Lawton Lanier Nalley

The Relationship between Oil, Exchange Rates, and Commodity Prices

Exchange rates have long been thought to have an important impact on the export and import of goods and services, and, thus, exchange rates are expected to influence the price of those products that are traded. At the same time, energy impacts commodity production in some very important ways. The use of chemical and petroleum derived inputs has increased in agriculture over time; the prices of these critical inputs, then, would be expected to alter supply, and, therefore, the prices of commodities using these inputs. Also, agricultural commodities have been increasingly used to produce energy, thereby leading to an expectation of a linkage between energy and commodity markets. In this paper, we examine the price relationship through time of the primary agricultural commodities, exchange rates, and oil prices. Using overlapping time periods, we examine the cointegration relationship between prices to determine changes in the strength of the linkage between markets through time. In general, we find that commodity prices are linked to oil for corn, cotton, and soybeans, but not for wheat, and that exchange rates do play a role in the linkage of prices over time.

Effect of warming temperatures on US wheat yields.

Significance This study provides insights for wheat breeding efforts, public policy, and agricultural decision making related to climate change. Our findings provide opportunities for the international wheat breeding community to intensify research efforts to increase resistance to heat stress during focused developmental stages. These efforts could result in net positive warming effects since reduced exposure to freeze was found to be a yield-enhancing benefit of warming. Our results indicate that advancements in heat resistance could come at the expense of higher average yields, and that there is currently limited scope for producer adaptation through alternative variety selection. Our results also suggest that irrigation could help mitigate the effects of warming, which has implications for policies focused on the conservation of increasingly scarce water resources. Climate change is expected to increase future temperatures, potentially resulting in reduced crop production in many key production regions. Research quantifying the complex relationship between weather variables and wheat yields is rapidly growing, and recent advances have used a variety of model specifications that differ in how temperature data are included in the statistical yield equation. A unique data set that combines Kansas wheat variety field trial outcomes for 1985–2013 with location-specific weather data is used to analyze the effect of weather on wheat yield using regression analysis. Our results indicate that the effect of temperature exposure varies across the September−May growing season. The largest drivers of yield loss are freezing temperatures in the Fall and extreme heat events in the Spring. We also find that the overall effect of warming on yields is negative, even after accounting for the benefits of reduced exposure to freezing temperatures. Our analysis indicates that there exists a tradeoff between average (mean) yield and ability to resist extreme heat across varieties. More-recently released varieties are less able to resist heat than older lines. Our results also indicate that warming effects would be partially offset by increased rainfall in the Spring. Finally, we find that the method used to construct measures of temperature exposure matters for both the predictive performance of the regression model and the forecasted warming impacts on yields.

Revisiting GMOs: Are There Differences in European Consumers’ Acceptance and Valuation for Cisgenically vs Transgenically Bred Rice?

Both cisgenesis and transgenesis are plant breeding techniques that can be used to introduce new genes into plant genomes. However, transgenesis uses gene(s) from a non-plant organism or from a donor plant that is sexually incompatible with the recipient plant while cisgenesis involves the introduction of gene(s) from a crossable—sexually compatible—plant. Traditional breeding techniques could possibly achieve the same results as those from cisgenesis, but would require a much larger timeframe. Cisgenesis allows plant breeders to enhance an existing cultivar more quickly and with little to no genetic drag. The current regulation in the European Union (EU) on genetically modified organisms (GMOs) treats cisgenic plants the same as transgenic plants and both are mandatorily labeled as GMOs. This study estimates European consumers’ willingness-to-pay (WTP) for rice labeled as GM, cisgenic, with environmental benefits (which cisgenesis could provide), or any combination of these three attributes. Data were collected from 3,002 participants through an online survey administered in Belgium, France, the Netherlands, Spain and the United Kingdom in 2013. Censored regression models were used to model consumers’ WTP in each country. Model estimates highlight significant differences in WTP across countries. In all five countries, consumers are willing-to-pay a premium to avoid purchasing rice labeled as GM. In all countries except Spain, consumers have a significantly higher WTP to avoid consuming rice labeled as GM compared to rice labeled as cisgenic, suggesting that inserting genes from the plant’s own gene pool is more acceptable to consumers. Additionally, French consumers are willing-to-pay a premium for rice labeled as having environmental benefits compared to conventional rice. These findings suggest that not all GMOs are the same in consumers’ eyes and thus, from a consumer preference perspective, the differences between transgenic and cisgenic products are recommended to be reflected in GMO labeling and trade policies.

