Source: RUTGERS, THE STATE UNIVERSITY OF NEW JERSEY submitted to
TRADE AND AGRICULTURAL DEVELOPMENT IN A CHALLENGING ENVIRONMENT: A NEW JERSEY CASE STUDY
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
TERMINATED
Funding Source
Reporting Frequency
Annual
Accession No.
0225249
Grant No.
(N/A)
Project No.
NJ02121
Proposal No.
(N/A)
Multistate No.
(N/A)
Program Code
(N/A)
Project Start Date
Sep 1, 2011
Project End Date
Aug 31, 2016
Grant Year
(N/A)
Project Director
Tavernier, E.
Recipient Organization
RUTGERS, THE STATE UNIVERSITY OF NEW JERSEY
3 RUTGERS PLZA
NEW BRUNSWICK,NJ 08901-8559
Performing Department
Agricultural Food & Resource Economics
Non Technical Summary
Despite the benefits of trade, recent research suggests that much work remains to be done to convince New Jersey farmers of its benefits. The project described herein empirically examines the perspectives of agricultural producers in New Jersey on various agricultural trade-related issues.
Animal Health Component
(N/A)
Research Effort Categories
Basic
(N/A)
Applied
(N/A)
Developmental
(N/A)
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
6066030301010%
6066199301055%
6106030301025%
6106199301010%
Goals / Objectives
The overarching goal of the project described herein is to empirically examine the perspectives of agricultural producers in New Jersey on various trade and agricultural-related market issues. These issues include producer perceptions on the benefit from international trade, issues related to labor laws, environment and food safety, issues of unilateral sanctions prohibiting trade, and domestic social policy goals and trade.
Project Methods
An econometric model will be developed from the survey data using the logit model to determine the relationship between the above objectives and the socio-economic variables. That model is chosen for its mathematical simplicity and because its asymptotic characteristic constrains the predicted probabilities to a range between zero and one. The model assumes that the probability of observing a particular outcome is dependent on a vector of explanatory variables.

Progress 09/01/11 to 08/31/16

Outputs
Target Audience:Extension colleagues and other professionals; farm community. Changes/Problems:The co-PI for the project retired which left one of the stated goals not met. What opportunities for training and professional development has the project provided?Given the heat that trade policy generated in the just concluded presidential campaign, the presentation of the results at professional conferences provides ample opportunities to shed more light on the benefits and challenges of trade. How have the results been disseminated to communities of interest?The primary vechicle for the dissemination of the results has been professional conferences. What do you plan to do during the next reporting period to accomplish the goals? Nothing Reported

