Source: UNIVERSITY OF MAINE submitted to
SPECIALTY CROPS AND FOOD SYSTEMS: EXPLORING MARKETS, SUPPLY CHAINS AND POLICY DIMENSIONS
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
TERMINATED
Funding Source
Reporting Frequency
Annual
Accession No.
1009142
Grant No.
(N/A)
Project No.
ME031619
Proposal No.
(N/A)
Multistate No.
S-1067
Program Code
(N/A)
Project Start Date
Jan 15, 2016
Project End Date
Sep 30, 2017
Grant Year
(N/A)
Project Director
Chen, XU, .
Recipient Organization
UNIVERSITY OF MAINE
(N/A)
ORONO,ME 04469
Performing Department
School of Economics
Non Technical Summary
This project focuses on three general content areas: 1) modeling and quantifying cost and benefit of government programs such as insurance programs provided by Risk Management Agency (RMA) and Farm Service Agency (FSA) of USDA; 2) analyzing the market structure, particularly the market integration of (wild) blueberry; 3) evaluating the economic impacts of different management/organizational practices on the risk and return of wild blueberry operations in Maine.The agricultural sector plays an important role in the state of Maine. Among various kinds of crops harvested in Maine, two most important ones are potato and blueberry. The total economic impacts of the potato industry and the blueberry industry on Maine's economy are about $540 million and $250 million respectively. Maine potato production is ranked among top ten and Maine is the top grower for wild blueberry in the states.However, both crops are constantly facing challenges from different sources. Among them, the impacts of government programs, market integration and risks of different management practices are often overlooked. For example, a large share of farmers have been utilizing insurance instruments offered or underwritten by USDA to hedge risks because of various hazards such as late blight disease and potato beetle in potato production. However, the cost and return of these programs to Maine farmers have rarely been visited before. Moreover, Maine wild blueberry farmers are always concerned with blueberry prices. An important determinant of the price is whether and to what extent the (wild) blueberry markets are integrated. In addition, although the management practices of Maine wild blueberry operations have been studied by many of my colleagues, the associated economic risks and returns have never been thoroughly evaluated.Given the above, one of my main research objective is to adopt quantitative approaches to evaluate the insurance programs covering potato and blueberry productions. Second, I will use multiple time series to assess the market integration of blueberries. In addition, I will use simulation methods to compare the risks and returns among farms of different sizes or using management practices.
Animal Health Component
0%
Research Effort Categories
Basic
20%
Applied
60%
Developmental
20%
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
6011120301060%
6011310301040%
Goals / Objectives
Develop demand and market valuation models for the produce sector that can be used to evaluate effects of increasingly complex product differentiation schemes (organic, enhanced health claims, biodynamic), trade, commodity marketing programs, labeling programs (local, food miles, Fair Trade), traceability systems, and food safety events in the U.S. produce markets. Analyze the relative benefits and costs, to producers and consumers, of government and industry-led marketing and policy programs (certifications, Country of origin labeling, farmers markets, California/Arizona Leafy Greens Marketing Agreements) using both theoretical approaches and empirical evidence from multi-state applied research projects.
Project Methods
This project focuses on three general content areas: 1) modeling and quantifying cost and benefit of government programs such as insurance programs provided by Risk Management Agency (RMA) and Farm Service Agency (FSA) of USDA; 2) analyzing the market structure, particularly the market integration of (wild) blueberry; 3) evaluating the economic impacts of different management/organizational practices on the risk and return of wild blueberry operations in Maine.One of my main research objective is to adopt quantitative approaches to evaluate the insurance programs covering potato and blueberry productions. Second, I will use multiple time series to assess the market integration of blueberries. In addition, I will use simulation methods to compare the risks and returns among farms of different sizes or using management practices.In analyzing the risks of potato production, I will use a data set from Maine Potato Ecosystem Project. The data set spans thirteen years, describing the soil management, pest management, cultivar and rotation of potatoes in an experimental field. The field consists of a large number of bordered sites with different managements and rotations. First, I am going to focus on pests. I will use econometric models to evaluate whether risks of certain pests (e.g., Colorado potato beetle) are spatio-temporally correlated and quantify the spillover effects across both spatial and temporal units. Further, structural spatio-temporal models will be applied to identify which factors (i.e. soil condition and weather) are crucial to certain pest outbreaks, and to what extent they would influence the likelihood and the intensities of such outbreaks, given the spatio-temporal transmission of the pest is accounted for. Combing such findings with the potato yields, I will be able to assess the economic impact of pest outbreaks, soil quality variation and weather condition. With available time series of potato prices, I am positioned to evaluate the government insurance programs.Further, I will compare time series of (wild) blueberry prices across different regions, i.e. Canada and U.S.. Then I will use co-integration tests to explore the market integrations ofthose areas. Based on my findings, I will identify whether the (wild) blueberry markets are integrated. Thus policy suggestions to better reduce the price risks caused by external shocks will be discussed.In addition, I will use financial records of blueberry farms. University of Maine Cooperative Extension collected these data through an annual producer survey over the past ten years. I plan to analyze such records to identify cost and revenue across different management systems. For example, we find Maine wild blueberry farms can be generally categorized into four input systems. I will assess revenue and cost across different systems. The risks will be modeled. Then I will run simulations to evaluate the profitability and sustainability of different categories of farms.

