Agribusiness & Applied Economics Masters Theses

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An Empirical Analysis of U.S. Foreign Direct Investment and Exports of Processed Food Industries
(North Dakota State University, 2006) Haque, Mohua
This study examined the determinants of U.S. foreign direct investment (FDI) and exports of processed food. This study also examined the impact of U.S. FDI on U.S. exports on processed food. FDI and export models used for estimation in this study were based on the cost-minimizing production function. The analysis focused on ten countries for the period of 1989-2004. Four of them were Asian countries: India, Japan, South Korea, and Thailand. Six of them were European countries: Belgium, France, Germany, Italy, Spain, and the United Kingdom. The model was estimated using the two-way error component three-stage least squares (EC3SLS) method. Results from this study show that U.S. FDI and U.S. exports of processed food are complements. Major factors affecting U.S. FDI in the processing industry are GDP, GDP per capita, exchange rate, tariff rate, labor compensation cost, interest rate, and distance. Major factors affecting U.S. exports in the processed food industry are GDP, distance, and GDP from the agri-sector.
The Effects of Deregulation on Rail Rates: A Study on Wheat, Barley, Corn, Oat, and Soybean
(North Dakota State University, 2006) Vinje, Daniel Martin, 1959-
Although the original intent of this study was to do a pre-and post-deregulation assessment of rail rates per ton-mile, the results using post-deregulation data show a significant decrease in rail rates between 1981 and 2000. While accounting for changes in shipment characteristics, savings for wheat, barley, com, oat, and soybean shippers were 63.80%, 69.17%, 49.07%, 67.97%, and 59.36%, respectively. Rate savings over time for an average 1981 shipment were 45%, 55%, 38%, 45%, and 36% for wheat, barley, com, oat, and soybean shippers, respectively. Analysis regarding the effects of deregulation of rail rates on com, soybean, and wheat on a regional basis shows that rail rates not only differ across commodities, but also among regions. In general, it was found that grain producers within regions that had higher levels of intermodal competition had lower rates than their counterparts with lower levels of intermodal competition. Distribution of benefits as a result of market-based pricing has varied among regions, and these variances are increasing over time.
Preferences of Tourists and Locals Toward Ecotourism Development on the Standing Rock Sioux Indian Reservation
(North Dakota State University, 2006) Tuscherer, Sheldon Ray, 1967-
Studies have shown that ecotourism is one of the fastest-growing sectors in the tourism market. To date, there has been very little systematic research focused on the general topic of ecotourism development on Indian reservations. This study researches possible ecotourism alternatives on the Standing Rock Sioux Indian Reservation (SRSIR) in North Dakota. Choice experiments were employed to analyze the preferences of reservation residents and those of cultural tourists. Reservation tourism personnel and local investors will benefit from the information this study provides. Data for this research were collected through a series of field surveying campaigns. Surveying was conducted on the SRSIR as well as off reservation sites in the surrounding area. All respondents were adults and included a random sample of reservation residents and tourists who demonstrated an interest in cultural and/or nature-based tourism experiences. Results of this study demonstrate an overwhelmingly positive attitude by all populations toward ecotourism development. Local residents and powwow tourists proved to be insensitive to price, contradicting economic theory. Non-powwow tourists proved to be sensitive to price.
Determining and Evaluating Cost-Effective Food Safety Risk Reduction Strategies at Retail Meat Facilities
(North Dakota State University, 2006) Lehrke, Linda
In spite of the documented success of Pathogen Reduction and Hazard Analysis and Critical Control Points (PR/HACCP) at the processing level, farm-level and retail-level application is optional. Several factors impact the gap of food safety regulations from farm to fork. This thesis focuses on the retail level. At the retail level, pathogen survival and the associated ability to cause further disease to humans even after being subjected to certain processing and packaging conditions have varying implications on the probability of sickness or death. This issue also arises over the fact that, sometimes, appropriate handling and processing instructions are not properly followed by consumers. The primary goals of the project are to develop an optimal food safety intervention strategy that incorporates risk, cost, and the value of pathogen reduction with alternative control mechanism. We wish to evaluate incentives for PR/HACCP-like planning and adherence to best management practices that promote safe food production. These incentives will be evaluated for the retail level. In addition, we will develop optimal intervention strategies for ready-to-eat meats and poultry products that incorporate risk assessment, cost of intervention, and the value of risk reduction of alternative strategies for the farm-to-table continuum. The model adopted in this study is an expansion of the stochastic optimization model developed by Nganje, Kaitibie, and Sorin (2005) to include the optimal intervention strategy at the retail ( consumer) level. These components are simulated with firm-level microbial data at the processing and retail level using stochastic optimizer software. Stochastic dominance was also used to compare across the optimal strategies and determine if there is one clear choice that is preferred. This allowed us incorporate risk preferences of firms. The scenario method was used to determine what factors would likely affect the adoption of PR/HACCP at the retail level. Finally, this thesis provides firms and policymakers a direction for future options concerning risk mitigation strategies.
