SABIIA - Sistema Aberto e Integrado de Informação em Agricultura (Sabiia)

Carriquiry, Miguel A.; Babcock, Bruce A.; Hart, Chad E..

The effect of sampling error in estimation of farmers' mean yields for crop insurance purposes is explored using farm-level corn yield data in Iowa from 1990 to 2000 and Monte Carlo simulations. We find that sampling error combined with nonlinearities in the insurance indemnity function will result in empirically estimated crop insurance rates that exceed actuarially fair values by between 2 and 16 percent, depending on the coverage level and the number of observations used to estimate mean yields. Accounting for the adverse selection caused by sampling error results in crop insurance rates that will exceed fair values by between 42 and 127 percent. We propose a new estimator for mean yields based on a common decomposition of farm yields into systemic and...

Managing Quality under Heterogeneous Consumer Demand and Product Quality

Palavras-chave: Actual production history (APH); Crop insurance; Mean yields estimation; Sampling error; Farm Management.

Ano: 2005

URL: http://purl.umn.edu/18600

Carriquiry, Miguel A.; Babcock, Bruce A..

Based on accepted advances in the marketing, economics, consumer behavior, and satisfaction literatures, we develop a micro-foundations model of a firm that needs to manage the quality of a product that is inherently heterogeneous in the presence of varying customer tastes or expectations for quality. Our model blends elements of the returns to quality, customer lifetime value, and service profit chain approaches to marketing. The model is then used to explain several empirical results pertaining to the marketing literature by explicitly articulating the trade-offs between customer satisfaction and costs (including opportunity costs) of quality. In this environment firms will find it optimal to allow some customers to go unsatisfied. We show that the...

OPTIMAL QUALITY ASSURANCE SYSTEMS FOR AGRICULTURAL OUTPUTS

Palavras-chave: Consumer satisfaction; Heterogeneous customers; Quality expectations; Quality heterogeneity; Quality management; Repeated purchases; Demand and Price Analysis.

Ano: 2005

URL: http://purl.umn.edu/18637

Carriquiry, Miguel A.; Babcock, Bruce A.; Carbone, Roxana.

New quality assurance systems (QASs) are being put in place to facilitate the flow of information about agricultural and food products. But what constitutes a proper mix of public and private efforts in setting up QASs is an unsettled question. A better understanding of private sector incentives for setting up such systems will help clarify what role the public sector might have in establishing standards. We contribute to this understanding by modeling the optimal degree of "stringency" or assurance in a processor's quality control system over procurement of agricultural output when there exists uncertainty about quality. Our model addresses two questions: (1) Should a buyer of agricultural outputs implement a QAS as a way to gain and provide information...

Costs and Benefits to Taxpayers, Consumers, and Producers from U.S. Ethanol Policies

Palavras-chave: Food products; Price premium; Product differentiation; Quality assurance; Production Economics.

Ano: 2003

URL: http://purl.umn.edu/18450

Babcock, Bruce A.; Barr, Kanlaya J.; Carriquiry, Miguel A..

The U.S. ethanol industry is lobbying hard for an extension of existing ethanol import tariffs and blenders tax credits before they expire at the end of 2010. The purpose of this study is to examine the likely consequences on the U.S. ethanol industry, corn producers, taxpayers, fuel blenders, and fuel consumers if current policy is not extended. Impacts of different ethanol policies in both 2011 and 2014 were estimated. Estimates were obtained by developing a new stochastic model that calculates market-clearing prices for U.S. ethanol, Brazilian ethanol, and U.S. corn. The model is stochastic because market-clearing prices are calculated for 5,000 random draws of corn yields and wholesale gasoline prices. Key assumptions in this study are that the...

Tipo: Report

Palavras-chave: Blenders tax credit; Brazilian ethanol; Ethanol import tariffs; U.S. ethanol policy.; Crop Production/Industries; Demand and Price Analysis; International Relations/Trade; Resource /Energy Economics and Policy.

