Monthly Archives: August 2011

Dalton Studies Effects of Climate Change on African Agriculture

by K-State Communications and Marketing

Climate change in Africa, including increased temperatures and decreased rainfall, is causing an uncertain future for African farmers. But an international research team that includes a Kansas State University agricultural economist hopes to bring clarity to the situation.

Timothy J. Dalton, K-State associate professor of agricultural economics, recently completed two separate research projects related to African agriculture and the effects of climate change. The projects involved African farmers’ response to using drought-tolerant maize seed and how climate change was impacting their decision-making and production systems.

The Bill and Melinda Gates Foundation, Howard G. Buffet Foundation and other charitable sources sponsored the research team’s Water Efficient Maize for Africa project. Dalton visited Africa multiple times to conduct the research, specifically working in South Africa, Tanzania and Kenya.

To gauge the effects on farmer’s decision-making, Dalton and his colleagues created a lottery-based system with certain gambles. Farmers were given an explanation of probability and discussed rainfall prior to the experiment. Two different colored chips representing positive and negative outcomes were placed in a jar in varying quantities. Positive outcomes would yield as much as a day and half’s worth of wages. For each gamble, farmers were asked if they wanted to make the gamble or accept a reduced — or safer — amount. Dalton’s team was attempting to determine the certainty equivalent or point in which farmers shifted from taking the gamble to the safe bet.

“We found most farmers switched before their expected value, and that indicated they were risk averse, just like most people up to a point,” Dalton said.

Dalton’s team later returned to the same farmers with more ambiguous information. This portion of the experiment was designed to mirror reality for many farmers. Tanzania features two rainy seasons: one short, the other long. A month typically separates the two seasons and functions as a signal for farmers to begin planting. In recent years, however, the rainy seasons have merged into one. Similarly, Kenya was experiencing decreased rainfalls, which were adversely affecting maize crops. Farmers in the country were faced with whether to continue growing maize, which fetches better prices and has better markets, or switch to drought-tolerant alternatives such as sorghum.

“They are caught in this trap without a proper signal on what to take,” Dalton said. “This what we are trying to simulate with the experiment.”

High chances of winning and ambiguous information caused many farmers to take a lesser certainty equivalent. Conservative behaviors were expected with the lack of clarity in what to plant, according to Dalton. Results were similar in all three countries as the probabilities began decreasing. When farmers reached the point where there was a 10 percent chance of winning, there was a higher certainty equivalent. Dalton attributes that to farmers believing the situation could be no worse. This illustrated that many farmers who should not be growing maize were continuing to do so at the risk of crop failure. Other farmers were not taking risks when they should be. An air of uncertainty accompanied the ambiguity.

“With climate change, information becomes less diffuse and less valuable,” Dalton said.

Potential policy responses include providing rural farmers with accurate weather data to ensure an appropriate planting period. Providing subsidies for yields, fertilizer use or approved seed were also considered. Establishing crop insurance mechanisms in Africa similar to the U.S. and developing more drought-tolerant grains were other considerations.

Drought tolerance was the focus of Dalton’s other research project: drought-tolerant varieties of maize. Farmers were presented with hypothetical new seeds and asked whether they would purchase the variety. The seed types and other important traits were varied. They also received graphical data for each variety. After being presented with the information, some farmers continued to gravitate toward the cheaper seeds, but the majority selected new drought-resistant varieties. The results were consistent in Tanzania and Kenya, but a large segment of the population was more willing to purchase herbicide-tolerant seeds in South Africa.

Dalton hopes these findings will help in the development of targeted programs to assist with purchase of drought-tolerant seed varieties. Until then, he will continue to research adaptations to climate change.

“While climate change still may be a contentious issue in the United States, many people are having to deal with it in the lower latitude and equatorial countries where changes are occurring right now,” he said. “It’s at the forefront of many people’s minds.”

Dalton presented the two sets of research at the 15th annual Conference of the International Consortium on Applied Bioeconomy Research in Frascati, Italy, in late June and at the American Association of Applied Economists annual conference in Pittsburgh, Pa., July 24.

EPA Recommends K-State Watershed Plan

A watershed plan for two Kansas rivers has been recognized as one of the nation’s best, according to the Environmental Protection Agency.

Staff from the Office of Local Government in K-State’s Department of Agricultural Economics helped develop a watershed plan for the Lower Big Blue and Lower Little Blue Rivers, a transboundary watershed in northern Kansas and southern Nebraska. The watershed drains into Tuttle Creek Lake, a flood control reservoir near Manhattan, Kan. The lake is impaired by phosphorus, total suspended solids and atrazine.

