Department of Agricultural Economics
- Effects of Horizontal Consolidation under Bilateral Imperfect Competition between Processors and Retailers
As agricultural food processing and retailing industries have become increasingly concentrated, numerous studies have examined the impact of changes in market structure on social welfare. The objective of this study is to examine the effects of horizontal consolidation on the U.S. beef processing industry while considering bilateral imperfect competition between processors and retailers. Results suggest processors tend to exercise oligopsony market power in procuring cattle but are unlikely to exercise market power on retailers. Processors’ market power effects are larger when processors and retailers are assumed to be an integrated single sector than when processors’ market power is considered separately from the integrated retailer-processor market power. Thus, previous studies that do not consider retailers’ potential market power separately from processors’ market power might have overestimated processor’ market power and its effects. The results of this study have been published in Applied Economics and presented at a professional meting and invited seminars. The study has been further extended for two Ph.D. dissertations.
- Optimal Insect Control in Grain Storage
Sampling-based IPM can be economically effective in certain conditions in partially replacing fumigation in controlling insects in stored grain facilities. If those conditions hold, managers can reduce frequency of fumigations, and thus costs.
- IPM Methods in Processing Facilities
Models are being developed to predict insect growth in different locations within a processing facility. This will facilitate analysis to determine economic effectiveness of alternatives to whole-plant fumigation in order to control insects.
Insect Resistance to Phosphine by Stored Product Insects
Integrated Pest Management strategies can be an economically effective approach under certain conditions to reduce, but not eliminate, growth of insect resistance to phosphine fumigants in stored grain facilities. If those conditions hold, managers can reduce future insect control problems, and thus costs, at no extra cost now.
Whole-chain Traceability Technology
A prototype whole-chain traceability system has been developed that allows supply chain participants to select information that they wish to share with other participants, even those several stages down the chain, and deny access to others. This is a key feature for development of a complete traceability system that provides benefits to participants that are greater than the costs.
- Agricultural Policy Research and Extension Programs
Work cooperatively with regional policy education organizations to continuously focus on natural resources, trade and macroeconomy research and extension. Cooperation leads to improved efficiency through sharing information and workload on a regional basis, leading to heightened awareness and improved program development for state and field staff in respective states, then leading to improved assistance to various public audiences in each state. Farm groups and federal agencies have expressed appreciation for the programs which use objective, scientific information to help them better understand the alternatives and consequences in these areas.
- Crop Insurance and Ag Policy Education Program
Agricultural producers in Oklahoma, and in the Southern Plains, are making more informed crop insurance and farm program choices as a result of the Crop Insurance and Ag Policy Education Program. Educational materials, information programs, computer decision aids, fact sheets and news releases have been refined, updated, and delivered to the Oklahoma agricultural industry.
Food and Consumer Economics
- Food Demand Survey (FooDS)
Food businesses operate in an environment where every action is scrutinized, and where mistakes are rapidly disseminated to the consuming public. Staying abreast of consumer trends and knowledge is critically important, but there are many disadvantages with the information now available to food companies. FooDS tracks consumer preferences and sentiments on the safety, quality, and price of food at home and away from home with particular focus on meat demand. The work has helped food companies anticipate the plan for changes in food demand, and has deepened understanding of the ongoing food demand challenges. FooDS has been prominently featured in the agricultural media, and journalists have come to anticipate and rely on the data for monthly reporting in outlets such as Drovers, Feedstuffs, Meatingplace, etc.
- Food Economics Book
Farm animal welfare is a controversial issue, experiencing significant interest from the public. It is quite rare for agricultural economists to write about popular food topics, so it is time for agricultural scientists to address the science behind the agricultural and food debates. Two years from now, when the American consumer is perusing books on Amazon, they will find an honest, objective, accessible, and scientifically valid book, written by Dr. Norwood and his three colleagues in CASNR. It will be one of the few books willing to take on food as a political issue—and food issues are political issues—without affiliating with either one of the political parties.
- 2008-2012 Economic Impact of the Robert M. Kerr Food & Agricultural Products Center at Oklahoma State University
The Robert M. Kerr Food & Agricultural Products Center (FAPC) has been providing services to the value-added agribusiness sector in Oklahoma since 1997. In 2001, the FAPC and its Industry Advisory Committee determined the State of Oklahoma needed an estimate of FAPC’s impacts to justify the use of state dollars to support the Center. Resulting surveys provided information on the sales, employment, and statewide impacts of their operations, but did not specifically identify the percentage of those impacts attributable to the FAPC. However, a 2013 survey captured the 2012 sales and employment data for FAPC clients from 2008-2012, changes in sales and employment since 2007, and the percentage of those changes directly attributable to the FAPC. Findings show the total impact of FAPC assistance on economic activity for the state was approximately $18.7 million for calendar year 2012.