Ano: 2010

URL: http://purl.umn.edu/92383

Using a Farmer's Beta for Improved Estimation of Expected Yields

Carriquiry, Miguel A.; Babcock, Bruce A.; Hart, Chad E..

Effects of sampling error in estimation of farmers’ mean yields for crop insurance purposes and their implications for actuarial soundness are explored using farm-level corn yield data in Iowa. Results indicate that sampling error, combined with nonlinearities in the indemnity function, leads to empirically estimated insurance rates that exceed actuarially fair values. The difference depends on the coverage level, the number of observations used, and the participation strategy followed by farmers. A new estimator for mean yields based on the decomposition of farm yields into systemic and idiosyncratic components is proposed, which could lead to improved rate-making and reduce adverse selection.

Tipo: Journal Article

Palavras-chave: Actual production history (APH); Adverse selection; Crop insurance; Mean yields estimation; Sampling error; Crop Production/Industries; Farm Management.

Ano: 2008

URL: http://purl.umn.edu/36707

Biofuels: Potential Production Capacity, Effects on Grain and Livestock Sectors, and Implications for Food Prices and Consumers

Hayes, Dermot J.; Babcock, Bruce A.; Fabiosa, Jacinto F.; Tokgoz, Simla; Elobeid, Amani E.; Yu, Tun-Hsiang (Edward); Dong, Fengxia; Hart, Chad E.; Chavez, Eddie C.; Pan, Suwen; Carriquiry, Miguel A.; Dumortier, Jerome.

We examined four evolution paths of the biofuel sector using a partial equilibrium world agricultural sector model in CARD that includes the new RFS in the 2007 EISA, a two-way relationship between fossil energy and biofuel markets, and a new trend toward corn oil extraction in ethanol plants. At one extreme, one scenario eliminates all support to the biofuel sector when the energy price is low, while the other extreme assumes no distribution bottleneck in ethanol demand growth when the energy price is high. The third scenario considers a pure market force driving ethanol demand growth because of the high energy price, while the last is a policy-induced shock with removal of the biofuel tax credit when the energy price is high. Standard results hold where...

Tipo: Journal Article

Palavras-chave: Biofuel; EISA; Ethanol; Tax credit; World agricultural sector model; Agribusiness; Consumer/Household Economics; Crop Production/Industries; Demand and Price Analysis; International Relations/Trade; Livestock Production/Industries; Political Economy; Production Economics; Resource /Energy Economics and Policy; Q13; Q18; Q38.

Ano: 2009

URL: http://purl.umn.edu/53093

CAN SPOT AND CONTRACT MARKETS CO-EXIST IN AGRICULTURE?

Carriquiry, Miguel A.; Babcock, Bruce A..

New production technologies, consumers who are more discriminating, and the need for improved coordination are among the forces driving the move from spot markets to contracts. Some worry that this tendency will result in the disappearance of spot markets, or at least that they will become too thin to be of help for an efficient price discovery process. Other authors point to the reduction in welfare of independent producers resulting from contracting in oligopsonistic industries. While a large body of literature is available tackling the contract versus spot market decision, much less is known about the reasons that lead to procurement in both markets. This paper provides a simple model to study how fundamental economic factors influence the contracting...

Index Insurance, Production Practices, and Probabilistic Climate Forecasts

Palavras-chave: Contract markets; Contracting in agriculture; Specialty grains; Spot markets; Yield risk; Marketing.

Ano: 2004

URL: http://purl.umn.edu/18634

Carriquiry, Miguel A.; Osgood, Daniel E..

The failure of the development of commercially viable traditional crop insurance products and innovations in financial markers has fed a renewed interest in the search for alternatives to help producers in developing countries manage their risk exposure. Salient among these is the proposal of several index insurance schemes against weather events. Among the basic tenets are that the presence of index insurance allows producers to intensify their operations and reduce the risks of default and hence may induce creditors to offer loans at affordable rates. The two factors combined are touted as key to help producers in developing countries escape poverty traps. Improvements in seasonal climate forecasts create challenges for the design and effective...

