ECONOMIC IMPACT OF CANCELLING PESTICIDE X USE ON SOYBEANS

The yield reduction and increase in cost of production due to the cancellation of pesticide X is estimated to result in a 8.39 per cent increase in the price of soybeans. A single product (soybeans) supply-demand model was used to estimate the impact of cancellation. The net impact upon producers is estimated to be a reduction of profits of $106.8 million. The Lake States and the Corn Belt realize an increase in profits while other regions suffer losses. The reduction in consumer welfare is estimated at approximately $1.2 billion for domestic and foreign consumers ($3.55 per capita for U.S. consumers). The implications of the major simplifying assumptions used in the model are discussed briefly