Progress 01/15/16 to 09/30/17

Outputs
Target Audience:1. I presented my research "Wild Blueberry Enterprise Budget" at the Maine wild blueberry advisory committee meeting in November 2015. The attendees include wild blueberry growers, extension specialists and research scientists. The committee was impressed by the research idea and pleased with my research progress. 2. During the past two years, each year I recruited five undergraduate students who are interested in becoming next generation farmers (three from potato farms in 2016) and agribusiness specialists (two are now working for agricultural lenders) for the University of Maine Farm Credit Fellowship Program. I coordinated this training program. This eight-month program has gotten these students well prepared for their future agribusiness careers. I worked closely with the Farm Credit East. With my help, in summers the above mentioned undergraduate students got internship opportunities at different locations of Farm Credit East offices. In this way, I helped them to get more exposure to the agricultural finance industry. 3. In fall 2015 and fall 2016, I taught an agricultural economics/agribusiness class ECO 497. I developed a curriculum targeted for persons who are currently in or interested in agribusiness. Through weekly lectures, I conveyed modern agricultural economics knowledge and my ongoing research experience to the audience. 4. On September 9th 2015, I invited Raymond Nowak, senior consultant of Farm Credit East and former CEO of Farm Credit Maine for a formal meeting on campus. I introduced my research progress on various agricultural economics topics to him. 5. Again on October 5th 2016, I invited Raymond Nowak to campus. I gave him my research update and he was happy with my progress and contribution to the agricultural industries of the state of Maine. 6. On September 28th 2016, I visited Don Todd, state executive director of FSA Maine at FSA Bangor office. I introduced my research progress on various agricultural economics topics. 7. My research paper "Wild Blueberry Systems Approach: Economic and Risk Analysis" was presented at XI International Vaccinium Symposium in April 2016 at Orlando, FL. The symposium attendees include academic scholars, specialty crops industry stakeholder and government staff from all over the world. 8.My co-authored paper "Economic Risk of Bee Pollination in Maine Wild Blueberry, Vaccinium angustifolium Aiton" was published in 2017 at Journal of Economic Entomology. It is reviewed and cited by the scientific community. 9. My first-authored paper "Wild Blueberry Systems Approach: Economic and Risk Analysis" is in line for publication at Acta Horticulturae. It is going to be reviewed and cited by the scientific community Changes/Problems:In fall 2017, I left University of Maine and moved to Emory University due to family reasons. What opportunities for training and professional development has the project provided? Nothing Reported How have the results been disseminated to communities of interest?The paper "Economic Risk of Bee Pollination in Maine Wild Blueberry, Vaccinium angustifolium Aiton" was published in 2017 at Journal of Economic Entomology.The paper "Wild Blueberry Systems Approach: Economic and Risk Analysis" is in line for publication at Acta Horticulturae. Bothresearch aticles will be reviewed by scholars who are intereated in these topics. I presented my research "Wild Blueberry Enterprise Budget" at the Maine wild blueberry advisory committee meeting in November 2015. The attendees include wild blueberry growers, extension specialists and research scientists. The committee were impressed by the research idea and pleased with my research progress. I am working closely with stakeholders and government agencies in the state of Maine. On September 9th 2015 and again onOctober 5th 2016, I invited Raymond Nowak, senior consultant of Farm Credit East and former CEO of Farm Credit Maine for a formal meeting on campus. I updated my research progress on various agricultural economics topics to him. On September 28th 2016, I visited Don Todd, state executive director of FSA Maine at FSA Bangor office. I introduced my research progress on various agricultural economics topics. My research paper "Wild Blueberry Systems Approach: Economic and Risk Analysis" was presented at XI International Vaccinium Symposium in April 2016 at Orlando, FL. It was well received by both academic and general audiences. What do you plan to do during the next reporting period to accomplish the goals? Nothing Reported