Enhancing Farm Profitability through Portfolio Analysis: The Case of Spatial Rice Variety Selection

This study applies portfolio theory to rice varietal selection decisions to find profit maximizing and risk minimizing outcomes. Results based on data from six counties in the Arkansas Delta for the period 1999–2006 suggest that sowing a portfolio of rice varieties could have increased profits from 3 to 26% (depending on the location) for rice producers in the Arkansas Delta. The major implication of this research is that data and statistical tools are available for rice producers to improve the choice of rice varieties to plant each year in specific locations. Specifically, there are large potential gains from combining varieties that are characterized by inverse yield responses to growing conditions such as drought, pest infestation, or the presence of a specific disease.

The Impact of Reducing Greenhouse Gas Emissions in Crop Agriculture: A Spatial- and Production-Level Analysis

With the Waxman-Markey Bill passing the House and the administrations push to reduce carbon emissions, the likelihood of the implementation of some form of a carbon emissions policy is increasing. This study estimates the greenhouse gas (GHG) emissions of the six largest row crops produced in Arkansas using 57 different production practices predominantly used and documented by the University of Arkansas Cooperative Extension Service. From these GHG emission estimates, a baseline state “carbon footprint” was estimated and a hypothetical GHG emissions reduction of 5, 10, and 20 percent was levied on Arkansas agriculture using a cap-and-trade method. Using current production technology and traditional land use choices, results show that the trading of carbon-emitting permits to reduce statewide GHG emissions by 5 percent from the baseline would enhance GHG emissions efficiency measured as net crop farm income generated per unit of carbon emissions created. The 5 percent reduction in GHG emissions does cause marginal reductions in acres farmed and has marginal income ramifications. Beyond the 5 percent reduction target, gains in GHG emissions efficiency decline but remain positive in most counties through the 10 percent GHG reduction target. However, with a 10 percent GHG reduction, acreage and income reductions more than double compared to the 5 percent level. When GHG emissions are reduced by 20 percent from the baseline, the result is a major cropping pattern shift coupled with significant reductions in traditional row crop acreage, income, and GHG emissions efficiency.

Economic and Environmental Impact of Rice Blast Pathogen ( Magnaporthe oryzae ) Alleviation in the United States

Rice blast (Magnaporthe oryzae) is a key concern in combating global food insecurity given the disease is responsible for approximately 30% of rice production losses globally—the equivalent of feeding 60 million people. These losses increase the global rice price and reduce consumer welfare and food security. Rice is the staple crop for more than half the world’s population so any reduction in rice blast would have substantial beneficial effects on consumer livelihoods. In 2012, researchers in the US began analyzing the feasibility of creating blast-resistant rice through cisgenic breeding. Correspondingly, our study evaluates the changes in producer, consumer, and environmental welfare, if all the rice produced in the Mid-South of the US were blast resistant through a process like cisgenics, using both international trade and environmental assessment modeling. Our results show that US rice producers would gain 69.34 million dollars annually and increase the rice supply to feed an additional one million consumers globally by eliminating blast from production in the Mid-South. These results suggest that blast alleviation could be even more significant in increasing global food security given that the US is a small rice producer by global standards and likely experiences lower losses from blast than other rice-producing countries because of its ongoing investment in production technology and management. Furthermore, results from our detailed life cycle assessment (LCA) show that producing blast-resistant rice has lower environmental (fossil fuel depletion, ecotoxicity, carcinogenics, eutrophication, acidification, global warming potential, and ozone depletion) impacts per unit of rice than non-blast resistant rice production. Our findings suggest that any reduction in blast via breeding will have significantly positive impacts on reducing global food insecurity through increased supply, as well as decreased price and environmental impacts in production.

