Abstracts of Selected Papers

Agricultural and Resource Economics Review, Oct 2004

NAREA Annual Meetings, Halifax, Nova Scotia, June 20-23, 2004

SESSION: Production I. Moderator: Dan Lass (University of Massachusetts).

"Heterogeneity, Empirical Distributions, and Aggregation." David R. Just and Barrett E. Kirwan (Cornell University).

Using a unique panel of individual farms constructed from the U.S. Census of Agriculture, we explore the effects of aggregation in yield estimates employing a translog production function with farm fixed effects. Findings show that unobserved factors comprise 56% of corn yield variation. Aggregating farm-level data to the county level reveals significant and disturbing differences in coefficient estimates, including sign reversals. The biases appear to be consistent with recent theoretical work. This evidence supports the proposition that vital information is lost upon aggregation, and farm-level data are required if one wishes to test farm-level theory.

"Managerial Intensity and the Adoption of Conservation Tillage." Jorge Fernandez-Cornejo (Economic Research Service/USDA) and Alexandra Gregory (University of Missouri).

This paper analyzes the interaction of off-farm work and adoption of an agricultural technology with a low managerial intensity (managerial-saving) and estimates the impact of adopting this technology on farm household income from on-farm and off-farm sources using a nationwide farm survey of corn farmers for 2001. The technology selected is conservation tillage. Our main research question is whether or not adoption has a significant effect on the off-farm component of household income as well as on total household income. Results are compared with those of the adoption of HT soybeans, a technology with a very low managerial intensity.

"Blowing in the Wind: Impact of Spatial Drift on Producers' Profits." Cheryl Brown (West Virginia University) and Lori Lynch (University of Maryland).

A theoretical model of agricultural production with spatial externalities examines issues of cooperation and liability on neighboring farms. The case of genetically modified (GM) com pollen drift is investigated using simulations to determine the relative importance of prices, costs, yield differentials, property rights, and policy options. Given low yield losses from pests and a low price premium for non-GM corn or high yield losses and high price premium, we find the loss to the non-GMplanting farm due to the impacts of pollen drift is greater than the loss to the GM-planting farm if it is restricted from planting GM corn.

"Factors Affecting the Decision to Exit Dairy Farming: A Two-Stage Regression Analysis." Lisa A. Bragg and Timothy J. Dalton (University of Maine).

A two-stage regression model is used to analyze the factors contributing to the decision to exit from dairy farming in Maine. Demographic, opportunity cost, and efficiency variables are used to explain the decision. Results from the second-stage logit model indicate that producer age, off-farm income, production specialization, and predicted short-run profitability significantly influence producer exit. Managerial and financial factors, identified in the model's first stage, affect profitability and hence, indirectly, industry exit. Findings from this research confirm the need for a broader focus of dairy support programs beyond the scope of price supports to reduce farm exit.

SESSION: Consumer Behavior and GMOs. Moderator: Richard Gray (University of Saskatchewan).

"Consumer Acceptance of Genetically Modified Foods in Korea: Factor and Cluster Analysis." Benjamin Onyango, Ramu Govindasamy, William Hallman, Ho-Min Jang, and Venkata Puduri (Food Policy Institute, Rutgers University).

This study applies multivariate statistical and econometric tools to estimate the importance of the various factors driving Korean consumer acceptance of GM food products. The Korean public is categorized into distinct consumer segments, and the relationships between product attributes and their socioeconomic and expressed value judgments are examined. Koreans, while optimistic about benefits of GM, are also concerned about safety for humans and the environment-a major obstacle to its widespread acceptance. Results highlight the importance of credibility of private and public institutions responsible for implementation of necessary regulatory controls and safety certification of GM foods.

"Willingness to Pay for GM Foods with Bundled Health and Environmental Attributes." Mario F. Teisl (University of Maine), Brian Roe (Ohio State University), and Mike Vayda (University of Maine).

The debate surrounding the labeling of genetically modified foods (GMFs) has largely been framed as a yes/no issue. That is, the debate and research has almost exclusively approached the issue as one where the consumer's sole desire for information is whether GMFs are, in fact, genetically modified. However, this approach is limited because biotechnology can have multidimensional effects on food quality. Here, we explore the benefits of labeling GMFs when the labeling directly links changes in product quality to the genetic modification. Further, we examine how these benefits differ across a nationally representative sample of U.S. consumers.