The EPA review states, “While the plan only addresses Kansas portion of the watershed, it is overall an excellent watershed-based plan. Every required component was fully addressed, and the information for components B-I were presented in an especially effective manner. The tables and maps made the information easy to read and digest and all of the information was tied back to meeting the goals of the plan; there was little extraneous information. It was also one of the few plans that included a brief explanation of the model used in the analysis, including why the model was selected, major assumptions, and data sources used.”

The review goes on to state, “Overall, the Lower Big Blue/Lower Little Blue River plan was one of the best reviewed, and it provides an excellent example of how to develop and write a watershed based plan.”

Staff members cooperating on the plan development include Josh Roe and Robert Wilson of the Office of Local Government in K-State Agricultural Economics, Sue Brown of the Kansas Center for Agricultural Resources and the Environment (KCARE) and Aleksey Sheshukov of Biological and Agricultural Engineering.

MAB to Host Professional Development and Alumni Reunion Sept. 22-23

K-State Master of Agribusiness (MAB) alumni, students, Advisory Board members and members of the agribusiness industry are invited to attend the fourth MAB Professional Development and Alumni Reunion Event in Manhattan, KS. The event is scheduled for September 22-23 and will be held at the Clarion Hotel. This event is open to those interested in discussing hot-button topics affecting the global food and agriculture environment with industry experts.

Click here to register online or download a paper registration form.

The event will kick-off Thursday, September 22 in the afternoon with professional programming and plenty of opportunity for fellowship, fun and networking with classmates and fellow agribusiness professionals.

For those who have taken AGEC 710, the Comparative Food and Agriculture Systems course, most of the international faculty will be attending this event and you will have the opportunity to interact with them.

The tentative agenda includes two main topics each addressed from multiple perspectives: the Energy Situation and Food Security. We will also have a roundtable discussion with several industry representatives sharing their thoughts on the future of the food and agriculture industry.

Learn more on the MAB website.

K-Staters Earn 2nd, 4th Places in AAEA Grad Student Case Study Competition

From left: Brady Brewer, Brian Lauer and Cooper Morris won second place in the 2011 AAEA Graduate Student Case Study Competition. Elizabeth Canales (not pictured), also a K-State agricultural economics graduate student, competed on the fourth-place team with students from the University of Minnesota.

Kansas State University agricultural economics graduate students recently earned second and fourth places in the Agricultural and Applied Economics Association’s Graduate Student Case Study Competition. The national competition took place during the AAEA’s annual meeting July 24-26 in Pittsburg, PA, and is presented by the Agribusiness Economics and Management section of AAEA.

The competition allows graduate students to test their communication skills and apply their knowledge of agricultural economics and agribusiness subjects to practical situations. Teams received a copy of the case study two weeks prior to the annual meeting and prepared a 15-minute oral summary of their solution to the case. Teams also answered questions from a panel during two rounds of judging.

Nine teams competed, including California Polytechnic State University, Texas A&M University, University of Kentucky, Oklahoma State University, University of Arkansas and two teams from the University of Georgia. The second-place team included K-State agricultural economics graduate students Brady Brewer, Cooper Morris and Brian Lauer. In addition, Elizabeth Canales, also a K-State agricultural economics graduate student, competed on the fourth-place team with students from the University of Minnesota, advised by Michael Boland, former professor of agricultural economics at K-State.

The case study topic was a producer-owned cooperative based in Indiana.

“The challenge was to position the cooperative to respond to the biofuels industry,” said Brewer. “We had to research the ethanol industry and produce a solution that kept the cooperative balanced among its four divisions to ensure the long term viability of the cooperative and that it added value to the member owners products, the first objective of a producer owned cooperative.”

The team created a broad business plan, enabling the cooperative to prepare its owners to plant more corn, increase their access to storage space, utilize dried distiller grains to mitigate increasing feed costs, and use technology to increase the quality of services, Morris said.

“It was important for teams to recognize a cooperative’s commitment to their owners and understand how new ethanol plants consuming 78 million bushels of corn annually would change the structure of the local agricultural economy,” Lauer said.

The team of Brewer, Morris and Lauer experienced an additional twist in the competition. After their flight from Chicago O’Hare was canceled, the team drove overnight to Pittsburgh, arriving an hour after their scheduled presentation time. Vincent Amanor-Boadu, associate professor of agricultural economics, was instrumental in recruiting judges for two back-to-back presentations, enabling the team to still compete.