The Impact of the Kansas Wheat Breeding Program on Wheat Yields, 1911-2006

This paper quantifies advances of the Kansas Agricultural Experiment Station (KAES) wheat breeding program for two time periods: (1) 1911 to 2006 and (2) 1977 to 2006. Using multiple regression, increases in yields of wheat varieties grown in Kansas are quantified, holding growing conditions and other improvements in productivity constant. Differences in KAES variety yields and those released by other public and private breeders are quantified. During the ‘‘new age’’ of wheat breeding (1977–2006), wheat breeding alone is found to have increased yields by 6.182 bushels per acre, or an average increase of 0.206 bushels per year.

Irrigation restriction and biomass market interactions: the case of the alluvial aquifer.

The U.S. Geological Survey has determined that irrigation in Arkansas’ Delta is unsustainable. This study examines how irrigation restrictions would affect county net returns to crop production. It also considers the effect of planting less water-intensive bioenergy crops—switchgrass and forage sorghum—in the event biofuel markets become a reality. Results suggest that sustainable irrigation restrictions without bioenergy crops would decrease producer returns by 28% in the region. Introducing these alternative crops would both reduce groundwater use and may restore state producer returns, albeit with significant spatial income redistribution to crop production throughout the state.

High vapor pressure deficit drives salt‐stress‐induced rice yield losses in India

Flooded rice is grown across wide geographic boundaries from as far north as Manchuria and as far south as Uruguay and New South Wales, primarily because of its adaptability across diverse agronomic and climatic conditions. Salt-stress damage, a common occurrence in delta and coastal rice production zones, could be heightened by the interactions between high temperature and relative humidity (vapor pressure deficit--VPD). Using temporal and spatial observations spanning 107 seasons and 19 rice-growing locations throughout India with varying electrical conductivity (EC), including coastal saline, inland saline, and alkaline soils, we quantified the proportion of VPD inducing salinity damage in rice. While controlling for time-invariant factors such as trial locations, rice cultivars, and soil types, our regression analysis indicates that EC has a nonlinear detrimental effect on paddy rice yield. Our estimates suggest these yield reductions become larger at higher VPD. A one standard deviation (SD) increase in EC from its mean value is associated with 1.68% and 4.13% yield reductions at median and maximum observed VPD levels, respectively. Yield reductions increase roughly sixfold when the one SD increase is taken from the 75th percentile of EC. In combination, high EC and VPD generate near catastrophic crop loss as predicted yield approaches zero. If higher VPD levels driven by global warming materialize in conjunction with rising sea levels or salinity incursion in groundwater, this interaction becomes an important and necessary predictor of expected yield losses and global food security.

Estimating Yield Gaps With Limited Data: An Application to United States Wheat

The objective of this research is to estimate and analyze the gap between in-trial yield potential, on-farm yield potential, and actual on-farm wheat yields. Yield gaps are quantified by measuring how varietal mean yields have changed over time, due to productivity increases generated by public and private wheat breeding programs. Variety performance trial data for Kansas winter wheat are used to summarize the evolution of wheat yields over the time period 1985 to 2011. A measure of yield potential is compared to actual on-farm yields to derive implications for wheat industry stakeholders. Persistent and expanding yield gaps between potential yield and actual on-farm yield are measured and analyzed. Producers’ variety adoption decisions explain a relatively small portion of this gap, and producers have become more effective at identifying and adopting yield-enhancing varieties over time. The largest portion of these gaps was explained by on-farm production decisions.