Impacts
What was accomplished under these goals? The overarching goal of the project has been to empirically examine the perspectives of agricultural producers in New Jersey on various trade and agricultural-related market issues using logistic methodology. These issues include producer perceptions on (i) unilateral sanctions and prohibiting trade; (ii) agricultural trade agreements to reduce or eliminate trade barriers; (iii) labor laws, environment and food safety (a social clause); (iv) and domestic social policy goals and trade. First, on the issue of whether the U.S. should eliminate unilateral sanctions prohibiting food trade with other countries, the results suggest that compared to agricultural producers who earn none of their family income from farming, agricultural producers who earn 76% to 100% and 1% to 25% of their family income from farming are more likely to indicate that U.S. should do so. The results also suggest that compared to agricultural producers who own 76% to 100% of the land that they farm, agricultural producers who own 1% to 25% and 26% to 50% of the land that they farm are more likely to indicate that U.S. should eliminate unilateral sanctions prohibiting food trade with other countries. In the case of agricultural sales, the results suggest that compared to agricultural producers with sales less than $10,000, agricultural producers with sales between $10,000 and $49,999 and $500,000 and $999,999 are more likely to indicate that U.S. should eliminate unilateral sanctions prohibiting food trade with other countries. The recent effort by the Obama Administration and some in the U.S. Congress to loosen trade restrictions on Cuba finds support by a majority of agricultural producers in New Jersey. In a 2005 national survey, 51% of agricultural producers in the state indicate that U.S. should eliminate unilateral sanctions prohibiting food trade with other countries. This result compares to 44% of agricultural producers nationally and signals a desire for expanding trade. Second, on the issue of whether the U.S. should continue to pursue free trade agreements to reduce or eliminate trade barriers, the results show that agricultural households who derive 76% to 100% of their family income from farming are 32.5% more likely to indicate that should be the case when compared to families who earn 1% to 50% of their income from farming. The results for agricultural households who earn no income from farming and those families who earn 51% to 75% of their family income from farming are not significant. In the tenure category, the results suggest that compared to agricultural producers who own none of the land that they farm, agricultural producers with any ownership stake in land are over 50% more likely to indicate that U.S. should pursue free trade agreements. For example, agricultural producers who own 51% to 75% of the land that they farm are 69% more likely to indicate that the U.S. should pursue free trade agreements compared to agricultural producers who own none of the land that they farm. In the case of agricultural sales, the results suggest that agricultural producers with annual sales of a million dollars or more are almost 60% less likely to indicate that the U.S. should pursue free trade agreements compared to agricultural producers with sales of less than $500,000. In times of economic turmoil countries often pursue measures that impede the flow of trade. These measures are taken to stem the tide of job losses and in most cases are pursued in response to calls for protection. While workers call for protection, a whole swath of industries looks to policymakers to implement policies that expand markets and create an environment that fosters free trade. In the case of the agricultural industry in New Jersey, the summary statistics suggests that about 53% of agricultural producers in the state would like the federal government to pursue free trade agreements. Third, on the issue of whether the U.S. should include a "social clause" such as labor laws, environmental impacts, and food safety as part of international trade agreements, the results suggest that agricultural producers with sales between $500,000 and $999,999 are 40% less likely to indicate that should be the case. That figure is 22% for agricultural producers with sales between $50,000 and $99,999, and 19% for agricultural producers with sales between $100,000 and $249,000. Though the direction of the signs is the same, the different magnitudes may indicate the different weights that producers in various farm size categories place on the importance of linking a social clause to international trade negotiations. It is not clear why agricultural producers with sales between $10,000 and $49,000 is not significant. While global macroeconomic forces are more likely to affect farms participating in international markets, small as well as large firms can thrive while exporting. Given their small size, however, the results may be an indication that producers in that farm size category believe that international agreements have little or no effect on them. The results also show that agricultural producers who operate 1% to 25% of the land that they farm are 15% less likely to indicate that labor laws, environmental impacts, and food safety should be included as part of international trade negotiations. This result is not surprising since agricultural producers are utilizing labor in the production process and the inclusion of a social clause is likely to raise their production costs. However, it is less clear why other tenure groups have no influence on a social clause. The results confirm the hypothesis that agricultural producers, across farm sizes, are less likely to want labor laws, environmental impacts, and food safety to be included as part of international trade agreements across farm sales categories. Fourth, on the issue of whether countries should be allowed to restrict trade to pursue domestic economic and social policy - social engineering - goals even if the policies affect international trade, the results support the hypothesis, that in general, agricultural producers whose sales are likely to be adversely affected by the use of such policies are unlikely to endorse them. Specifically, the results suggest that except for agricultural producers with sales under $10,000 and agricultural producers with sales between $250,000 and $499,999, agricultural producers across the sales category are unlikely to favor a policy allowing countries to restrict trade to pursue domestic economic and social policy goals if the policies affect international trade. For example, agricultural producers with annual gross sales including government payments between $500,000 and $999,999 are 80 percent less likely to indicate that countries should be allowed to restrict trade to pursue domestic economic and social policy goals if the policies affect international trade. In the case of agricultural producers who earn their family income from farming or ranching, the results suggest that they are more likely to indicate that countries should be allowed to restrict trade to pursue domestic economic and social policy goals even if the policies affect international trade. For example, agricultural producers who earn between 51% and 75% of their income from farming or ranching are 72% more likely to indicate such a preference The results strongly suggest that agricultural producers in New Jersey view market access or the absence or diminution of conditions that restrict trade as an important factor in international trade. In particular, agricultural producers across sales categories indicate that trade should not be restricted for socio-economic policy goals. Given the importance of agricultural trade this finding is not surprising since restricting trade would adversely affect trade volume and farm profits as domestic prices decrease.