Impacts
What was accomplished under these goals? My study focuses on Maine's wild blueberry and potato industries. The agricultural sector plays an important role in the state of Maine. Among various kinds of crops harvested in Maine, two of the most important ones are potato and blueberry. The total economic impacts of the potato industry and the blueberry industry on Maine's economy are about $540 million and $250 million respectively. Maine potato production is ranked among top ten and Maine is the top grower for wild blueberry in the states. However, both crops are constantly facing challenges from different sources. Among them, the impacts of government programs, market integration and risks of different management practices are often overlooked. For example, a large share of farmers have been utilizing insurance instruments offered or underwritten by USDA to hedge risks because of various hazards such as late blight disease and potato beetle in potato production. However, the cost and return of these programs to Maine farmers have rarely been visited before. Moreover, Maine wild blueberry farmers are always concerned with blueberry prices. An important determinant of the price is whether and to what extent the (wild) blueberry markets are integrated. In addition, although the management practices of Maine wild blueberry operations have been studied by many of my colleagues, the associated economic risks and returns have never been thoroughly evaluated. My study aims to shorten such a gap. So far, this project has produced 1 peer-reviewed articles, 1 conference presentation, 1 seminar, 1 economics model and 1 database, all of which have greatly impacted both academic and industrial audiences. The detailed objectives and accomplishments under each goal are listed below: (1)Develop demand and market valuation models for the produce sector that can be used to evaluate effects of increasingly complex product differentiation schemes (organic, enhanced health claims, biodynamic), trade, commodity marketing programs, labeling programs (local, food miles, Fair Trade), traceability systems, and food safety events in the U.S. produce markets. Nothing to report. 2) Analyze the relative benefits and costs, to producers and consumers, of government and industry-led marketing and policy programs (certifications, Country of origin labeling, farmers markets, California/Arizona Leafy Greens Marketing Agreements) using both theoretical approaches and empirical evidence from multi-state applied research projects. I lead authored "Wild Blueberry Systems Approach: Economic and Risk Analysis" which is due for publication at Acta Horticulturae. We conducted a multi-disciplinary large-scale study of four cropping input production systems - organic, low input, medium input and high input - that fit along gradients of capital inputs and potential environmental effects to quantify system effects on yield. The yields varied over the years for each system; organic and low were not significantly different and medium and high were not significantly different but each of the two groups were different from each other. While organic production had low yields, the higher value of the organic fruit and the fresh sales and value added products produced an overall average profit of $3,724 per acre. The low input system had a loss of $289 per acre. The medium system produced the next highest profit at $1,575 per acre while the high input system was third in profitability at $1,374 per acre. The risk simulation indicated that overall all systems could be profitable, but the higher inputs resulted in reduced risk of not being profitable. In addition, we compiled a database of selected wild blueberry farmer's income, input, cost and operations from multiple years' survey. I also co-authored a paper "Economic Risk of Bee Pollination in Maine Wild Blueberry, Vaccinium angustifolium". Our study analyzed variability of native bees and honey bees, and the risks these pose to profitability of Maine's wild blueberry industry. We used cross-sectional data from organic, low-, medium-, and high-input wild blueberry producers in 1993, 1997- 1998, 2005-2007, and from 2011 to 2015 (n = 162 fields). Data included native and honey bee densities (count/m2/min) and honey bee stocking densities (hives/ha). Blueberry fruit set, yield, and honey bee hive stocking density models were estimated. Fruit set is impacted about 1.6 times more by native bees than honey bees on a per bee basis. Fruit set significantly explained blueberry yield. Honey bee stocking density in fields predicted honey bee foraging densities. These three models were used in enterprise budgets for all four systems from on-farm surveys of 23 conventional and 12 organic producers (2012-2013). These budgets formed the basis of Monte Carlo simulations of production and profit. Stochastic dominance of net farm income (NFI) cumulative distribution functions revealed that if organic yields are high enough (2,345 kg/ha), organic systems are economically preferable to conventional systems. However, if organic yields are lower (724 kg/ha), it is riskier with higher variability of crop yield and NFI. Although medium-input systems are stochastically dominant with lower NFI variability compared with other conventional systems, the high-input system breaks even with the low-input system if honey bee hive rental prices triple in the future.

