Competitive Grants and the Funding of Agricultural Research in the United States

Efforts to improve public agricultural research efficiency include calls to increase use of competitive grants. This paper empirically assesses different instruments the USDA uses to fund state-level research. Compared with other instruments, competitive grants focus more on basic research and are concentrated among fewer states. Model results suggest that top-ranked biology and agricultural science programs were strong determinants of states' shares of competitive grants. Other significant factors were agricultural sector size and number of agricultural scientists. USDA-funded state-level research focus did not change significantly because competitive grants comprised only 15% of these funds and other instruments counteracted their influence.     

Was the Australian Meat and Live‐stock Corporation’s advertising efficient?

A theory of the allocation of producer levies earmarked for downstream promotion is developed and applied to quarterly series (1970:2–1988:4) on red-meats advertising by the Australian Meat and Live-stock Corporation. Robust inferences about program efficiency are contained in the coefficients of changes in promotion effort regressed against movements in farm price and quantity. Empirical evidence of program efficiency is inconclusive. While the deeper issue of efficient disbursement of funds remains an open question, there is evidence, at least, of efficient taxation.     

The Wheat War of 1994

Following the signing of the 1989 Canada–United States Free Trade Agreement, sales of Canadian wheat to the United States grew rapidly. This resulted in a series of trade disputes, culminating in an investigation by the U.S. International Trade Commission (USITC) into the impacts of U.S. imports of Canadian wheat on the U.S. wheat farm program. A USITC finding of "material interference" would have led to a recommendation to implement tariffs or quantitative restrictions against Canadian wheat under Section 22 of the U.S. farm program legislation. The U.S. Department of Agriculture (USDA) claimed such material interference, but the U.S. flour millers, pasta makers and grain handlers, along with Canadian grain industry interests, testified that the true effects of imports are in the order of one–tenth of the effects claimed by the USDA. USITC staff analysis led to intermediate estimates of effects. This study explores the impacts of Canada–U.S. wheat trade on U.S. wheat prices and program costs, explains some of the differences in measured effects, and reports the outcome of the dispute.     

Setting Efficient Incentives for Agricultural Research: Lessons from Principal-Agent Theory

A conceptual analysis of important issues in the organization and management of academic research is presented. Principal-agent theory is applied to derive optimal compensation schemes for scientists when they differ in ability, risk aversion, cost of effort, and reservation utility, and to show the optimal trade-off between institutional risk and scientists' abilities. Implications for an efficient organization of research are derived, including how scientists' incentives should be structured to elicit optimal research efforts and direction, whether research direction should be centralized or decentralized, and whether the organization of research should be through external competitive grants or program and institutional funding.     

Earmarking of pollution charges and the sub-optimality of the Pigouvian tax

One approach to internalising a negative externality of economic activity is to impose a Pigouvian tax equal to the marginal cost of the externality. However, this approach overlooks the possibility that the tax revenue can be earmarked to correct the externality directly, i.e. financing the environmental protection projects. It is found that a pure Pigouvian tax is usually not an optimal policy. This issue is examined in both partial and general equilibrium, static and dynamic settings. Certain conditions for justifying a pure Pigouvian tax or a fully earmarked tax scheme are developed.     

The components of the bid‐ask spread: Evidence from the corn futures market

This article examines whether USDA announcements and commodity index fund rolling activity have an impact on liquidity costs, measured by the bid‐ask spread. Using Huang and Stoll's (1997) model of liquidity costs, we estimate whether changes to liquidity costs are driven by its adverse selection, inventory, or order processing components. Commodity index fund roll activity reduces the asymmetric information cost component of liquidity cost due to an increased proportion of noninformation‐based trading, but the inventory cost component increases as (mostly long only) commodity index funds sell their nearby positions and buy the first deferred contract—raising liquidity providers’ risk of building a position. The sum of these two effects is that liquidity costs remain low during index fund roll periods, averaging one “tick” (0.25 cents). On USDA report release days, we find that informed traders raise the asymmetric information component of liquidity costs in the first hour after release, but the inventory cost component is reduced due to the increase in volume. Similar to index fund roll activity, liquidity costs on USDA report release days remain low, averaging one “tick”. Our findings that liquidity costs are minimally changed during USDA report releases and commodity index fund roll periods is consistent with other recent research on liquidity costs, but we show that what drives liquidity costs differs substantially depending on the circumstances surrounding daily trading.     

