ECONOMETRIC ESTIMATION OF TART CHERRY SUPPLY RESPONSE TO LOSS OF PESTICIDE ALTERNATIVES

Many agricultural producers are faced with the prospect of fewer chemical alternatives to mitigate damage from pests such as disease, weeds, insects, and rodents. Decreased pesticide availability can arise from health and environmental standards stipulated in federal and state regulations. Pesticide alternatives can also be lost due to natural pest resistance and economic considerations. The loss of pesticides due to economic considerations is especially troublesome to specialty crop producers such as fruit, fresh vegetable, and ornamental growers. Although these producers may use pesticides more intensively per acre than the major crop producers, the total acreage devoted to specialty crops is often not enough to warrant the pesticide registration costs faced by the chemical manufacturers. The potential loss of important chemical alternatives could significantly affect the supply and price of specialty crops. This research develops an econometric supply and demand model of the tart cherry industry to estimate the supply response to the loss of the pesticides DifolitanTm, GuthionTm, and FungineXTM. The tart cherry industry is representative of many specialty crops in that data on specific pesticide applications, pesticide expenditures, and other important variables are not readily available. Thus, the tart cherry model illustrates the type of analysis that can be undertaken in the face of limited data. The forecast model indicates that there are some important changes on the horizon for the tart cherry industry. Some of these changes appear to be influenced or exacerbated by the loss of pesticide alternatives, while other trends seem inevitable regardless of pesticide availability. A downward trend in grower prices is predicted over the next decade, however, this decline may be overwhelmed by the positive relationship between production losses (due to yield and acreage effects) and grower price. Bearing acreage is also predicted to decline over the forecast period. The decline appears to be slightly mitigated by the price increases associated with the loss of GuthionTm. Yield predictions of course vary according to pesticide availability, with yield declining by up to 1000 pounds per acre when GuthionTM is assumed lost. Finally, the model predicts a declining trend in tart cherry demand over the next decade. Price increases associated with pesticide losses amplify this trend. Direct estimation of the supply response through new plantings and orchard block removals was not possible due to data limitations. A more comprehensive supply response analysis, as well as improved accuracy in the model's predictions, could be obtained with the availability of data on new plantings, orchard block removals, pesticide applications levels, pest damage levels, and orchard characteristics (tree age, tree height, tree width, tree density, etc.)