This paper develops a simultaneous-equations panel data econometric model to obtain point estimates of market power and pricing conduct in a representative product-differentiated, oligopolistic food market. The importance of this class of markets is recognized given its prevalence in the food and fiber system, especially for final consumer food products. The $1.3 billion domestic spaghetti sauce industry is featured. Although the results indicate firms exert limited market power, a portion of this power is derived from tacit price collusion. A higher degree of price collusion was found among brands within a market segment than between segments.

The partial equilibrium model links the infection risk from imported products to a premium, which compensates the importing country for the risk incurred by allowing imports from infected countries. The model is applied to the Porcine Reproductive and Respiratory Syndrome (PRRS) and Mexican live swine imports. The premium is sensitive to the expected loss from a PRRS outbreak and to the magnitude of the risk. As the risk or severity of PRRS rises, so does the level of the barrier. If swine imports are categorized and appropriate restrictions applied, an acceptable level of disease protection can be achieved while improving national welfare.

We evaluate agricultural bank management performance, focusing on the impacts of interstate banking laws on productivity change. The generalized Malmquist productivity index decomposes productivity change into technological change, technical efficiency change, and change in scale economies. While managerial productivity rose from 1982 to 1991, states that adopted the most liberal interstate banking laws experienced the greatest improvement in productivity. Large agricultural banks were more efficient in states that had more liberalized interstate banking laws while small agricultural banks fared better in states with more restrictive laws.

“Commodity promotion” consists of many activities, each designed to contribute to a consumer's product knowledge or influence tastes. However, both knowledge and tastes are unobservable, or latent, variables influencing demand. This paper specifies a dynamic structural model of fresh fruit demand that treats promotion and other socioeconomic variables as “causal” variables influencing these latent variables. Estimating this state-space model using a Kalman filter approach provides estimates of both the system parameters and a latent variable series. The results show that these latent effects contribute positively to apple and other fruit consumption, while reducing banana consumption.

Many agricultural producers face cash price distributions that are effectively truncated at a lower limit through participation in farm programs designed to support farm prices and incomes. For example, the 1996 Federal Agricultural Improvement Act (FAIR) makes many producers eligible to obtain marketing loans which truncate their cash price realization at the loan rate, while allowing market prices to freely equilibrate supply and demand. This paper studies the effects of truncated cash price distributions on the optimal use of futures and options. The results show that truncation in the cash price distribution facing an individual producer provides incentives to trade options as well as futures. We derive optimal futures and options trading rules under a range of different truncation scenarios. Empirical results highlight the impacts of basis risk and yield risk on the optimal futures and options portfolio.

A generalized Heckman model of purchase decisions incorporating perceived consumer quality attributes, ease of purchase, and familiarity with marketing outlets as factors influencing pecan purchases is estimated. Marketing efforts that encourage consumers to expand expenditures on nut products increase both the probability of pecan purchases and the amount purchased. Consumers who use all types of nuts in a wider variety of foods tend to purchase pecans more frequently. A diverse set of marketing outlets provides consumers with convenient sources for purchasing pecans and has a significant influence on the probability of pecan purchases but not the amount of pecans purchased.

Expected prices for storable commodities often lie below spot prices plus interest and marginal storage charges. Recently this gap has been explained as the value of a call option held by a representative storer whenever a positive probability exists that stocks could dwindle to zero. However, the probability of an aggregate stock-out is effectively zero in most markets most of the time. This paper presents an alternative model that explains the gap as an equilibrium between fundamentals traders and noise traders. Applications of the model suggest that rational agents make up 84 percent of the U.S. copper market, and more than 95 percent of the corn and wheat markets.

The impact pre-harvest hedging and crop insurance strategies have on expected revenue and associated risk as well as how producers' risk attitudes affect optimal strategies was analyzed for Kansas wheat farms. No insurance, Catastrophic (CAT), Actual Production History (APH), and Crop Revenue Coverage (CRC) were considered. Average revenue was similar across alternatives, but APH and CRC resulted in the least income variability. Risk reduction effects of hedging were small and the advantage of CRC over APH decreases as hedging increases. This historical study provides useful information; however, if future market conditions differ significantly from the past, optimal strategies may change.