MODELING THE EFFECTS OF PASTURE EXPANSION ON EMISSIONS FROM LAND-USE CHANGE

Palavras-chave: Climate forecast; Index insurance; Input Decisions; Risk Management; Weather risks; Risk and Uncertainty.

Ano: 2006

URL: http://purl.umn.edu/21463

Dumortier, Jerome; Hayes, Dermot J.; Carriquiry, Miguel A.; Dong, Fengxia; Du, Xiaodong; Elobeid, Amani E.; Fabiosa, Jacinto F.; Mulik, Kranti.

We present a global agricultural greenhouse gas model that assesses emissions from land-use change. In addition to evaluating shifts in and out of crop production, we develop a pasture model to assess extensification and intensification of global livestock production based on herd size and stocking rate. We apply the model to a scenario that introduces a tax on me-thane emissions from cattle in the United States. The resulting expansion of pasture in the rest of the world leads to substantially higher emissions than without the tax. The yearly average emissions from the tax are 260 metric tons of CO2-equivalent.

Greenhouse Gas and Nitrogen Fertilizer Scenarios for U.S. Agriculture and Global Biofuels

Palavras-chave: Land-use change; Greenhouse gas emissions; Pasture expansion; Pasture extensification; Land Economics/Use; Q15; Q17; Q18; Q54.

Ano: 2010

URL: http://purl.umn.edu/95944

Elobeid, Amani E.; Carriquiry, Miguel A.; Fabiosa, Jacinto F.; Mulik, Kranti; Hayes, Dermot J.; Babcock, Bruce A.; Dumortier, Jerome; Rosas, Francisco.

This analysis uses the 2011 FAPRI-CARD (Food and Agricultural Policy Research Institute–Center for Agricultural and Rural Development) baseline to evaluate the impact of four alternative scenarios on U.S. and world agricultural markets, as well as on world fertilizer use and world agricultural greenhouse gas emissions. A key assumption in the 2011 baseline is that ethanol support policies disappear in 2012. The baseline also assumes that existing biofuel mandates remain in place and are binding. Two of the scenarios are adverse supply shocks, the first being a 10% increase in the price of nitrogen fertilizer in the United States, and the second, a reversion of cropland into forestland. The third scenario examines how lower energy prices would impact world...

World Market Impacts of High Biofuel Use in the European Union

Palavras-chave: Afforestation; Energy price; Ethanol tax credit; Fertilizer; Partial equilibrium model; Policy analysis; Agricultural and Food Policy; Demand and Price Analysis; Resource /Energy Economics and Policy.

Ano: 2011

URL: http://purl.umn.edu/107043

Carriquiry, Miguel A.; Dong, Fengxia; Du, Xiaodong; Elobeid, Amani E.; Fabiosa, Jacinto F.; Chavez, Eddie C.; Pan, Suwen.

This study examines the world market impact of an expansion in the biofuel sector in the European Union with particular focus on indirect land-use impacts. In the first scenario, an increase of 1 million tonnes oil equivalent (Mtoe) of wheat ethanol use in the European Union expands world land area used in agricultural commodity production by 366,000 hectares, representing an increase of 0.039% in total area. In the second scenario, an increase of 1 Mtoe of rapeseed oil biodiesel use in the European Union expands world land area by 352,000 hectares, representing an increase of 0.038% in total area. With additional land use somewhat close between the two scenarios, the main difference is the spatial distribution of the sources of additional supply. Because...

Global Biofuel Expansion and the Demand for Brazilian Land: Intensification versus Expansion

Palavras-chave: Biofuels; Land use; Partial equilibrium model; Rapeseed oil biodiesel scenario; Wheat ethanol scenario.; Agricultural and Food Policy; Demand and Price Analysis; Land Economics/Use; Resource /Energy Economics and Policy.