An Economic Assessment of Genetic Information: Leptin Genotyping of Breeding Cattle
(North Dakota State University, 2006) Mitchell, Jay Douglas
Recent studies show polymorphisms in the leptin gene significantly impact milk production in dairy cattle. If the leptin gene were to have a similar impact on beef cattle, calf weaning weights would be expected to increase from the increased milk production in the cows. Since weaning weight is a key component of profitability in a cow-calf operation, leptin genotyping may prove to have an economic impact in breeding cattle. However, no research has been done to link the economic impact of increased milk production to breeding cattle. Using 595 observations from genotyped cows spanning 11 years (1995-2005), calf weaning weight by genotype is estimated as a function of calf and dam characteristics and environmental effects. A MIXED procedure, utilizing data from 89 culled cows, is used to determine statistical differences in average cull age by genotype. A simulation model calculates mean annualized equivalent return by genotype and breed using the regression coefficients and residuals and 16 years of price data. results show that at least one T-allele in breeding cows increases calf weaning weight, average cull age, and annualized equivalent return compared to cows with homozygous C-alleles. These results indicate that there may be future premiums and discounts for breeding cattle based on genotype. Seedstock producers could potentially begin to segregate herds based upon genotype so that they could sell genotypic registered products. Cow-calf producers may also benefit from this knowledge by increasing the amount of TT genotype breeding cattle in their herd to maximize profits.
Evaluating the Economic Feasibility of Canola Biodiesel Production in North Dakota
(North Dakota State University, 2006) Tapasvi, Dhruv, 1981-
Numerous factors have pushed energy from biomass to the forefront of policy and industry discussions. Large harvests of traditional crops, low farm prices, dependence on foreign energy sources, and environmental problems have increased interest in renewable energy sources. Tools are needed to evaluate and compare different available feedstocks and to identify parameters and modifications for the production of renewable fuels such as biodiesel. The first paper examines the development of a biodiesel process model using commonly available spreadsheet software and process-engineering principles. The basis of the model is a continuous process with two stirred-tank reactors and sodium methoxide catalysis. The process is modeled as 27 units with 51 flows and 18 components. Mass flow rates and compositions of the process input and output streams are quantified using mass and component balances, energy balances, stoichiometric relations, and established process parameters. Oil composition and rate, methanol:triglyceride ratio, and expected transesterification of triglyceride are the user-specified inputs in the model. Based on commonly reported parameters (6: 1 methanol:triglyceride ratio and 98% transesterification) and a basis of 100 kg/h crude soybean oil, the model computes inputs of 13.8, 10.8, and 34.7 (in kg/h) for methanol, 10% sodium methoxide in methanol, and process water, respectively; and outputs of 93.5, 10.3, and 55.6 for soy biodiesel, glycerol, and waste stream, respectively. In the second paper, the mass flow rate data from the developed biodiesel process model are linked to cost data for evaluating the economic feasibility of biodiesel production in North Dakota with canola oil as the feedstock. Estimations of capital investment cost and total annual biodiesel product cost are conducted for two canola biodiesel production plants with 5 and 30 million gallons per year (MGY) capacities. These capacities were selected based on North Dakota and neighboring states' biodiesel demands, respectively. Capital investment cost analysis shows the presence of considerable economies of scale for the biodiesel production process for the two capacities. These cost calculations are based on the purchased equipment cost calculated from the equipment specifications. Total annual biodiesel product cost analysis shows that the major portion (>80%) of the total product cost is the raw material cost, similar to the analysis of previous economic feasibility studies. Cost benefits from the economies of scale are still present for the fixed charges, general expenses, and the manufacturing costs (other than the raw material costs) in the annual product cost calculations for the two production plant capacities. Finally, based on the gross profit evaluation for both plants, this study concludes that it is more worthwhile to invest in the 30 MGY production plant because of the greater cost returns from the economies of scale benefits. The results are more encouraging after the incorporation of the federal biodiesel tax incentive and favor the investment for biodiesel production in North Dakota.