Surprise and dispersion: informational impact of USDA announcements

We examine the role of information asymmetry on changes in bid‐ask spreads during major United States Department of Agriculture (USDA) announcements. Our analyses, using corn, wheat, and soybean futures, indicate that information asymmetry is significantly higher on USDA announcement days compared to nonannouncement days. We further observe that the increased information asymmetry prior to news announcements is mainly driven by the divergence in private information possessed by market participants. However, once the USDA news is released, not only the dispersion in investors’ private information but also the surprises in news announcements contribute to increased information asymmetry and widening of bid‐ask spreads.     

Absentee landowners and conservation programs: Mind the gap

In this research report, we examine determinants of absentee landowner participation in USDA set-aside and cost share programs. Previous research on these landowners suggests they have a high interest in conservation yet minimal involvement in government conservation programs on their land (e.g. [Petrzelka et al., 2009] and [Roggenbuck and Kushman, 1980]). Our aim is to better understand this gap in hopes of attracting absentee landowners as participants to USDA conservation programs.     

Taxing Snack Foods: Manipulating Diet Quality or Financing Information Programs?

This paper investigates consumers' likely response to a proposed tax on snack foods that addresses public health issues generated by rising U.S. obesity rates. We estimate demands for particular snack foods and show they are price inelastic after accounting for quality variation. We calculate impacts of a range of ad valorem taxes on the demand for salty snack food. The impacts on dietary quality are small, and negligible at the lower tax rates. If taxes were earmarked for funding information programs, as several proponents suggest, taxes would generate a revenue stream the public health community could use for nutrition education.     

The End of the Federal Tobacco Program: Economic Impacts of the Deregulation of U.S. Tobacco Production

In 2004, Congress ended the sixty-six-year-old federal tobacco program, effectively deregulating production and prices. With deregulation came a buyout package, with cigarette manufacturers agreeing to pay more than $3 billion in present value to quota owners and farmers. While the dollar values of compensation payments are known, the effects of the historic legislation on tobacco markets are uncertain. We examine these effects and their welfare consequences. We also consider the appropriateness of the buyout payments under alternative views of economic damages due to the quota system's demise.     

A new professionalism for agricultural research for development

There have been repeated calls for a ‘new professionalism’ for carrying out agricultural research for development since the 1990s. At the centre of these calls is a recognition that for agricultural research to support the capacities required to face global patterns of change and their implications on rural livelihoods, requires a more systemic, learning focused and reflexive practice that bridges epistemologies and methodologies. In this paper, we share learning from efforts to mainstream such an approach through a large, multi-partner CGIAR research program working in aquatic agricultural systems. We reflect on four years of implementing research in development (RinD), the program’s approach to the new professionalism. We highlight successes and challenges and describe the key characteristics that define the approach. We conclude it is possible to build a program on a broader approach that embraces multidisciplinarity and engages with stakeholders in social-ecological systems. Our experience also suggests caution is required to ensure there is the time, space and appropriate evaluation methodologies in place to appreciate outcomes different to those to which conventional agricultural research aspires.     