- Grain Grading Schools
As a result of nine grain grading schools offered in 2013, grain grading accuracy improved, reducing risks for both producers and grain handling firms. The grain pricing system became more efficient, increasing the premiums for producers delivering high quality grain. Over 400 agribusiness personnel attended the schools.
- New Product Development Center (NPDC)
The New Product Development Center (NPDC) focuses on solving real-world innovation challenges faced by small- and medium-sized manufacturers in Oklahoma. Integrated teaching, research and extension ideas with interdisciplinary involvement of CEAT and DASNR and the cooperation of numbers state programs including OCAST, the Oklahoma Manufacturing Alliance, and the Oklahoma Department of Commerce make the NPDC unique and successful. NPDC project impacts are measured by post-project surveys by Oklahoma Manufacturing Alliance Extension Agents and are audited by NIST. Our initial NIST contract started in October 2010 and ended in September 2013. Surveys showed impacts are estimated at $3.3 million of capital investment, $6.9 million in unnecessary investments avoided, $34.5 million in sales increase, $31.1 million of sales retained, $9.2 million in cost savings, 117 jobs created and 90 jobs retained. We have 102 activities in our data base with 64 different companies. We have closed 67 projects with impact, 11 that had no reported impact and still have 24 open activities as of February 10, 2014.
- Changes in Market Power from the Livestock Mandatory Price Reporting Act: An Agent-Based Auction Model Approach
The Livestock Mandatory Price Reporting Act mandates that packers report the prices they pay producers for cattle and swine. The question addressed is what is the predicted impact of the act based on economic theory? An article published in the American Journal of Agricultural Economics calculated the expected impact of mandatory price reporting that reduced uncertainty about the prices being paid. Results show producers benefit from mandatory price reporting regardless of whether the reporting reduces the uncertainty of buyers or sellers. Agricultural producers are better off with mandatory price reporting; thus, research can be used to support renewing the Livestock Mandatory Price Reporting Act.
- Oklahoma Quality Beef Network
The Oklahoma Quality Beef Network (OQBN) is both an educational program and a brand-neutral calf health management certification program that offers Oklahoma producers opportunities for adding value to calves in the marketplace. Producer participation and the number of calves marketed through the OQBN value added health management program increased in 2013. OQBN’s impact reaches beyond the certified sale component. New value-added programs have been developed at participating livestock markets and overall awareness of the value of health management practices has increased. The percentage of Oklahoma’s calf crop marketed as value-added has increased from 3.06% in 2007 to 6.43% in 2012.
- Packer-Feeder Simulation
The Fed Cattle Market Simulator, developed in 1990 has been the basis for an OSU course and 100 groups of marketing workshops in Oklahoma, 17 other states, Canada, and Mexico. Workshop evaluations clearly indicate the value of the simulator in teaching economics concepts. Anecdotal evidence indicates the market simulator changes attitudes about how markets work and why; increases knowledge and understanding of pricing methods for various genetic types of cattle; and enhances the bargaining skills of producers. During 2013, three workshops were conducted with over 125 participants. Evaluation comments indicate the market simulator aids participants to better understand price discovery.
Natural Resources & Environmental Economics
- Lake Tenkiller Research
The journal article published by Debnath et al. indicates the public recreational value of maintaining water levels in Lake Tenkiller at normal pool levels through August far exceeds value of additional electrical power generated by drawing down the lake even though electrical power values in August are at their highest annual levels. The article if read and acted upon would show the need for this type of analysis in the state water plan and would provide Oklahoma citizens with a better understanding of the opportunity cost of their lake resources.
- Energy Programming
As the leading industry in the state, energy plays an important role not only in the overall state economy, but also in agriculture. Wind energy production has been growing at a startling rate in Oklahoma, accounting for 23% of total electrical power generated in the state in 2013. At the same time, Oklahoma’s petroleum energy industry is at a level unseen since the early 1980’s. Some of this development is taking place in areas that have not been developed before, and many landowners have little or no experience in dealing with these issues. The impact of the energy industry on Oklahoma agriculture has resulted in significant demand for OCES programming that helps landowners understand and shape these impacts. presentation materials have been prepared targeted at (1) issues faced by surface owners whose land is subject to petroleum development, (2) mineral interest owners and issues in negotiating oil and gas leases, and (3) stakeholders with concerns about the water quality and quantity impacts of petroleum development. There have also been three in-service training sessions focused on petroleum industry issues. In 2013 alone, 16 extension programs were provided to both state and national audiences to deliver the content referenced above. These presentations reached a cumulative audience of 748 participants (not including webinar and broadcast viewers). A total of 19.5 hours of participant-contact time were provided through these programs. Assuming prevailing market rates for attorneys specializing in energy issues are approximately $200 per hour; this resulted in over $2,917,200 worth of consulting value received by audience participants. If information received during these programs enabled landowners to receive additional compensation or more favorable terms in their agreements, the impact of these programs could be significant.