Using Stochastic Optimization and Real-Options Models to Value Private Sector Incentives to Invest in Food Protection Measures
(North Dakota State University, 2006) Lewis, Andrew Michael
Agro-terrorism has become a major concern since the September 11, 2001, terrorist attacks due to characteristics that create unique problems for managing the threat of an agro-terrorist attack. The costs of trucking delays alone were in the tens of millions of dollars. Over the last few years, the government has spent billions of dollars on biological surveillance and record keeping in preventing potential attacks. Several public and private initiatives are currently in use. Examples include 1) the bio-terrorism regulation of 2004 on maintenance of records; 2) establishment of food protection centers for research and teaching excellence; and 3) investments in emerging technology, such as radio frequency monitoring (RFEM) technology, with the potential to track shipments and provide real-time data that can be used to prevent agro-terrorism risks along food supply chains. This thesis addresses the costs and risk premiums associated with alternative tracking strategies, where and when along the milk supply chain these strategies will reduce the most risks, and what policy implications are associated with the most costeffective tracking strategy. To accomplish these objectives, stochastic optimization is used to determine the costs and risk premiums of alternative tracking strategies. Next, the realoptions method along with a portfolio of options, also referred to as the "tomato garden" framework, is used to determine where and when alternative intervention strategies should be implemented to reduce the most risks. Finally, policy implications are derived on the cost-risk tradeoffs, probability of attacks, and containment efforts if there is an attack by using game theory to determine the incentives needed to motivate participants in the milk supply chain to invest in security measures.
Private and Social Costs of Hazardous Material Transportation: A Model for Anhydrous Ammonia Distributions in North Dakota
(North Dakota State University, 2006) Zimanski, Michael Robert
The transportation of anhydrous ammonia, which is classified as a hazardous material, poses risk to the transporter, surrounding communities, and the environment. The commercial transportation of anhydrous ammonia is highly regulated, while the private transport is not subject to the same degree of mandates. Given the regulatory policies, the current locations of licensed dealers of anhydrous ammonia within North Dakota may be leading to a scenario where a private transporter has an incentive to disobey these policies and thereby expose him/herself, the surrounding communities, and the environment to unnecessary risk. Three stylized counties were constructed to represent the attributes of the eastern, central, and western counties of North Dakota. Attributes included transportation infrastructure, population distribution, and crop composition. Mathematical programming techniques were then utilized to determine the number and optimal location of licensed dealers of anhydrous ammonia within these counties. The results were then compared and contrasted with the current locations of licensed dealers throughout North Dakota to determine if the regulatory policies are sufficient in that they are not encouraging unsafe actions of the transporters and thereby endangering the transporters, surrounding communities, and the environment. The results indicated that the current regulatory structure associated with the transportation of anhydrous ammonia is sufficient to limit incidents.
Optimal Grain Production and Distribution in China
(North Dakota State University, 2006) Huang, Fengqin, 1975-
The objective of this study is to evaluate the configuration of China's grain production pattern and the implications for agricultural trade. A spatial equilibrium model is developed to optimize grain production and distribution in China and its trade relationship with its trade partners. This study focuses on four grain crops: rice, wheat, com, and soybeans. The model divides China into 31 producing regions and 31 consuming regions. The model also includes seven exporting countries and six Asian importing regions. Results indicate that China can improve its grain production and social welfare through production specialization under a free-trade environment. China could become a major wheat and soybean importer, and a com and rice exporter to Asian countries. The study also provides perspectives on U.S. exports to China and other Asian countries.
A Game Theory Analysis of Firm Reaction to External Organizational Demands: The Case of Animal Welfare Standards
(North Dakota State University, 2007) Tzul, Sheril Sherine
There has been increasing public concern about farm animal welfare regarding transportation, slaughter, and some management practices, especially in systems where animals are confined for most of their existence. Animal welfare organizations (groups) have traditionally focused on forwarding their agendas through legislation, although more recent attempts have focused on convincing large firms that buy agricultural commodities to require particular production process standards to be met. The strategic interactions of players in the egg industry are modeled using a game theory approach. Two scenarios were explored: a principal-agent contract model between food firms and farmers, and a model where two firms are targeted by animal activists. The former model was empirically analyzed while the latter model was theoretically examined. Results for the principal-agent contract model indicate that, in general, the decision by the farmer of whether to invest in a free-range production system is dependent on the probability of being caught cheating. Whether contracts will be accepted or rejected by suppliers is dependent on the premium for free-range eggs. Finally, as the amount that can be lost if caught breaching the contract decreases, investment is motivated only with a higher probability of being caught. Theoretical analysis where competition did not matter and animal welfare was not a determinant of demand shows that animal activists must convince food firms that there will be a significant change in revenue with compliance as opposed to rejecting the contract or negotiating a compromise in order to attain their objectives of increased animal welfare.
