Changes In Crop Prices Research Articles

On the Use of SMAP Soil Moisture for Forecasting NDVI Over CONUS Cropland Regions

AbstractVegetation health forecasting (NDVI as a proxy) informs decision‐makers about the end of season crop yield productivity but is not well‐documented. This study tests improvements in vegetation health forecasting by developing a data‐driven Dynamic Agricultural Productivity Indicator (DAPI), which simultaneously incorporates satellite‐based root zone soil moisture (RZSM) and satellite‐based NDVI data. RZSM is estimated via data assimilation of satellite based SMAP SM dataset. We employ the proposed DAPI forecast across four cropland types in the CONUS, including corn, cotton, soybeans, and wheat. Results demonstrate superior performance of the DAPI forecasts compared to climatology‐based NDVI forecasts, with the largest improvements in water‐limited regions. DAPI shows particularly good performance during hydrologic disturbances such as floods and droughts. To this end, the DAPI approach is useful in estimating future vegetation health for identifying potential food‐insecure areas, predicting crop price changes, and projecting expected commodities market trends.

Impacts of degraded pollination ecosystem services on global food security and nutrition

Nutrient resource loss in human food due to an ecological shock in terms of the depletion of insect pollination services may become a global concern. Inspired by the international trade theory, we use a bioeconomic model to estimate the impact of crop price changes on nutrient consumption as crop supply and demand vary under different scenarios of pollinators decline. Our findings show that the average global crop price will increase by about 187% if pollinators go extinct at a global scale and worldwide nutrient consumption from crops may decrease in all scenarios studied, exacerbating food insecurity where food shortage already exists. We argue that the consequences of pollinators decline on human well-being is not only a matter of the crop production quantity in exporting countries but also the global demand of nutrients contained in pollinator-dependent crops as their supply decline.

Analysis of social welfare impact of crop pest and disease damages due to climate change: a case study of dried red peppers

Climate change can affect agricultural production both directly and indirectly. The direct impact is through climate change itself while the indirect impact is through the outbreak of pests and diseases (P&D) affected by climate change. We measured the difference in social welfare change of dried red peppers in monetary values between these two effects based on constructed three models. In the P&D damage model, the effects of climatic factors on P&D damages were analyzed. In the yield model, the direct and indirect effects of climatic factors on the dried red pepper yields were analyzed. Lastly, the effect of rising temperatures on the social welfare of dried red peppers was measured in monetary values using the equilibrium displacement model (EDM). As a key result, although these rising temperatures increase the yields and social welfare, there are differences in social welfare change between with and without P&D damages, and the difference increases over time. This implies that global climate change can affect agricultural production around the world, which can affect food security around the world beyond changes in crop prices and social welfare. So rigorous pest control and damage predictions are needed.

Reevaluating the use of volatility factor in crop insurance premium rating

AbstractThis article reevaluates the use of volatility factors in federal crop insurance rate setting. The analysis focuses on price risk for corn and soybeans over the period 1990–2021. The sensitivity of insurance premiums to changes in volatility is comparable to the sensitivity resulting from changes in crop prices. Risk Management Agency's (RMA) volatility factor is generally supported to be an unbiased and efficient estimator of the realized volatility, although this support is found to be marginal in the case of soybeans. The out‐of‐sample forecasting analysis indicates that RMA's current approach can be modified to better reflect price risk over the insurance period.

Increased nitrogen use efficiency in crop production can provide economic and environmental benefits

Potential economic and environmental benefits of increasing nitrogen-use efficiency (NUE) are widely recognized but scarcely quantified. This study quantifies the effects of increased NUE on 1) the national agricultural economy using a simulation model of US agriculture and 2) regional water quality effects using a biogeochemical model for the Arkansas-White-Red river basin. National economic effects are reported for NUE improvement scenarios of 10%, 20%, 50%, and 100%, whereas regional water quality effects are estimated for a 20% NUE improvement scenario in the Arkansas-White-Red river basin. Simulating a 20% increase in NUE in row crops is shown to reduce N requirements by 1.4 million tonnes y−1 and increase farmer net profits by 1.6% ($743 million) per year by 2026 over the baseline simulation for the same period. For each 10% increase in NUE, annual farm revenues for commodity crops increased over the baseline by approximately $350 million per year by 2026. Changes in crop prices and land-use relative to the baseline were less than 2%. This suggests a net benefit even though fertilizer cost savings can result in increased cultivation of land, i.e., ‘Jevon's paradox’. Results from the biogeochemical model of the Arkansas-White-Red river basin suggest that a 20% increase in NUE corresponds to a 5.72% reduction in nitrate loadings to freshwaters, with higher reductions in agricultural watersheds. The value of these reductions was estimated as $43 ha−1, for a total of $15.3 to 136.7 million yr−1 in avoided water treatment costs. After estimating the social value of increased NUE, we conclude with a discussion of potential strategies to increase efficiency and the research needed to achieve this goal. These include perennialization of the agricultural landscape, genetic crop improvement, targeted fertilizer application, and manipulation of the plant-root microbiome.