Understanding the impacts of the Uruguay Round (UR) Agreement on southern commodities serves as a starting point to assess the potential impacts of the next global trade negotiations in terms of hope (expanding export markets) and fear (new competition). Key issues examined include whether or not the UR Agreement resulted in new markets or new competition for key southern commodities—cotton, poultry, tobacco, and rice. For new markets, export data were analyzed to determine if exports increased since the passage of the UR Agreement in 1994. Also, countries that are leading world importers of these southern commodities were identified and data analyzed to determine whether the U.S. is exporting to these top markets. Alternatively, to assess whether the UR Agreement resulted in new competition for southern commodities, countries that are leading world exporters were identified and data analyzed to determine whether the U.S. is among them. Data analyses was supplemented with interviews of southern commodities experts who assess impacts of the GATT-UR and identify issues for the next round of global trade negotiations.

Computers change rapidly, yet the last survey on computer use in agriculture was in 1991. We surveyed Great Plains producers in 1995 and used logit analysis to characterize adopters and non-adopters. About 37% of these producers use computers which is consistent with the general population. We confirmed previous surveys emphasizing the importance of education, age/experience, and other farm characteristics on adoption. However, we also found that education and experience may no longer be a significant influence. Future research and education could focus on when and where computers are most needed, and therefore when adoption is most appropriate.

The success of the Boll Weevil Eradication (BWE) Program is believed to be one factor underlying the recent increase in cotton acreage in the Southeast. We find weak evidence that the initial, eradication phase of the BWE program decreases cotton acreage, and strong evidence that the second, maintenance phase of the program increases acreage. The full benefits associated with a BWE program may not become apparent until acreage adjustments occur, four to five years after program initiation. Our results indicate that for a representative sample county neglecting acreage effects may lead to underestimation of BWE program net benefits by 9 percent-12 percent.

Eight input combinations of commercial fertilizer, insecticides, and herbicides on a corn-soybean crop rotation in the Brazos River Bottom of Texas are evaluated. Input combinations which do not fully utilize all three inputs are consistently ranked higher by all criteria as the preferred input strategy for the corn-soybean rotation system. These results, which indicate limited input crop rotations that fall somewhere between the extremes of conventional agricultural production and organic agriculture, deserve further attention as a possible production alternative.

An adaptive regression model is employed for estimating pre- and post-boll weevil eradication cotton-acreage response. Results indicate cotton acreage becoming more inelastic to own- and cross-price changes. As a result of this shift in acreage response and yield increases from eradication, net producer benefits on average are $88.73 per acre.

This paper employed a variety of sources of data and a number of methods to describe rural lending markets. Over the sample period, 1992 through 1998, there was a pronounced trend towards affiliation of banks, both urban and rural, with holding companies, although over this period there was little change in the concentration of banking offices in rural areas. Using data from the 1993 National Survey of Small Business Finances, the study found some evidence that rural small businesses were less likely to apply for a loan than urban small firms although those rural firms that did apply were more likely to have their application accepted.

Resurgent cotton production compels better acreage forecasts for planning seed, chemical, and other input requirements. Structural models describe leading acreage response indicators, and forecasts are compared to time-series models. Cotton price, loan rate, deficiency payments, lagged corn acreage, the PIK program, and previous cotton yield significantly influence cotton acreage response.

Current methods of formulating animal rations lead to excess nutrient excretion which can potentially lead to excess manure nutrients and an increase in economic costs. These methods do not recognize the impact of diminishing returns. The objective is to simultaneously optimize feed ration composition and replacement. The results, when compared against results from a survey of feed companies, indicate that using a profit maximization rather than live weight growth maximization criterion targets nutrients to an animal's actual needs and, hence, fewer nutrients are excreted and higher returns for producers are obtained.