Publications

  • Type: Journal Articles Status: Awaiting Publication Year Published: 2017 Citation: Chen, X., Yarborough, D., and Cote, J. (2016) Wild Blueberry Systems Approach: Economic and Risk Analysis, Acta Horticulturae
  • Type: Journal Articles Status: Published Year Published: 2017 Citation: Asarea, E., Drummond, F., Hoshide, A., Criner, G. and Chen, X. (2017), Economic Risk of Bee Pollination in Maine Wild Blueberry, Vaccinium angustifolium Aiton, Journal of Economic Entomology, Volume 110, Issue 5: 1980-1992


Progress 01/15/16 to 09/30/16

Outputs
Target Audience: I presented my research "Wild Blueberry Enterprise Budget" at the Maine wild blueberry advisory committee meeting in November 2015. The attendees include wild blueberry growers, extension specialists and research scientists. The committee were impressed by the research idea and pleased with my research progress. During the past two years, each year I recruited five undergraduate students who are interested in becoming next generation farmers (three from potato farms in 2016) and agribusiness specialists (two are now working for agricultural lenders) for the University of Maine Farm Credit Fellowship Program. I coordinated this training program. This eight-month program has gotten these students well prepared for their future agribusiness careers. I worked closely with the Farm Credit East. With my help, in summers the above mentioned undergraduate students got internship opportunities at different locations of Farm Credit East offices. In this way, I helped them to get more exposure to the agricultural finance industry. In fall 2015 and fall 2016, I taught an agricultural economics/agribusiness class ECO 497. I developed a curriculum targeted for persons who are currently in or interested in agribusiness. Through weekly lectures, I conveyed modern agricultural economics knowledge and my ongoing research experience to the audience. On September 9th 2015, I invited Raymond Nowak, senior consultant of Farm Credit East and former CEO of Farm Credit Maine for a formal meeting on campus. I introduced my research progress on various agricultural economics topics to him. Again on October 5th 2016, I invited Raymond Nowak to campus. I gave him my research update and he was happy with my progress and contribution to the agricultural industries of the state of Maine. On September 28th 2016, I visited Don Todd, state executive director of FSA Maine at FSA Bangor office. I introduced my research progress on various agricultural economics topics. My research paper "Wild Blueberry Systems Approach: Economic and Risk Analysis" was presented at XI International Vaccinium Symposium in April 2016 at Orlando, FL. The symposium attendees include academic scholars, specialty crops industry stakeholder and government staff from all over the world. 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?I presented my research "Wild Blueberry Enterprise Budget" at the Maine wild blueberry advisory committee meeting in November 2015. The attendees include wild blueberry growers, extension specialists and research scientists. The committee were impressed by the research idea and pleased with my research progress. I am working closely with stakeholders and government agencies in the state of Maine. On September 9th 2015 and again on October 5th 2016, I invited Raymond Nowak, senior consultant of Farm Credit East and former CEO of Farm Credit Maine for a formal meeting on campus. I updated my research progress on various agricultural economics topics to him. On September 28th 2016, I visited Don Todd, state executive director of FSA Maine at FSA Bangor office. I introduced my research progress on various agricultural economics topics. My research paper "Wild Blueberry Systems Approach: Economic and Risk Analysis" was presented at XI International Vaccinium Symposium in April 2016 at Orlando, FL. It was well received by both academic and general audiences. What do you plan to do during the next reporting period to accomplish the goals?As part of accomplishing project goals, the next steps will be to continue my current projects on wild blueberry and start analyzing potato operations. One or more publications will be written. Research results will be presented to a broad audience.