Property Rights, Land Misallocation, and Agricultural Efficiency in China

AbstractThis article examines the impact of a property rights reform in rural China that allowed farmers to lease out their land. We find the reform led to increases in land rental activity in rural households. Our results indicate that the formalization of leasing rights resulted in a redistribution of land toward more-productive farmers. Consequently, output and aggregate productivity increased by 8$\%$ and 10$\%$, respectively. We also find that the reform increased the responsiveness of land allocation across crops to changes in crop prices.

Smallholders, Market Failures, and Agricultural Production: Evidence from India

Market completeness has important implications for household behavior. I firmly reject complete markets for smallholders but am unable to do so for non-smallholders. This leads to important differences in production behavior: smallholders reallocate labor across activities less in response to intra-seasonal crop price changes than do non-smallholders. A counterfactual exercise indicates smallholders could increase revenue by almost nine percent if they were to reallocate labor similarly to non-smallholders. The overall pattern of results is consistent with small-holders lacking sufficient wage employment opportunities. Since non-smallholders have to hire in for agricultural production, this lack of opportunities does not affect their decisions.

Progress and barriers in understanding and preventing indirect land‐use change

AbstractClimate change mitigation pathways have highlighted both the critical role of land‐use emissions, and the potential use of biofuels as a low‐emission energy carrier. This has led to concerns about the emission mitigation potential of biofuels, particularly related to indirect land‐use change (ILUC). This arises when the production of biofuels displaces the production of land‐based products elsewhere, either directly or via changes in crop prices, leading to indirect greenhouse gas (GHG) emissions. We review a large body of literature that has emerged on ILUC assessment and quantification, highlighting the methodologies employed, the resultant emission factors, modeled dynamics driving ILUC, and the uncertainty therein. Our review reveals that improvements in ILUC assessment methods have failed to reduce uncertainty and increase confidence in ILUC factors, instead making marginal improvements to economic models. Thus, while assessments have highlighted measures that could reduce ILUC, it is impossible to control or determine the actual ILUC resulting from biofuel production. This makes ILUC a poor guiding principle for land‐use and climate policy, and does not help with the determination of the GHG performance of biofuels. Instead climate and land‐use policy should focus on more integrated protection of terrestrial resources, covering all land‐use‐related products. © 2020 The Authors. Biofuels, Bioproducts, and Biorefining published by Society of Chemical Industry and John Wiley & Sons, Ltd

Is it a good time to develop commercial photovoltaic systems on farmland? An American-style option with crop price risk

Photovoltaic systems require large swaths of land that are currently being used for other purposes, such as farming. One option for developing large photovoltaic systems is converting farms that are currently economically unviable into commercial photovoltaic systems. However, this may not always be an economically rational decision as crop prices have the potential to increase over time. Fluctuations in farm income due to changes in crop prices can alter the optimal choice of whether to continue farming or to convert farmland into commercial photovoltaic systems. This study attempts to resolve this issue by proposing a real options framework to value farm production when crop prices are uncertain. By integrating uncertainty into the decision-making process, the value of keeping unprofitable farms operating prior to developing the area into a commercial photovoltaic system is assessed. This helps decision makers understand the extent to which potential income from developing a photovoltaic system should be greater than potential income from farming when deciding on investing in a photovoltaic system. A case study is conducted to examine this framework and to calculate the net present value of a farm in South Korea. The results indicate that although the money lost from continuing to farm is substantial, farmers should defer conversion to a commercial photovoltaic system until a sufficient drop in crop prices occurs. When applying this strategy, the farmer can gain an additional 100% of expected revenue simply by deferring the development decision until having better information on the market prices of crops.

Smallholders, Market Failures, and Agricultural Production: Evidence from India

Market completeness has important implications for household behavior. I firmly reject complete markets for smallholders but am unable to do so for non-smallholders. This leads to important differences in production behavior: smallholders reallocate labor across activities less in response to intra-seasonal crop price changes than do non-smallholders. A counterfactual exercise indicates smallholders could increase revenue by almost nine percent if they were to reallocate labor similarly to non-smallholders. The overall pattern of results is consistent with small-holders lacking sufficient wage employment opportunities. Since non-smallholders have to hire in for agricultural production, this lack of opportunities does not affect their decisions.

