Economics Working Group

Progress Report

Eric Belasco, Suzette Galinato, Jingze Jiang, Tom Marsh, and Srinivasa Ponnaluru

March 13, 2012

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Economic Model of Optimal Mulch Use◦ Jingze Jiang, Tom Marsh, Eric Belasco

Enterprise Budgets◦ Suzette Galinato

Production and Risk◦ Eric Belasco

Overview

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Tasks accomplished: (Jingze Jiang; Phd Project)◦ Developed a dynamic economic model of mulch use

Measure over time profits=revenue-costs subject to economic and noneconomic processes

◦ Gathered data and information

◦ Constructed empirical model to measure user cost balance the decision of mulch use vs cost of disposal

◦ Simulated different scenarios/sensitivity analysis

◦ Submitted abstract to the 2012 AAEA meetings

Optimal Mulch Use

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Experiments Information/Relationships

Production Inputs & Disposal

Profit=Revenue-Costs

Optimal Mulch Use

Yield & Quality

Markets& Demand

EnvironmentalConcerns

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Tasks to be accomplished:◦ Continue to gather data and information

◦ Link physical relationships to economic variables

◦ Derive decision rules for optimal mulch use by grower, which provides a baseline for comparisons

◦ Simulate tradeoffs for plastic and biodegradable mulches/sensitivity analysis

◦ Compare private and social benefits for use of plastic mulches and biodegradable mulches

◦ Investigate government intervention to balance individual and social optimum

Optimal Mulch Use

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Tasks accomplished:◦ Adilet Maimekov, MS student project

◦ Examined price determinants for different commodity thermoplastics

◦ Found pricing predominately determined by price lagged 1 period either gas or oil prices (or both)

◦ Provides a better understanding of expected prices and variation in pricing of plastic films for economic model

Price Analysis

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Tasks accomplished:Completed working drafts of budgets for: tomato,

lettuce and strawberry

Submitted budgets of field-grown tomato and lettuce to WSU Extension for publication as WSU Fact Sheets

Required multiple contacts and meetings with growers

Enterprise Budgets

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Tasks to be accomplished: Submit remaining crop budgets to WSU Extension

Publications and finalize them after peer review

Post fact sheets on SCRI Project and IMPACT websites

Post plastic mulch requirement calculator on SCRI Project and IMPACT websites

Enterprise Budgets

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Tasks accomplished: (Suzette)

Costs built into enterprise budgets:◦ Material ◦ Installation ◦ Removal ◦ Disposal

Tasks to be accomplished:◦ Investment decisions◦ Finish and post stand alone plastic mulch calculator

Plastic Mulch Calculator

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Tasks accomplished:

◦ Initial evaluation of early-to-season premium

◦ Evaluation of crop insurance options for fruit/vegetable

◦ Theoretical development of relationship between high tunnels and crop insurance in risk management

◦ AAEA paper and presentation, summer 2011 meetings

Production and Risk

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Tasks to be accomplished:

◦ Evaluate risk management strategies with HTs Assess the interaction between HTs and

crop insurance programs Use team results to create hypothetical

scenarios Place team results within context of a

longer weather time series (how frequent do these types of events occur?)

Incorporate results from ongoing Certified Organic Production survey

Production and Risk

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Tasks to be accomplished:

◦ Incorporate outcomes from year 2 Yield Marketable yield Quality

◦ More in-depth analysis regarding early-to-market premium using farmer’s market data

Production and Risk

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Tasks to be accomplished:

◦ Two presentations upcoming with Carol and Annette Women in Agricultural Educators National

Conference (March in Memphis) HTs as a risk management tool

National Small Farms Conference (Sept. in Memphis) A case study in uses (and abuses) of HTs

◦ Assess the insurability of HTs? (weather-based)

Production and Risk

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Belasco, E., S. Ponnaluru, S. Galinato, and T.L. Marsh. “An Assessment of the Interaction between High Tunnels and Crop Insurance for Specialty Crop Producers,” American Agricultural Economics Association, Pittsburg, 2011.

Jiang, J., T. L. Marsh, and E. Belasco. 2012. “Optimal Pollution Control in Agricultural Production: Biodegradable vs Plastic Mulches,” Working paper, Washington State University.

Galinato, S.P., C. Miles and S.S. Ponnaluru. “2011 Cost Estimates of Producing Fresh Market Field-Grown Tomatoes in Washington,” Working Paper submitted to WSU Extension Publication.

Galinato, S.P. and C. Miles. “2011 Cost Estimates of Producing Fresh Market Field-Grown Lettuce in Washington,” Working Paper submitted to WSU Extension Publication.

Publications/Drafts

Thank you