- Water Conservation and Valuation Research Helps Citizens Conserve Resources
The State of Oklahoma has experienced extreme to moderate drought over much of its area in the last two years, making this period the driest period in Oklahoma dating back to 1921 (Mesonet, 2013). Oklahoma City Water Utilities adopted a progressive water conservation program tied to the Lake Hefner Reservoir Level (City of Oklahoma City, 2013). Two workshops entitled, “A Simple Irrigation Audit Homeowner Workshop”, were developed to provide homeowners with tools to assess the proper irrigation needs of their home lawn. By making homeowners aware of proper lawn irrigation methods, it is expected that they will become more conservation minded and aware of their water use. Extending the workshop to larger audience in 2014 is expected to involve outlets such as web videos and television programs such as Sunup. Other municipalities have sought guidance informally about how to implement conservation education campaigns and it is expected this will continue.
Production & Farm Management
- Development of Winter Canola as a Crop to Rotate with Winter Wheat
Oklahoma cropland has been continuously seeded to winter wheat for many years. The continuous cropping of annuals contributes to the buildup of yield-constraining weeds, diseases, and insects. Economic returns are hampered by yield losses and by reductions in grain quality. Crop rotations are not common in Oklahoma because small grain crops such as oats, barley, and rye are not economically competitive. Attempts to include corn, soybeans, and grain sorghum in the planting rotation have not been successful because they don’t fit well with the winter wheat rotation and don’t perform well in dry land conditions. Our research has determined a three year crop rotation that includes canola followed by two years of dual-purpose wheat has a high probability of generating greater net returns than continuous dual-purpose wheat and continuous grain-only wheat. .
- Grain Handling Infrastructure Replacement in Oklahoma
Three hundred and ninety of Oklahoma’s 477 grain storage structures are past their current design life. Oklahoma grain cooperative’s and private grain companies are likely to need to make over $125 million in re-investment in infrastructure in the coming years. This research determined grain production trends for every township in Oklahoma and also modeled the path of grain facility replacement including locations where existing facilities are likely to be combined into larger regional operations. These results are very useful for grain cooperatives considering infrastructure investment.
- Predicting Wheat Yield and Quality with Mesonet Data
Preliminary results of research that examined the relationship between weather data during the February to May period with county yields indicate that weather during the spring period explains 46% of the variation in county wheat yields. The predicted wheat yield and quality for each county are presented each spring via regional meetings sponsored by the Oklahoma Grain and Feed Association and the Oklahoma Agricultural Cooperative Council. The information is being used to allow harvest logistic planning and marketing efforts by grain handlers.
- Canola Production
A research/extension team that promotes canola in Oklahoma has determined that the value of canola produced in Oklahoma has grown from $9 million in 2009 to $41 million in 2012 (USDA NASS). Their estimate of the value of the 2012-2013 Oklahoma crop is $81.7 million (215,000 acres harvest (USDA NASS), $19/cwt price (USDA NASS), 20 cwt/acre).
- Fertilization and Economic Feasibility of Sweet Sorghum Grown as Biofuel Feedstock Using Commercial Fertilizer
Field experiment results from applying poultry litter versus commercial fertilizer (CF) found that after three years of litter application, several soil quality parameters increased for litter amended soils compared to CF. Oklahoma producers now have information on the potential for using poultry litter for biofuel crop production.
- Confirming Why Use of No-Till Crop Production is Limited in Oklahoma
Previous studies have found that for continuously cropped winter wheat in the region, yields from no-till (NT) are significantly less than yields from intensive tillage (IT). The predominance of continuous cropping to wheat may explain the low rate of NT use in Oklahoma. To confirm this face, a survey was mailed to 9,500 Oklahoma farmers, which found that on average, Oklahoma farms that use NT crop more than twice as many acres as those that use IT. Fifty percent of the farms that use NT plant more than 1,000 acres to annual crops compared to 16 percent of the farms that use IT. The NT farms have more diversified cropping operations and use crop rotations. The IT farms plant more than 90 percent of their annual crop acres to wheat and seldom rotate to other crops.