Effects of Ethanol Plant Proximity and Crop Prices on Land‐Use Change in the United States

AbstractExpansion of ethanol production in the United States has raised concerns regarding its land‐use change effects. However, little is known about the extent to which observed land use change in the United States can be attributed to ethanol plant proximity or is caused by changes in crop prices that may be partly induced by expansion in ethanol production. This study aims to examine the determinants of changes in corn acreage and aggregate crop acreage by simultaneously identifying the effects of establishment of ethanol plants serving as terminal markets for corn and the effects of changes in crop prices in the United States between 2003 and 2014. Our results show that corn acreage and total acreage are fairly inelastic with respect to both changes in ethanol capacity in the vicinity, as well as changes in crop prices. Our estimates of acreage elasticity with respect to corn ethanol production are smaller than those obtained by previous studies that disregard the price effect on crop acreage. We find that, ceteris paribus, the increase in ethanol capacity alone led to a modest 3% increase in corn acreage and less than a 1% increase in total crop acreage by 2012 when compared to 2008. The effect of corn price and aggregate crop price on acreage change from 2008 to 2012 was more than twice larger than that of effective ethanol production capacity over this period; but this price effect was largely reversed by the downturn in crop prices after 2012. This study shows that land‐use change is not a static phenomenon and that it is important to examine how it evolves in response to various factors that may change over time.

Scenarios of future land use change around United States’ protected areas

Land use change around protected areas can diminish their conservation value, making it important to predict future land use changes nearby. Our goal was to evaluate future land use changes around protected areas of different types in the United States under different socioeconomic scenarios. We analyzed econometric-based projections of future land use change to capture changes around 1260 protected areas, including National Forests, Parks, Refuges, and Wilderness Areas, from 2001 to 2051, under different land use policies and crop prices. Our results showed that urban expansion around protected areas will continue to be a major threat, and expand by 67% under business-as-usual conditions. Concomitantly, a substantial number of protected areas will lose natural vegetation in their surroundings. National land-use policies or changes in crop prices are not likely to affect the overall pattern of land use, but can have effects in certain regions. Discouraging urbanization through zoning, for example, can reduce future urban pressures around National Forests and Refuges in the East, while the implementation of an afforestation policy can increase the amount of natural vegetation around some Refuges throughout the U.S. On the other hand, increases in crop prices can increase crop/pasture cover around some protected areas, and limit the potential recovery of natural vegetation. Overall, our results highlight that future land-use change around protected areas is likely to be substantial but variable among regions and protected area types. Safeguarding the conservation value of protected areas may require serious consideration of threats and opportunities arising from future land use.

The Tangled Web of Agricultural Insurance: Evaluating the Impacts of Government Policy

This paper examines how changes in major elements of the U.S. federal crop insurance program affect the structure of the agricultural insurance industry.We model interactions between farmers, insurance agents and insurance companies. Marginal changes in government policy (premium subsidy rate, A&O subsidy rate, and loading factor) affect the insurance premium rate, agent compensation rates, agent effort levels, and market demand for crop insurance. Farmers prefer a marginal increase in the premium subsidy rate, but the insurance companies’ most preferred policy is a marginal increase in the A&O subsidy rate. We also evaluate the consequences of changes in crop prices.

The Tangled Web of Agricultural Insurance: Evaluating the Impacts of Government Policy

This paper examines the effects of changes in major elements of the U.S. federal crop insurance program on the structure of the agricultural insurance industry. We model the interactions between farmers, insurance agents and insurance companies. Two symmetric equilibria are determined: one with competitive insurance companies and one where insurance companies form a collusive monopsony. We evaluate how marginal changes in government policy (changes in the premium subsidy rate, A&O subsidy rate, and loading factor) affect the insurance premium rate, agent compensation rates, agent effort levels, and market demand for crop insurance. Conditional on no prior government policy, farmers prefer a marginal increase in the premium subsidy rate. This change has the lowest associated net social cost, but is the policy least preferred by insurance companies. The insurance companies’ most preferred policy is a marginal increase in the A&O subsidy rate, which has the highest associated net social cost, the highest cost to the government, and does not benefit farmers. We also evaluate the consequences of changes in crop prices. If the market for insurance agent services is competitive, then a change in crop prices does not change agent compensation rates, but otherwise the agent compensation rate will change. This result suggests an empirical test regarding insurance company market performance.