Publications


    Progress 10/01/14 to 09/30/15

    Outputs
    Target Audience:Farmers, specialists and faculty Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?The presentation of the results at profesional conferences provided opportunities for professional advancement. How have the results been disseminated to communities of interest?The preliminary results were presented in Barbados and Atlantic City, N.J. What do you plan to do during the next reporting period to accomplish the goals?Develop the econometric model.

    Impacts
    What was accomplished under these goals? The U.S. has often used unilateral sanctions as a policy tool to influence the behavior of countries such as Cuba with which it has political disagreements. These sanctions have been instituted as export or import restrictions, reductions in aid or financial assistance, prohibitions on investments, and trade interventions in the form of tariffs and quotas. Critics of such a policy argue that for the most part the sanctions have failed to bring about the intended effect of changing the behavior of the targeted countries and have resulted in economic costs to the U.S. economy. In an era of globalization, they continue, the targeted countries can usually find alternate sources of financing and supply. Opponents suggest that the elimination of sanctions would remove any leverage that the U.S. has to influence foreign economic and political policy goals particularly with respect to Cuba. While the debate continues, it is becoming increasingly clear that certain economic agents in the U.S. are calling for a re-examination of unilateral sanctions as a policy tool. The administration of U.S. President Barack Obama has signaled a shift in U.S.- Cuba policy. While not removing the embargo against Cuba, Obama has relaxed travel restrictions, permitted remittances to the island nation by Cuban nationals, and in August 2015 reopened the U.S. Embassy in Havana. In light of this rapprochement, the paper finds that 51 percent of New Jersey producers strongly agree or agree that unilateral sanctions on food should be eliminated compared to 23% who strongly disagree or disagree. These statistics compare to 44% and 29%, respectively for the nation.

    Publications


      Progress 10/01/13 to 09/30/14

      Outputs
      Target Audience: Nothing Reported Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided? Nothing Reported How have the results been disseminated to communities of interest? Nothing Reported What do you plan to do during the next reporting period to accomplish the goals? Further examine Fam Bill goals as they relate to increasing the competitiveness of US agriculture in the global marketplace, enhancing opportunities for small farms/ranches and beginning farms/ranches, and enhancing farm prospects for rural economies.

      Impacts
      What was accomplished under these goals? The conclusion of the 2014 Farm Bill allows for a comparison of what New Jersey farmers indicate that the goals of the Farm Bill should be and what was passed by Congress. Two goals – enhance farm income and reduce price and income risk - are examined in this report. While the 2014 Farm Bill eliminates direct payments, it continues crop insurance and provides for price loss coverage and agricultural risk coverage. Almost 60% of survey respondents indicate that enhancing farm income is an important or most important goal of the Farm Bill. This compares to over 44% of respondents who indicate the same preference goal of reducing price and income risk. An examination of the nexus of sales data and the goals identified above is quite revealing. Less than 40% and 25.7% of respondents with agricultural sales under $10,000 indicate a preference for the goals of enhancing farm income and reducing price and income risk, respectively. However, 83.3% and 66.7% of farmers with sales between $250,000 and $499,999, indicate the preference for the goals of enhancing farm income and reducing price and income risk, respectively. This finding raises the question of “hobby” farmers versus “true” farmers.

      Publications


        Progress 10/01/12 to 09/30/13

        Outputs
        Target Audience: Nothing Reported Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided? Nothing Reported How have the results been disseminated to communities of interest? Nothing Reported What do you plan to do during the next reporting period to accomplish the goals? Work on econometric model and present reults to stakeholders.