- OSU Master Cattleman Program
Over 70 producers were certified under the OSU Master Cattleman Program in 2013. This program, launched in 2004, seeks to enhance the profitability of beef operations and the quality of life of beef producers by equipping them with vital information on many aspects of beef production, business planning, risk management, and marketing.
- Improved Chick Litter Handling and Transport
A study was conducted to determine to what degree an alternative litter storage process (composting) would decrease mass and affect litter properties, and to conduct an economic analysis of this storage process in the context of transporting litter from poultry dense watersheds to areas of deficient in soil P. Results suggest composting chicken litter will reduce its mass by about 20 percent. This reduction is expected to result in a savings of over $35 million in subsidies, transportation costs, and reduced fertilizer expenditures over the next 20 years. The on-going research is estimating the impact on energy savings.
- Record Keeping: Quicken for Farm Financial Records
Team members updated a Quicken instruction manual and developed a quarterly newsletter for past workshop participants and notebook purchasers. Materials are used in several states and the website receives the second most hits of a department website. Approximately 1,300 individuals are receiving financial information via the newsletter. Team members are also responding to phone, mail, e-mail requests for assistance and/or support. Financial records inform decision making and improve farm/ranch sustainability.
- Enterprise Budgets and Other Software Tools
OSU Enterprise Budgets are Excel templates for principal commodities in Oklahoma plus selected horticultural crops. The spreadsheets are interactive, which allows users to build customized budgets to fit a particular operation. Budgets are updated annually and new templates are developed on request. Budgets for canola, sunflowers, and switchgrass were recently developed. A spreadsheet was also developed to analyze “Sunflower Production to Processing for Biodiesel”. The sunflower production planning software was made available on request to several producers who participated in the Kerr Center’s conference.
- Estate Planning
Team members presented seminars providing a general overview of estate planning considerations for farm operations including basics of the probate and property disposition process, inventory of estate assets, and considerations in choosing estate planning tools. During 2013, 370 producers received training on estate management at eight separate workshops. As a result of the training the participants are able to make better decisions regarding estate planning issues.
- Oklahoma Farm and Business Tax School
Twelve two day sessions are conducted each year for the Oklahoma Farm and Business Tax Schools with two of these in the summer, ten in the fall, and two, one-day special topics courses. Total 2013 attendance was approximately 1,950 tax preparers. Certified public accountants make up 46 percent of the attendance, 27 percent are tax preparers and bookkeepers, 10 percent are enrolled agents, 2 percent are attorneys, and the remaining 15 percent come from a variety of backgrounds. These tax preparers file roughly 80 percent of the farm returns for taxpayers in the state of Oklahoma. High quality, professional instruction makes continuing education credit available for Certified Public Accountants, Enrolled Agents, and Tax Attorneys. Many of those attending have stated that they have been coming to these programs since they began 46 years ago. Participants filed more than 37,645 Federal farm tax returns and 255,428 Federal non-farm tax returns as reported by the participants in the most recent program evaluations. Most of the tax preparers that attend are from Oklahoma however there have been preparers from Kansas, Texas, New Mexico, Arkansas, Florida, and California attending the program in order to maintain their Oklahoma accreditation.
- Risk Management Training for Fruit and Vegetable Producers
Through the Oklahoma Market Garden program and the Risk Management Training program, Extension personnel have been providing training for fruit and vegetable producers. The risk management training has been focused on Native Americans and underserved Americans such as an immigrant community of people from Cambodia. Both groups of participants have expanded vegetable production and have been marketing at their local farmer’s markets thus adding to their incomes.
- Beginning and Minority Farmer Projects
Beginning and minority famers are often at a disadvantage due to being underserved by government and educational programs. This project emphasized specialty crops and underserved commodities and had four target audiences for risk management and crop insurance education: women in agriculture; beef and forage producers; specialty crop producers and producers impacted by Farm Bill changes. Educational programs delivered included meetings for producers to address farm policy issues, two specialty crop season extension workshops and two food safety workshops, a statewide conference for women in agriculture and small business, three regional conferences for women in agriculture, one Annie’s Project workshop series and quarterly newsletters for beef/forage producers. Participants from each project area responded very positively to the information, education and/or workshop provided. Many shared the sentiments of one participant who was quoted as saying, “The education provided through this program is invaluable, I cannot put a price tag on the wealth of information and resource”.