Stakeholder Preferences for Water Quality Alternatives in the Red River Basin
(North Dakota State University, 2007) Torpen, David Randal
The objective of this research is to estimate stakeholder preferences for management alternatives within the Red River of the North basin. Specifically, this thesis analyzes preferences related to water quality, water-based recreation, water supply, and institution. Results are estimated using choice experiments. Data show that residents are willing to pay approximately $84 per year for wetland restoration, $76 per year for additional bike trails, and $117 for enhanced fishery management. Taken to an aggregate level of all counties with land in the basin, willingness to pay is approximately $24 million for wetlands, $22 million for bike trails, and $34 million for enhanced fishery management. These values can assist institutions in making decisions related to the basin's water resources.
Pricing Genetically Modified Output Traits and Effects on Competing Technologies
(North Dakota State University, 2007) Johnson, Adam Michael
This study develops a framework for pricing output traits derived from agriculture biotechnology and the effects on competing technologies post-introduction of the genetically modified (GM) variety. The price impact model determines processor or consumer adoption rates and changes in processor, farmer, and tech firm surplus as a result of the release of the new GM variety. Several implications result from this research. First, adoption of the GM variety may not be as high as expected due to the lower cost of using conventional varieties for processing or consumption inputs. Second, both processors who adopt the GM variety and those who continue to use conventional varieties will have an increase in surplus as a result of the introduction of the GM variety. Lower costs of conventional varieties will also result in new entrants into the market.
Offsetting Behavior and the Benefits of Food Safety Policies in Vegetable Preparation and Consumption
(North Dakota State University, 2007) Ndembe, Elvis Mokake
Foodbome disease outbreaks have a tremendous impact on society, including foodbome illnesses, hospitalizations, lost work time, and deaths. These food-safety events have a significant influence in shaping consumers' perception of risk. Outbreaks of foodbome illnesses also have an effect on the development of public health policy. Due to these safety-related uncertainties in the food supply chain, various regulatory, safety, and health policies are implemented to decrease harm to potential victims. The total effect of such food-safety policies looked at in terms of reduction of foodbome illness, mortality, and food-related diseases may possibly be smaller than the forecasted effect because of failure to consider offsetting behavior. Attenuation and possibly reversal of the direct policy effect on expected injuries may arise because of offsetting behavior. This study combines both theoretical and empirical models to test the presence of dominant or partial offsetting behavior (OB) in the preparation and consumption of vegetables if a food-safety policy such as the Pathogen Reduction/Hazard Analysis and Critical Control Point (PR/HACCP) is mandated in the vegetable sector. Our findings indicate that food-safety information that has an effect on outrage and locus of control, both factors which have an effect on consumers' perception of risk, will lead consumers to become lax in response to this food-safety policy.
The Impact of Multilateral Trade Association Membership on Agricultural and Food Trade
(North Dakota State University, 2007) McKoy, Shahera Diane
This thesis models trade flows between countries as a function of several variables, including those representing membership in multilateral trade agreements (MTAs). The objective of this research is to evaluate the impact of trade policies, trading costs, trade agreements and other demographic characteristics on exports of food and agriculture products. More specifically, the paper uses a gravity model augmented with three sets of dummy variables to estimate the impact of 13 trade arrangements on intra-bloc and extra-bloc trade. Results indicate that several MTAs enhance intra-bloc trading at the expense of non-members while others have been successful at increasing both intra-bloc trade and trade with the rest of the world. Findings further suggest that several arrangements had no significant effect on member trading and that a few have effectively reduced trade for members.
A Reference Price Model of Sugar Consumption with Implications on Obesity
(North Dakota State University, 2007) Effertz, Cary Marshall
Obesity has increased dramatically in the past 25 years. The consumption of added sugar has increased significantly during the same time period. Previous research indicates a direct correlation between the consumption of added sugar and the prevalence of obesity. Sugar has been identified in multiple studies as having addictive or opiate-like qualities. Unquestionably, added sugar consumption has contributed to the current obesity epidemic. Here, we apply a reference price economic model to attempt to describe sugar consumption. Using consumption and price data from the Economic Research Service of the United States Department of Agriculture, we made a reference price estimation of domestic refined sugar (sucrose) consumption. Using time-series econometric techniques, we tested the effects of internal and external reference prices, in the form of first differenced own price and price of other nutrient classes, respectively, on sugar demand. Results indicate that internal and, particularly, external reference prices do indeed play a role in consumption decisions. However, the model lacks socioeconomic variables that may help to provide a more complete consumption picture.
