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Economic Value of Information: Wheat Protein Measurement

Author

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  • Miao, Ruiqing
  • Hennessy, David A.

Abstract

In this paper we study U.S. wheat farmers’ willingness to pay for near infrared (NIR) sensor that can segregates wheat grains according to their protein concentration. We first develop a microeconomic optimization model of wheat farmers’ segregating and commingling decisions. Then we use U.S. wheat prices and stocks to estimate a wheat protein stock demand system. This allows us to establish the effects of changes in the protein profile of wheat stocks on protein premiums. The paper’s simulation section combines the results from the microeconomic optimization model and from the econometric estimations to simulate wheat farmers’ WTP for the sorting technology. Preliminary findings from the simulation show that a typical hard red winter (hard red spring) wheat farmer’s WTP for the sorting technology is 5.6 (4.8) cents per bushel.

Suggested Citation

  • Miao, Ruiqing & Hennessy, David A., 2011. "Economic Value of Information: Wheat Protein Measurement," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103974, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea11:103974
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    File URL: http://purl.umn.edu/103974
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    Keywords

    information; economic value; wheat; protein; market structure; Crop Production/Industries; Production Economics; Q12; Q16; D81;

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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