Relations/Trade, Marketing, Production Economics, Resource /Energy Economics and Policy, C32, L71, Q11, Q40,

How A Cap-and-Trade Policy of Green House Gases Could Alter the Face of Agriculture in the South: A Spatial and Production Level Analysis.

With the Waxman-Markey Bill passing the House and the Obama administration’s push to reduce carbon emissions, the likelihood of the implementation of some form of a carbon policy is increasing. This study estimates the greenhouse gas (GHG) emissions of the six largest crops produced in Arkansas using 63 different production practices as documented by University of Arkansas Cooperative Extension Service. From these GHG estimates a baseline state “carbon footprint” was estimated and a hypothetical cap-and-trade carbon reduction of 5, 10, and 20% was levied on Arkansas agriculture. Results show that while a modest reduction in GHG emissions (5%) would only affect crop allocations amongst certain crops while marginally reducing state net returns, a 20% reduction would cause major cropping pattern shifts with some traditional row crops nearly disappearing.Cap-and-Trade, carbon, sustainability, Agricultural and Food Policy, Environmental Economics and Policy, Q28, Q52, Q54, Q56,

The Impact of Reducing Greenhouse Gas Emissions in Crop Agriculture: A Spatial- and Production-Level Analysis

With the Waxman-Markey Bill passing the House and the administration’s push to reduce carbon emissions, the likelihood of the implementation of some form of a carbon emissions policy is increasing. This study estimates the greenhouse gas (GHG) emissions of the six largest row crops produced in Arkansas using 57 different production practices predominantly used and documented by the University of Arkansas Cooperative Extension Service. From these GHG emission estimates, a baseline state “carbon footprint†was estimated and a hypothetical GHG emissions reduction of 5, 10, and 20 percent was levied on Arkansas agriculture using a cap-and-trade method. Using current production technology and traditional land use choices, results show that the trading of carbon-emitting permits to reduce statewide GHG emissions by 5 percent from the baseline would enhance GHG emissions efficiency measured as net crop farm income generated per unit of carbon emissions created. The 5 percent reduction in GHG emissions does cause marginal reductions in acres farmed and has marginal income ramifications. Beyond the 5 percent reduction target, gains in GHG emissions efficiency decline but remain positive in most counties through the 10 percent GHG reduction target. However, with a 10 percent GHG reduction, acreage and income reductions more than double compared to the 5 percent level. When GHG emissions are reduced by 20 percent from the baseline, the result is a major cropping pattern shift coupled with significant reductions in traditional row crop acreage, income, and GHG emissions efficiency.greenhouse gas emissions, carbon equivalents, sustainability, cap and trade, Environmental Economics and Policy, Resource /Energy Economics and Policy,

Consistency of Consumer Valuation Under Different Information Sets: An Experimental Auction with Sweet Potatoes

We used a controlled, uniform 5th-price auction to elicit values for sweet potatoes—both when location is known and unknown, and before and after tasting and providing health information. Significant differences were found between pre- and post-consumption valuations and also found that there were significant effects for location of origin and health information. Interestingly, we also find that location of origin not only affects the level of bids, but also the marginal differences in bids between different potatoes. Overall, however, these results suggest little consistency in bid values across information sets, suggesting that attempting to elicit values of attributes in isolation may lead to erroneous results.Consumer/Household Economics, Demand and Price Analysis,