Ano: 2010

URL: http://purl.umn.edu/91923

Elobeid, Amani E.; Carriquiry, Miguel A.; Fabiosa, Jacinto F..

We use a spatially disaggregated model of Brazilian agriculture to assess the implications of global biofuel expansion on Brazilian land usage at the regional level. This Brazilian model is part of the FAPRI agricultural modeling system, a multimarket, multi-commodity international agricultural model, used to quantify the emergence of biofuels and to analyze the impact of biofuel expansion and policies on both Brazilian and world agriculture. We evaluate two scenarios in which we introduce a 25% exogenous increase in the global demand for ethanol and one scenario in which we increase global ethanol demand by 50%. We then analyze the impact of these increases in terms of land-use change and commodity price changes particularly in Brazil. In the first...

A Comparative Analysis of the Development of the United States and European Union Biodiesel Industries

Palavras-chave: Biofuels; Brazil; Land use; Land Economics/Use.

Ano: 2011

URL: http://purl.umn.edu/103798

Carriquiry, Miguel A..

Worldwide production of biodiesel is growing at a rapid pace. Arguably, the European Union (EU) is the global leader in biodiesel production, but the United States has recently expanded its production. The growth of the biodiesel industry in both regions has been fueled by a series of government-provided financial incentives. However, the timing of the growth and incentive provisions, the nature of the main incentives, and the market conditions differ across regions. This article provides a comparative analysis of the EU and U.S. biodiesel industries, highlighting market and policy aspects that are leading to a rapid but distinct growth.

REPUTATIONS, MARKET STRUCTURE, AND THE CHOICE OF QUALITY ASSURANCE SYSTEMS IN THE FOOD INDUSTRY

Palavras-chave: Biodiesel; Biodiesel industry; Biodiesel quality; Biofuels; Energy security; Rapeseed oil; Rapeseed methyl ester; Soybean oil; Soydiesel; Ultra low sulfur diesel; Resource /Energy Economics and Policy.

Ano: 2007

URL: http://purl.umn.edu/9081

Carriquiry, Miguel A.; Babcock, Bruce A..

Participants in a supply chain of agricultural value-added products face significant challenges. Many of the costly distinctive traits are difficult (if not impossible) to observe even after consumption. A complicating factor, addressed here, is that in some circumstances delivered quality can only be imperfectly learned and/or affected stochastically by producers. In order for markets for these goods to arise, firms touting the quality of the product need to be trusted. In response to these challenges, new (and diverse) quality assurance systems (QASs) that facilitate the acquisition and flow of information about agricultural and food products are being put in place. A repeated-purchases model is developed to explore the fundamental economic factors that...

Flex-Fuel Vehicle Adoption and the Dynamics of Ethanol Price: Lessons from Brazil and Implications for the United States

Palavras-chave: Imperfect information; Product quality; Quality assurance; Repeated purchases; Reputations; Supply chain; Value-added agriculture; Food Consumption/Nutrition/Food Safety; Industrial Organization.

Ano: 2004

URL: http://purl.umn.edu/18593

Du, Xiaodong; Carriquiry, Miguel A..

Poster

Implied Objectives of U.S. Biofuel Subsidies

Palavras-chave: Demand and Price Analysis.

Ano: 2011

URL: http://purl.umn.edu/103690

Rubin, Ofir D.; Carriquiry, Miguel A.; Hayes, Dermot J..

Biofuel subsidies in the United States have been justified on the following grounds: energy independence, a reduction in greenhouse gas emissions, improvements in rural development related to biofuel plants, and farm income support. The 2007 energy act emphasizes the first two objectives. In this study, we quantify the costs and benefits that different biofuels provide. We consider the first two objectives separately and show that each can be achieved with a lower social cost than that of the current policy. Then, we show that there is no evidence to disprove that the primary objective of biofuel policy is to support farm income. Current policy favors corn production and the construction of corn-based ethanol plants. We find that favoring corn happens to...