“His effort embodied the commitment of our faculty,” Morris said.

Amanor-Boadu and other faculty, including Brian Briggeman, David Barton, Arlo Biere and David Lambert, helped the team prepare for the competition.

“They helped us work through our solutions, making sure they were not only grounded in facts and economic truths, but we presented them effectively to the judges,” Morris said.

The top four teams were invited to the AEM industry dinner, where they were recognized for their success. While Morris said the team felt a sense of disappointment missing out on first place, they felt a concrete confidence that was more important than a trophy or ribbon.

“With the help of faculty, we had confidently worked through a complex analysis, survived a transportation nightmare and gave a great final presentation,” he said. “As a team, we had challenged one another to reach a level of economic and business analysis we had yet to achieve. We were one step closer to being ready to complete our theses, taking another step towards our longer term goals.”

Faculty, graduate students participate in AAEA Annual Meeting

K-State Agricultural Economics faculty and graduate students recently participated in the 2011 Agricultural and Applied Economics Association annual meeting in Pittsburg, PA.

Participants from the department are as follows:

Agri-food Sustainability and its Relationship to Firm Strategy and Performance. “Does Sustainability Pay? Sustainability As a Source of Competitive Advantage for Public Agri-food Companies.” Vincent Amanor-Boadu

“Navigating the Job Search Process.” Elizabeth Yeager

Research and Diffusion of Tolerance Cultivars in Developing Countries: What Can We Learn from Projects to Develop Drought Tolerant Crops in Asia (Rice) and Sub-Saharan Africa (Maize)? “Evaluating the Potential for the Dissemination and Adoption of Water-efficient Maize Cultivars in Africa.” Timothy Dalton

Meeting Fuel Mandates with Red Hot Markets. “Short and Long Run Market Implications of the Renewable Fuel Standard.” Samuel M. Funk

Measuring WTP for Animal Welfare In Agricultural Production: The Role of Information and Preference Instruments. “Impact of Alternative Videos on Public Perceptions of Practices in the Dairy Industry” Glynn Tonsor. Ted Schoeder, discussant

Productivity. “How Market Power Changes in Monopoly Using Lau’s Hessian Identities.Koichi Yamaura and Allen Featherstone

Biofuel. “Farmers’ Willingness-to-Grow Sweet Sorghum as a Cellulosic Bioenergy Crop: A Stated Choice Approach.” Jason E. Fewell, Jason Bergtold and Jeffery Williams

“A Review of Financial Statements Generated Using the Agricultural Resource Management Survey.” Allen Featherstone, moderator and speaker, Brian Briggeman, speaker

Policy Options and Consequences for the 2012 Farm Bill. “Crop Revenue.” Art Barnaby

Getting the Most Out of Data: Sample Size, Imputation, and Recall Bias. “Sample Size and Robustness of Inferences from Logistic Regression in the Presence of Nonlinearity and Multicollinearity.” Jason Bergtold, Elizabeth Yeager and Allen Featherstone

Commodity Price Determinants and Relationships in Agribusiness Markets. “Impact of Changes in Energy Input Prices on Ethanol Importation and Prices.” Elizabeth Yeager and Allen Featherstone

“Livestock Outlook & Industry Issue Panel Discussion.” Glynn Tonsor, moderator

Topics in Demand Modeling. “Using Weak Separability and Generalized Composite Commodity Theorem in Modeling Ground Beef Demand.” Lee Schulz, Ted Schroeder and Tian Xia

Poster Session: Demand and Price Analysis. “Consumer Preferences for Attributes of Organic Processed Foods: The Case of Soymilk in the United States.” Yue Zheng, Hikaru Peterson, Xianghong Li and Bob Burton

Poster Session: International Trade. “World Markets of Vertically Differentiated Agricultural Commodities: A Case of Soybean Markets.” Koichi Yamaura and Tian Xia

Economic Consequences of Risk for Participants In Beef Cattle Markets. “Fed Cattle Basis Forecasting: Assessing Alternative Methods and Regional Variation. Glynn Tonsor and Jeremiah McElligott

Agricultural and Resource Economics: Student Perceptions and Choice of Major. “Demographics and Recruitment: Why Do Midwestern Students Major in Agriculture?” Alexi Thompson and Bob Burton

Food and Agricultural Marketing Policy Section (FAMPS) business meeting. Glynn Tonsor, president elect

Extension Section Crops Outlook. Dan O’Brien, organizer and moderator