Paul W. Gallagher

Supply and Social Cost Estimates for Biomass from Crop Residues in the United States

The components of social costsincluded in the supply analysis are cashoutlays and opportunity costs associated withharvest and alternative residue uses, potentialenvironmental damage that is avoided byexcluding unsuitable land, and costs in movingresidues from farms to processing plants. Regional estimates account for the growingconditions and crops of the main agriculturalareas of the United States. Estimates includethe main U.S. field crops with potential forresidue harvest: corn, wheat, sorghum, oats,barley, rice and cane sugar. The potentialcontribution of residues to U.S. energy needsis discussed.

Some long-run effects of growing markets and renewable fuel standards on additives markets and the US ethanol industry

The effects of likely regulatory and policy changes in the US gasoline and additives market are compared to a reference baseline. The baseline reflects existing EPA policies about fuel quality regulation and likely petroleum and gasoline expansions. The market and welfare effects are presented for implementing a renewable fuel standard; imposing a national ban on the additive MTBE; and removing the oxygen standard for reformulated fuel. Market and welfare estimates are based on adjusting product market demands and factor supplies. Product market and price analyses include quality-differentiated products, such as refinery gasoline, chemical additives and ethanol at the wholesale level; and gasoline grades in conventional, reformulated and oxygenated markets at the ratail level. Factor market analyses include supplies for petroleum, natural gas byproducts, and corn. The analysis includes the welfare cost of fuel to consumers and income in agriculture and the petroleum sector.

The Price Responsiveness of U.S. Corn Yields

Production economics theory shows that the pro fit-maximizing output of a commodity depends, among other things, upon product and input prices. Supply functions consistent with this theory have been estimated for many agricultural crops both in the United States and elsewhere. However, the biological nature of the production process, the time lags involved between planting and harvest, and the generally extensive use of land and climate leads naturally to the separation of total crop production into acreage and yield components. Typically, acreage is viewed as the major decision variable with respect to input and output prices. Per acre yields are generally regarded as dependent upon technological trends, weather, and other more or less noneconomic influences. The recent work by Perrin and Heady is a good example of this approach. Only a little literature exists on attempts to measure the price responsiveness of crop yields (Guise, Hee, Krishna), although some recent methodological work can be found (Whitaker). This note concerns the price responsiveness of U.S. corn yields when both output and input prices are considered.

Effects of an Oxygen Requirement for Fuel in Midwest Ethanol Markets and Local Economies

This article examines the effects of an oxygen content requirement for fuel in several midwestern states. Ethanol could dominate the midwestern oxygenate market with federal incentives for ethanol blending or a generalized ban on MTBE; otherwise, price incentives would shift between ethanol and MTBE. Several states would share in the ethanol output expansion, but the largest increases would likely occur in Iowa and Minnesota. A benefitcost analysis of the oxygen requirement suggests that gains for consumers, producers, and local economies would more than offset lost federal tax revenues.

The Grain Sector of the European Community: Policy Formation, Price Determination, and Implications for Trade

A coresponsibility levy was added to high domestic prices and export subsidies in the EC. Levels for policy instruments could result from negotiations which favor producers but are acceptable to the public. Higher domestic prices and levies but lower export subsidies would occur if levy exemptions cover domestic marketings. If exemptions are excluded, low domestic prices, producer subsidies, and export taxes would occur. With exemptions, improved farm income and treasury surpluses would be achieved without injury to the public. Exemptions might be excluded because producers are better off and public cost is about the same with either program but producer subsidies require expanded public financing. Export reductions would occur under either program, given prevailing market conditions.

International Marketing Margins for Agricultural Products: Effects of Some Nontariff Trade Barriers

Trade uncertainty occurs when quality changes or when Administrative Trade Barriers (ATBs) cause a chance that a commodity will not enter the import market. Trade uncertainty adversely affects marketing firms and commodity trade. But arbitrage still precludes the distribution of rents to middlemen. An exporter subsidy may correct price distortions and expand trade towards the highest world welfare. The case for intervention appears strongest in thin markets with a low number of trade transactions and perishable commodities. Nonetheless, promoting trade liberalization before other interventions may still make sense when ATBs are present because reduced trade uncertainty also improves world welfare. Copyright 1998, Oxford University Press.

Some Productivity-Increasing and Quality-Changing Technology for the Soybean Complex: Market and Welfare Effects

Simulations suggest that soybeans with less protein and more oil would alter quality and change quantities on the market. Substitution toward other protein feeds, like fishmeal, would mitigate the benefits from restricted soymeal supply. Thus, there would not be a net welfare gain for the United States, only a redistribution of benefits. But a joint yield increase and composition change would benefit the United States, mainly because livestock producers would pay lower feed prices. Also, industrial processing of soybean oil would become competitive. Hence, soybean research should pursue yield increases by allowing protein reductions.

Stabilizing the U.S. corn market.

This article considers stabilization policies when the government acts before and after the weather is known, uses intervention rules that exclude discretion, and considers multiple policy instruments. Simulations shed light on the benefits and costs of corn-market stabilization and the desirability of acreage control or scarcity policy. Coordinated policies consistently reduce the variability of farm prices and incomes. Further, welfare comparisons against the unregulated market are favorable for some programs. Perhaps the government should avoid joint management of acreage and inventories, though, unless there are exceptional circumstances.