Characteristics and hedonic pricing of differentiated beef demands

We estimate a CBS system model of U.S. derived demand for meat. We use this model (1) to examine relationships between three quality categories of beef and three other meats and (2) to simulate how taste shifts have affected demands for meats over time. We extend previous studies by disaggregating wholesale beef production into three quality categories: (1) USDA Choice grade or higher, (2) USDA Select or lower, and (3) cow and bull beef. Innovative features of our empirical model include a breakout of ‘table cuts’ into Choice and Select and the use of a hedonic characterization of the two breakouts to value “Choice‐ness” and “beef‐ness.” Our model demonstrates important shifts in separate demands for Choice and Select beef. We show that, separately, the demand for Choice‐grade beef declined in the 1980s and 1990s and the demand for Select beef increased, a departure from the relatively stable demand characterizations of more aggregated measures of combined Choice and Select beef.     

Getting Something from Nothing: An Investigation of Beef Demand Expansion and Substitution

A relative increase in demand for one type of beef can have one of two potentially countervailing effects: it can cause substitution of one type for another and/or it might expand overall demand. The results of a random parameters logit analysis indicate that regardless of whether USDA Choice or upgraded steak demand increases, the expansion effect dominates the substitution effect. We also show that, for our sample of consumers, the introduction of a new "natural" steak causes a greater reduction in market share for USDA Choice beef than ungraded beef. Despite this result, however, overall steak demand increases.     

Introducing property tax in China as an alternative financing source

Since the beginning of the 21st century, China has been involved in active discussion on the introduction of the property tax. Yet the current land management system is unsustainable mainly because land supply is limited. This is because the system of lump sum grants produces distorted interests among suppliers and consumers of land. The property tax can be both a cure for these problems and create an alternative financial source of revenue for local governments. We suggest a theoretical model that proves the superiority of a property tax over lump sum grants.     

Do consumers value hydroponics? Implications for organic certification

Recent controversy about the inclusion of hydroponics in the U.S. Department of Agriculture (USDA) organic program has highlighted uncertainty about marketing hydroponic crops. In a controversial vote in November 2017, the National Organic Standards Board chose not to recommend that hydroponic farms be banned from organic certification. It is still unclear, however, how consumers perceive and value hydroponic production. This study used a nonhypothetical choice experiment to estimate consumers’ willingness to pay for hydroponic and traditional lettuce both with and without organic certification. No hydroponic premium was found, but exposing consumers to different kinds of information about hydroponics significantly affected consumers’ preference formation. Findings generally suggest that the National Organic Program should consider ways to ensure the stability of organic premiums as perceptions about hydroponics evolve.     

On the Cost of Chasing Research Dollars

Most researchers face the chore of seeking finding. Competitive grants are increasingly the norm for funding, even in large national research organizations. This paper presents the results of an analysis of the direct costs of grant-seeking behavior in the context of Canada s national forest research organization. Unit costs of obtaining additional research dollars from a particular competition are derived. The average cost is found to be 22 cents per research dollar received. However, this result is heavily contingent on assumptions about the opportunity costs of researchers' time.     

Are preserved farms actively engaged in agriculture and conservation?

This study addresses the question of whether farms enrolled in land preservation programs are actively engaged in agricultural or conservation activities. Data are drawn from an original survey administered to preserved farm owners in the states of New Jersey, Maryland, and Delaware in 2011. “Actively engaged” is defined as investment in conservation projects, buildings, equipment, or irrigation since the land was preserved. Affirmative answers to the survey's investment questions range from a low of 19% for irrigation to a high of 69% for equipment. Special attention was paid to differences between lifestyle farmers and small and large commercial farmers, which are classified using the USDA typology developed in 2000. Regression analysis estimates differences in investment behavior across these groups as well as farm tenure categories, controlling for farm size, program/state location, and demographic variables. Only owners who employ tenants or managers exclusively on their land were found to invest significantly less than the largest professional farmers, and they did so across all four types of investment.This study's findings support preservation goals articulated by legislators and program administrators, because (1) agricultural and land stewardship investments appear to be widespread on preserved farms, partly due to administrators’ preference for larger parcels, (2) there is no evidence that “hobby farmers” are disproportionately attracted to farmland preservation programs – in fact the opposite seems to be true – while those that exist in our sample behave similarly to the largest commercial farmers, (3) although tenant farming is associated in the sample with lower rates of investment, it is less common on preserved farms than on all farms in the three study states. The matter of land tenure, highlighted in this as in other studies, has not yet become a primary focus of either farm-behavioral research or state agricultural policy.     