Impact of crop rotations on optimal selection of conservation practices for water quality protection

This research integrates modern multiobjective optimization tools, water quality modeling capability, and data on costs of implementing conservation practices to develop a tradeoff frontier of cost-efficient nonpoint source pollution reduction solutions, which can be used to derive the watershed-level pollution abatement cost curve. Farmers9 decisions, both on the intensive and the extensive margin, are likely to affect the shape of the tradeoff frontier as well as the mix of conservation practices selected for achievement of given nutrient reduction goals. In this paper, we wish to explore the consequences of changes in the cropping practices on the intensive margin and changes in the amount of cropland on the extensive margin on the baseline water quality as well as the shape of the tradeoff frontier and the mix of conservation practices. An empirical application focuses on a typical Midwestern agricultural watershed, Squaw Creek watershed in central Iowa. Using detailed crop production budgets, we follow Secchi and Babcock (2007) to demonstrate an alternative land-use scenario, which could arise from recently observed changes in crop prices and production costs. We find that the change in cropping practices effects direct changes in the shape of the tradeoff frontier and the mix and location of conservation practices selected to achieve particular nutrient loading reductions. In particular, we find that a potential shift to more corn (<i>Zea mays</i> L.)-intensive crop rotations and an increase in the amount of cropland in the watershed may lead to increased loadings of both nitrate and phosphorus and that additional conservation investments are required to maintain water quality gains achieved under the baseline (historic) cropping practices. In terms of conservation practices selected, the optimal placement of terraces appears robust to the changes in crop rotations and amount of cropland in the alternative land-use scenario.

Modelling Common Agricultural Policy–Water Framework Directive interactions and cost-effectiveness of measures to reduce nitrogen pollution

Selecting cost-effective measures to regulate agricultural water pollution to conform to the Water Framework Directive presents multiple challenges. A bio-economic modelling approach is presented that has been used to explore the water quality and economic effects of the 2003 Common Agricultural Policy Reform and to assess the cost-effectiveness of input quotas and emission standards against nitrate leaching, in a representative case study catchment in Scotland. The approach combines a biophysical model (NDICEA) with a mathematical programming model (FSSIM-MP). The results indicate only small changes due to the Reform, with the main changes in farmers' decision making and the associated economic and water quality indicators depending on crop price changes, and suggest the use of target fertilisation in relation to crop and soil requirements, as opposed to measures targeting farm total or average nitrogen use.

Crop Production and Economics in Northwest Kansas as Related to Irrigation Capacity

Crop production and economics of corn, grain sorghum, soybean, and sunflower under irrigated and dryland conditions were simulated using 34 years (1972-2005) of weather data in Northwest Kansas. Irrigation system capacities ranged from 2.5 to 8.5 mm/day. The simulated long-term annual average net irrigation requirements for corn, grain sorghum, soybean, and sunflower were 375, 272, 367, and 311 mm, respectively. Assuming a 95% application efficiency (Ea), the average long-term crop yield is approximately 12.9, 8.2, 4.4, and 3.2 Mg/ha for corn, grain sorghum, soybean, and sunflower, respectively. Although corn is currently the predominant irrigated crop in western Kansas, projections for the year 2006 indicate soybean is a more profitable alternative. Net irrigation requirements for soybean are only about 2% lower than corn, so a shift to soybean will not result in significant water conservation. If the price of corn increased just 10% relative to stable prices for the other crops, it would become the most profitable irrigated crop. This indicates that net return projections are very volatile, subject to changes in crop prices and input costs.

Development of a GIS-based decision support system for assessing land use status

The objectives of this study are to assess land suitability and to predict the spatial and temporal changes in land use types (LUTs) by using GIS-based land use management decision support system. A GIS database with data on climate, topography, soil characteristic, irrigation condition, fertilizer application, and special socioeconomic activities has been developed and used for the evaluation of land productivity for different crops by integrating with a crop growth model—the erosion productivity impact calculator (EPIC). International food policy simulation model (IFPSIM) is also embedded into GIS for the predictions of how crop demands and crop market prices will change under alternative policy scenarios. An inference engine (IE) including land use choice model is developed to illustrate land use choice behavior based on logit models, which allows to analyze how diversified factors ranging from climate changes, crop price changes to land management changes can effect the distribution of agricultural land use. A test for integrated simulation is taken in each 0.1o by 0.1o grid cell to predict the change of agricultural land use types at global level. Global land use changes are simulated from 1992 to 2050.

MIOS: a decision tool for determination of optimal irrigated cropping pattern of a multicrop system under water scarcity constraints

AbstractThis paper develops a dynamic programming optimisation model that considers the competition of crops in a season, both for irrigation water and cultivated area. Decision variables are the cultivated area and water allocated to each crop. The objective function of the model is based on crop‐water production functions, production costs and crop prices. The model is solved using the CSUDP generalised dynamic programming package for conditions existing in northern Tunisia where a large fraction of the irrigation water is stored in a reservoir mainly during the winter period. The model gives the optimal distribution of area and water to each crop and the profit. Sensitivity analysis of the optimal solution to costs, area and changes in crop prices is carried out. The analysis results show that changes in prices and costs have a large impact on profits. Results indicate that the model can be a valuable tool for regional agencies or irrigation authorities in determining seasonal cropping pattern for a region at the beginning of the season. Copyright © 2002 John Wiley &amp; Sons, Ltd.