Risk Avoidance and Mitigation Project: Economic Component

1
Risk Avoidance and Mitigation ProjectEconomic
Component

• Dr. Suzanne Thornsbury
• Lourdes Martinez
• Robert Thomson Wright

2
RAMP Grant Objectives

• Develop and deliver alternative arthropod
  management strategies
• Develop and deliver alternative disease
  management strategies
• Measure impact of FQPA-induced alternative pest
  management strategies
• Outreach and extension

3
How to measure impacts?

• Change in physical characteristics of environment
  and fruit
• Change in profitability
• Costs price paid X inputs purchased
• Revenue price received X product sold

4
Measuring Costs

• Baseline cost of production budget
• As representative as possible
• Compromise between accuracy and time needed to
  collect information
• Previously published budget
• NW MI
• Limited detail on chemical inputs
• Collect from individual RAMP participants
• A lot of data needed large time commitment
• Collect from regional focus groups

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Baseline Budget

• Baseline will be used as a measure of control
  between years
• Baseline will be used to calculate percentage
  impacts
• Can be used to calculate breakeven prices and
  yield
• Will act as a point of reference for partial
  budgets

6
Measuring Costs

• Partial cost of production budgets
• Focus on changes made in RAMP blocks compared to
  pre-selected control blocks
• Most experimental block data collected from
  Andrea at the end of each season (compiled from
  consultants records)
• Selected experimental (cultural practices) and
  control block data collected from grower
  participants at the end of each season
• Partial budgets will be used as a measure of
  control within a season
• Partial budgets used to calculate percentage
  impacts within a year

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Partial Budgets
Advantage often better for smaller/shorter-term
decisions Disadvantage assumes consistency
(constant returns, costs, interest rates,
etc.) ignores the time value of money
(inflation, risk, opportunity costs) ignores
timing of cash flows
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Measuring Returns

• We are not collecting individual price data
• Quality scores used as a proxy for comparison
• Processor score sheets (?)
• Yield
• Yield estimates taken by consultants within 10
  days of harvest when they do final scouting
• Comparison of experimental and control blocks

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Summary

• Nobody can predict the economic impacts in any
  given future year.
• Not the battle to the strong, nor the race to
  the swift but time and chance happen to them all
  Aesops Fable
• It may NOT be the battle to the strong nor the
  race to the swift BUT thats the sure way to bet.
• Information to help you decide whether or not to
  bet.
• Want the best information possible to help
  decide whether to pursue a change
• Trade-offs between accuracy and time