Economics Working Group Progress Report

1. Economics Working Group Progress Report Eric Belasco, Suzette Galinato, Jingze Jiang, Tom Marsh, and Srinivasa Ponnaluru March 13, 2012

2. Overview • Economic Model of Optimal Mulch Use • Jingze Jiang, Tom Marsh, Eric Belasco • Enterprise Budgets • Suzette Galinato • Production and Risk • Eric Belasco

3. Optimal Mulch Use • 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

4. Optimal Mulch Use Profit= Revenue-Costs Markets & Demand Environmental Concerns Yield & Quality Production Inputs & Disposal Experiments Information/Relationships

5. Optimal Mulch Use • 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

6. Price Analysis • 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

7. Enterprise Budgets • 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

8. Enterprise Budgets • 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

9. Plastic Mulch Calculator • 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

10. Production and Risk • 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

11. Production and Risk • 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

12. Production and Risk • 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

13. Production and Risk • 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)

14. Publications/Drafts • 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.

15. Thank you