How U.S. Agriculture Adjusts to Energy Price Changes
(North Dakota State University, 2007) Gong, Jian
The primary objective of this research is to measure the impacts of rising energy prices on U.S. agriculture and to analyze the capability of U.S. agricultural producers to adjust for energy price volatility. This study compares four different models of producer adjustment: the static model, the simple error correction model, the partial adjustment model, and the fully dynamic model. The first three models are nested within the fully dynamic model using ]948-2002 U.S. agriculture data. Morishima elasticities of substitution and price elasticities are estimated to investigate whether U.S. agriculture's responses to energy prices have changed over time. The elasticity estimates indicate that there are substitutions among production factors in U.S. agricultural production, and the substitution elasticities have increased over the 1948-2002 period. This finding suggests an increasing possibility for farmers to substitute other production inputs for energy to mitigate the effects of changing energy prices.
An Econometric Analysis of Cost Changes in U.S. Trucking and the Implications of Implementing the NAFTA Trucking Provisions
(North Dakota State University, 2007) Peterson, Erica Kay
The United States trucking industry underwent deregulation starting in 1980. There was much opposition to the process in fears that trucking companies would be adversely affected by increased competition. There were also many proponents and researchers who proved that the increased competition due to regulatory reform only helped strengthen the industry by forcing firms to become more cost efficient. There has been similar opposition and support for the trucking provisions of NAFTA. Although the provisions have not been fully implemented, the trucking industry is well aware it will only be a matter of time. In early 2002 it was announced that the process to begin implementing the trucking provisions would begin in mid-2002. Many in the industry and other groups have opposed implementing the provisions, concerned that U.S. trucking firms would be subject to competition from Mexican firms, just as they feared trucking firms would be adversely affected by deregulation more than 25 years ago. This thesis analyzes the effects the 2002 announcement of the process to begin implementing the trucking provisions has had on the cost structure of the industry. It uses a translog cost function to determine if firms have become more efficient in the years following the announcement in anticipation of increased competition from Mexican firms after the provisions are fully implemented. The translog cost function is used to determine what effects the NAFTA variable has had on costs and what specific operating characteristics have caused the costs to increase or decrease.
Impact of Economic, Political, and Socio-Demographic Factors on the Parliamentary Election Outcomes in Central and Eastern European Countries
(North Dakota State University, 2008) Zhelo, Inessa
This study determines how economic, political, and socio-demographic factors impact the parliamentary election outcomes in central and eastern European countries in transition period. A one-way fixed-effect method has been applied to analyze two main economic models. The dependent variables are share of the Western-oriented and traditional-oriented parties. Data of sixteen countries have been used in the thesis. According to the results of this study, it is possible to conclude that outcomes of parliamentary elections in central and eastern European countries depended on political and socio-demographic factors from I 990-2001. Factors such as loans, received from the United States, per capita in the pre-election year, as a measure of external pressure, and share of agriculture in GDP, as a measure of country`s level of development, demonstrate consistent significance in both variations of the model.
Impact of Agricultural Productivity Changes on Agricultural Exports
(North Dakota State University, 2008) Gurung, Ananda Bahadur
This study uses linear programming and econometric tools to determine the impact of agricultural productivity (technology) on agricultural exports. The study determines total factor productivity (TFP) using the Malmquist index method for a panel of 64 countries. Productivity impact on exports is determined by a two-stage estimation procedure. The results show agricultural productivity affects agricultural exports. This has important implications for developing countries. A 1 unit change in cumulative TFP increases agricultural output by .79% and a 1% increase in estimated agricultural output increases exports by .37%. Therefore, the total effect of technology on exports of primary and processed commodities is .29%. Developed countries generally have higher TFP rates, leading to higher export earnings; meanwhile, developing countries are not getting the benefits from agricultural exports because they have a relatively lower level of agricultural productivity. Investing in research and development for agriculture can improve technology, which, in turn, can Increase agricultural exports.
Logistic Strategies for an Herbaceous Crop Residue-Based Ethanol Production Industry : An Application to Northeastern North Dakota
(North Dakota State University, 2008) Middleton, Jason Enil
A mixed integer programming model is developed to determine a logistical design for maximizing rates of return to harvest, storage, transportation, and bioreflning of herbaceous crop residue for production of biofuels and feed for ruminant animals. The primary objective of this research is to identify the optimal location, scale, and number of pretreatment and biorefinery plants in northeastern North Dakota. The pretreatment and biorefinery plants are modeled under the assumption that they utilize recent technological advancement in AFEX and Simultaneous Saccharification and Fermentation, respectively. Potential feedstocks include wheat straw, barley straw, Durum straw, and com stover. Results indicate that the minimum ethanol rack price that will effectively trigger the production of cellulosic ethanol is $1.75 per gallon.

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