Factors associated with landowner involvement in forest conservation programs in the U.S.: Implications for policy design and outreach

One-third of the forestland in the U.S. is owned by 10.4 million family forest owners. Their collective decisions have a great impact on the sustainability of forest landscape across the country. Public policies and programs for encouraging landowners to properly manage their land include cost-share, forest certification, and conservation easements. However, to date, less than 6% of the family forest owners have participated in a cost-share program, less than 1% have certified their land, and less than 2% have an easement. By analyzing data from USDA Forest Service's National Woodland Owner Survey, we examined the characteristics of family forest owners who had participated in these programs and identified strategies to capitalize on these landowner characteristics to improve current programs and attract a wider range of participants. We found that family forest owners with larger land holdings were more likely to participate in all three types of programs. Obtaining forest management information or advice was important for program participation; however, the effects differed depending on the types of programs and the sources of information. Income was not significant in predicting participation in cost-share programs, implying family forest owners from lower-income strata were not more likely to use cost-share program. The results also suggest the importance of targeting the right audience when promoting forest certification programs, namely those who are participants of cost-share programs, own forestland for reasons other than farming or ranching, and plan to harvest sawlogs or pulpwood in the future. Age was not significant in any of the empirical models. This result is particularly intriguing in the context of conservation easement, considering recent discussions about the high cost of dying unprepared and the potential for promoting conservation easement as part of estate planning among older family forest owners. Finally, few variables were significant in the model predicting landowner decision about donating or selling an easement, suggesting the easement decision is very different from cost-share and forest certification decisions and further efforts are needed to understand the dynamics of this increasingly popular conservation policy tool. In summary, this study provides a better understanding of the relationship between program participation and the demographics, attitudes and behaviors of family forest owners. This understanding contributes to the development of outreach strategies for improving landowner interest in forest conservation programs.     

Tourism development strategy or just brown signage? Comparing road administration policies and designation procedures for official tourism routes in two Scandinavian countries

This comparative study maps and explores planning and designation of official tourism, routes in two countries with quite similar planning traditions, responding to a deficiency in research, on tourism route planning and development. Based on personal semi-structured interviews with, public road planners and managers in Norway and Sweden, the paper illuminates establishment and, management of official tourism routes, with an emphasis on overall strategies, funding, and, stakeholder involvement. Results show that public road administration route planning procedures in, the two countries are quite different. In Norway, a top–down principle is basically employed, concerning initiatives and designation of routes. In Sweden, the principle is one of muddling through, giving street-level planners more opportunities for individual influence on route planning. Funding for, road stretches included in the Norwegian national route programme is earmarked, whereas Swedish, routes are financed from ordinary appropriations to the regional road administrations. In Norway, regular follow-up studies such as road user surveys are conducted. In Sweden, a dearth of, documentation of tourist interests and route assessments seemingly makes route development, susceptible in relation to regional road administrations’ economic priorities.     

Ecological integrity as an economic variable: An application to forested landscapes in the southern United States

Ecological integrity is important to fully describe the development of an economy. We calculated an aggregate index that quantifies the closeness of a forested region to a natural state. This naturalness index was based on the diversity of native tree species and sizes for ecological subregions in a seral condition. The index used the spatial–temporal array of sample plots from the Forest Inventory and Analysis (FIA) database of the USDA Forest Service. In the 70 survey units of the southern US between 1961 and 2005 the naturalness of forests generally improved with per capita personal income and population. The increase with income was consistent with the hypothesis of an environmental Kuznets curve for forested landscapes.