An Exploration of Certain Aspects of CARB’s Approach to Modeling Indirect Land Use from Expanded Biodiesel Production

Palavras-chave: Biofuels; Biofuel subsidies; Energy security; Feedstock; Greenhouse gas emissions; Social preferences; Value-added agriculture; Agricultural Finance; Political Economy; Resource /Energy Economics and Policy.

Ano: 2008

URL: http://purl.umn.edu/6333

Babcock, Bruce A.; Carriquiry, Miguel A..

This report provides insight into four aspects of modeling indirect land use caused by expanded biofuels production. The report was motivated by the National Biodiesel Board’s interest in better understanding how the California Air Resources Board (CARB) estimated an indirect land-use factor for soybean-based biodiesel of 66 gCO2e/MJ, which is more than three times greater than the direct emissions from the fuel. Four aspects of CARB’s modeling approach were examined: (1) why CARB estimates that more U.S. forest than pasture will be converted to cropland; (2) whether CARB’s predicted land-use changes are consistent with observed U.S. land-use changes in the past decade; (3) how CARB could account for double cropping; and (4) whether CARB’s assumption that...

Tipo: Report

Palavras-chave: CET supply function; Double cropping; Idle cropland; Indirect land use.; Environmental Economics and Policy; Land Economics/Use; Resource /Energy Economics and Policy.

Ano: 2010

URL: http://purl.umn.edu/57160

Agricultural Land Elasticities in the United States and Brazil

Barr, Kanlaya J.; Babcock, Bruce A.; Carriquiry, Miguel A.; Nassar, Andre Meloni; Harfuch, Leila.

The elasticity of aggregate supply is one key to understanding the degree to which policy-induced increases in demand for biofuel feedstocks or agricultural CO2 offsets will result in higher prices or expanded supply. In this paper we report land supply elasticities for the United States and Brazil estimated directly from the observed changes in cropland and estimated changes in expected returns. The resulting aggregate implied land-use elasticities with respect to price are quite inelastic in the United States and more elastic in Brazil (0.007-0.029 and 0.382-0.895, respectively). However, with pasture land included in Brazil, implied elasticities become much less inelastic (0.007-0.245).

CAN SPOT AND CONTRACT MARKETS CO-EXIST IN AGRICULTURE?

Palavras-chave: Acreage elasticity; Brazil; Indirect land-use change; Land-use elasticities.; Agricultural and Food Policy; Land Economics/Use; Resource /Energy Economics and Policy.

Ano: 2010

URL: http://purl.umn.edu/58047

Babcock, Bruce A.; Carriquiry, Miguel A..

New production technologies, consumers who are more discriminating, and the need for improved coordination are among the forces driving the move from spot markets to contracts. Some worry that this tendency will result in the disappearance of spot markets, or at least that they will become too thin to be of help for an efficient price discovery process. Other authors point to the reduction in welfare of independent producers resulting from contracting in oligopsonistic industries. While a large body of literature is available tackling the contract versus spot market decision, much less is known about the reasons that lead to procurement in both markets. This paper provides a very simple model to study how fundamental economic factors influence the...

Index Insurance, Probabilistic Climate Forecasts, and Production

Palavras-chave: Contracting in agriculture; Spot markets; Yield risk; Marketing.

Ano: 2002

URL: http://purl.umn.edu/18404

Carriquiry, Miguel A.; Osgood, Daniel E..

Index insurance and probabilistic seasonal forecasts are becoming available in developing countries to help farmers manage climate risks in production. Although these tools are intimately related, work has not been done to formalize the connections between them. We investigate the relationship between the risk management tools through a model of input choice under uncertainty, forecasts, and insurance. While it is possible for forecasts to undermine insurance, we find that when contracts are appropriately designed, there are important synergies between forecasts, insurance, and effective input use. Used together, these tools overcome barriers preventing the use of imperfect information in production decision making.