Impacts
What was accomplished under these goals? My study focuses on Maine's wild blueberry and potato industries. The agricultural sector plays an important role in the state of Maine. Among various kinds of crops harvested in Maine, two most important ones are potato and blueberry. The total economic impacts of the potato industry and the blueberry industry on Maine's economy are about $540 million and $250 million respectively. Maine potato production is ranked among top ten and Maine is the top grower for wild blueberry in the states. However, both crops are constantly facing challenges from different sources. Among them, the impacts of government programs, market integration and risks of different management practices are often overlooked. For example, a large share of farmers have been utilizing insurance instruments offered or underwritten by USDA to hedge risks because of various hazards such as late blight disease and potato beetle in potato production. However, the cost and return of these programs to Maine farmers have rarely been visited before. Moreover, Maine wild blueberry farmers are always concerned with blueberry prices. An important determinant of the price is whether and to what extent the (wild) blueberry markets are integrated. In addition, although the management practices of Maine wild blueberry operations have been studied by many of my colleagues, the associated economic risks and returns have never been thoroughly evaluated. My study aims to shorten such a gap. So far, this project has produced 1 peer-reviewed articles, 1 conference presentations, 1 seminar, 1 economics model and 1 databases, all of which have greatly impacted both academic and industrial audience. The detailed objectives and accomplishments under each goal is listed below: (1)Develop demand and market valuation models for the produce sector that can be used to evaluate effects of increasingly complex product differentiation schemes (organic, enhanced health claims, biodynamic), trade, commodity marketing programs, labeling programs (local, food miles, Fair Trade), traceability systems, and food safety events in the U.S. produce markets. Nothing to report. 2) Analyze the relative benefits and costs, to producers and consumers, of government and industry-led marketing and policy programs (certifications, Country of origin labeling, farmers markets, California/Arizona Leafy Greens Marketing Agreements) using both theoretical approaches and empirical evidence from multi-state applied research projects. I lead authored "Wild Blueberry Systems Approach: Economic and Risk Analysis" which is due for publication at Acta Horticulturae. We conducted a multi-disciplinary large-scale study of four cropping input production systems - organic, low input, medium input and high input - that fit along gradients of capital inputs and potential environmental effects to quantify system effects on yield. The yields varied over the years for each system; organic and low were not significantly different and medium and high were not significantly different but each of the two groups were different from each other. While organic production had low yields, the higher value of the organic fruit and the fresh sales and value added products produced an overall average profit of $3,724 per acre. The low input system had a loss of $289 per acre. The medium system produced the next highest profit at $1,575 per acre while the high input system was third in profitability at $1,374 per acre. The risk simulation indicated that overall all systems could be profitable, but the higher inputs resulted in reduced risk of not being profitable. In addition, we compiled a database of selected wild blueberry farmer's income, input, cost and operations from multiple years' survey. .

Publications

  • Type: Journal Articles Status: Accepted Year Published: 2016 Citation: Chen, X., Yarborough, D., and Cote, J. (2016) Wild Blueberry Systems Approach: Economic and Risk Analysis, Acta Horticulturae, Accepted.