        Impacts
        What was accomplished under these goals? A random sample of 631 farm operators stratified by value of farm sales was chosen for this survey. One hundred and forty-four surveys were returned giving a response rate of 23%. The sample used for this study consisted of farm operators, who (i) grew crops or cut forage; (ii) stored grains or soybeans; (iii) grew vegetables, nuts, nursery crops, or other specialty crops; and (iv) had or intended to have dairy, hogs, cattle, sheep, poultry, or other livestock on their farm operation. Descriptive statistics for the independent variables: educational attainment, sales, age, tenure, and farm income are presented. Two percent completed grade school, 4% had some high school education, 23% had a high school diploma, 23% had some college education, 27% had a bachelor’s degree and 21% had an advanced degree. In the sales category, a majority (47%) of farm operators had average annual sales from their farm operations, including government program benefits, of less than $10,000. Eighty-five percent of the farm operators were older than 45 years old and most (74%) own the land that they farm or ranch. A majority of farm operators (45%) typically earned 1-25% of their family income from farming.

        Publications


          Progress 10/01/11 to 09/30/12

          Outputs
          OUTPUTS: The output from this research was widely disseminated to agricultural and academic interests. First, the results were shared with Rutgers Cooperative Extension Specialists and agricultural producers in Atlantic City, NJ. Second, the results were presented at a national conference in Miami and an international conference in St. Vincent and the Grenadines. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: The results were presented to Extension Specialists, faculty from other institutions and farmers at conferences in Atlantic City, NJ; Miami, Florida and St. Vincent. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

          Impacts
          In the case of the agricultural industry in New Jersey, the summary statistics suggests that about 53% of agricultural producers in the state would like the federal government to pursue free trade agreements. While that figure may be considered low, the econometric evidence indicates that, across broad categories, agricultural producers would like the federal government to pursue free trade agreements. Across the education category, for example, the results indicate that agricultural producers with a bachelor's degree and above are in favor of the federal government pursuing free trade agreements. Increased educational attainment clearly provides a greater capacity for agricultural producers to understand the role that international trade plays in farm balance sheets. Indeed agricultural producers with advanced degrees are about 28% more likely to indicate that the federal government should pursue free trade agreements when compared to their counterparts with degrees. Overall the results of this study are in accord with a priori expectations. The results reflect a positive view of free trade from landowners who clearly benefit from increased land prices brought about by increased demand for agricultural products. Agricultural producers in the state, among the most educated in the U.S., appear to appreciate the benefits of free trade, as do agricultural producers along the age spectrum. As long as the conditions that allow agricultural producers to maximize returns from agricultural trade exist, those producers are likely to view the opening of markets for agricultural trade positively.

          Publications

          • Tavernier, E. M. and Yadavalli, A. (2012). Should the United States continue to pursue free trade agreements A socio-economic perspective, Tropical Agriculture, 89 (3): 189-198.


          Progress 09/01/11 to 12/31/11

          Outputs
          OUTPUTS: The data source for this study on whether the US should pursue free trade agreements comes from the National Agricultural, Food, and Public Policy Preference Survey. The survey was developed to provide input into the 2007 U.S. Farm Bill and was conducted at the end of 2005. Twenty-seven states participate in the survey. The main areas surveyed were a) Farm Programs and Budget Priorities, b) Commodity Programs and Risk Management Policy, c) Conservation and Environmental Policy, d) Trade Policy, and e) Food System and Regulatory Policy. Nationwide, 1,345,900 farms or 64 percent of total farms in the United States participated in the survey (USDA-NASS, 2006). The sample was stratified across farms, namely "small" - farms with less than $100,000 in agricultural product sales annually, "medium" - farms with $100,000-$250,000 in sales, and "large" - farms with over $250,000 in sales. According to the 2002 Census of Agriculture (NASS), more than 80 percent of the farms in the 27-state survey fell in the "small" farm category. Eight percent of farms fell in the "medium" and "large" farm category. There were 162 total responses from New Jersey, of which 149 were usable and yielded a response rate of 21 percent. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

          Impacts
          This study is in the early stages and econometric results have not been finalized.

          Publications

          • No publications reported this period