A group of minority farmers in NE Oklahoma have seen extensive progress in their production and ability to reach new markets through the education provided by the specialty crop/food safety workshops. A locally regional grocery store in NE Oklahoma with 19 locations has agreed to purchase produce from these farmers in response to a “buy local” campaign. The farmers’ cooperative indicated it would have not been possible for them to meet not only the production demand, but the food safety requirements, had it not been for the workshops provided by this program.
- Sales Tax Collections in Nonmetropolitan Communities
Community leaders often increase sales taxes to increase revenue, but increased taxes can also decrease retail sales. Community leaders need to know how much an increase in tax rates will increase revenue. An article published in Public Finance Review estimated the impact of sales taxes on retail sales. The results show Oklahoma communities can increase revenue by raising taxes, but the revenue increase will be less than the increase in taxes due to negative effects on retail sales. Local rates less than four percent will have little effect. Rates over four percent will reduce sales, but not enough that sales tax revenues would decrease with increased rates.
- Retail Trade Analysis
The Retail Trade Analysis Extension program has provided nine communities with data useful to evaluating their retail development programs and creating new retail opportunities. In communities which offer fiscal incentives for retail development, the analysis equips those communities to effectively negotiate a mutually beneficial contract. The executive director of the Durant Industrial Authority requests the reports annually to identify and target new retail establishments for Durant, OK. Particular successes the director has had involving this data were securing new, national retail chains like Hibbett Sports and Rue 21 clothing store.
During 2013, the e-commerce program provided training to over 105 small businesses in Oklahoma on how to plan, effectively set up, and promote their websites. Also, since anecdotal evidence suggests that the improved advertising offered by a website can increase small business sales anywhere from 20% to over 200%, the average sales of these business of $150,000 implies that the e-commerce program increased the revenue of small businesses in Oklahoma by between $2.1M and $21.0M during 2013.
- Rural Hospitals: Community Health Engagement Process
The “Community Health Engagement Process” aids community decision makers in evaluating and assessing health services. The end result is that the hospital gains community support and increased market share, and often enhances and expands services. Approximately 10 rural Oklahoma communities and hospitals conducted “Community Engagement Process” and four others increased market share. Two national workshops were conducted to train professionals across the nation with these tools. Professionals in other states were involved in adopting these materials for application in their states. Twenty rural communities conducted health economic impact studies. The end result is increased access to health area and improved quality of health care..
- Community Health Needs Assessment (CHNA)
Extension, in conjunction with the Oklahoma Office of Rural Health, led 18 communities, at no cost, through a facilitation process known as a Community Health Needs Assessment (CHNA) that is focused on community-level health in 2013. Success stories emerged after the process was completed in several communities that participated. Two of these were a pilot weight loss institute in Cleveland and the creation of community-level committees in Idabel to dig deeper into the health priorities identified.s.
- County Government Personnel Training
The County Training Program (CTP) provides training, technical assistance, and certification to county officers and their employees. In fiscal year 2013, 50 certification courses were provided to 1,447 people; twenty-seven workshop sessions were attended by 931 people; and 112 certificates were awarded. Answers to a 2013 evaluation survey indicated that CTP activities had a significant impact on county officer and employee conduct. On a question asking about their experience with the CTP, 46.3% answered “Very Positive,” 44.4% answered “Positive,” and 9.3% responded “Neutral.” No respondent answered “Negative” or “Very Negative.” To a question asking whether they believed they learned at least one thing from CTP classes that would be of positive benefit to their county and its citizens, 89.6% answered “yes.”
- Maintaining a Viable and International Recognized Agricultural Economics Ph.D. Program of Study
A vibrant Ph.D. program helps attract and maintain good faculty members, which allows the department to critically examine Oklahoma’s agricultural and rural resources. Furthermore, the quality of the department is somewhat based on the quality, placement and performance of Ph.D. graduates. Talented domestic students who understand production agriculture and who have undergraduate degrees in agricultural economics are in high demand. High opportunity costs and limited availability of assistantship funds makes recruitment difficulty. In 2008, the department applied and received three USDA Food and Agricultural Sciences National Needs Graduate Fellowships in Agricultural Management and Economics (USDA NNF). The fellowships were awarded to Brenna Ellison, Andrew Griffith and Mallory Vestal. Each student published multiple peer-reviewed journal articles from research conducted that supported Oklahoma Agricultural Experiment Station projects. The program led to more and higher quality research output and publications, than would have otherwise been possible. Each fellow had more than one job offer, and all accepted tenure track faculty positions prior to graduation.