Post Tobacco Buyout Farm Transition |
Federal legislation beginning in 2004 ending the federal tobacco program and instating the Tobacco Transition Payment Program (TTPP), commonly referred to as the tobacco buyout, brought dramatic change to farms and rural communities across the southeast. Many tobacco farmers faced the decision of whether to quit farming altogether, shift to other enterprises, or expand their current tobacco production level. From 2005-2014, North Carolina will receive about $3.9 billion in compensation to former tobacco quota owners and producers.
this NCSU team was used throughout all of the tobacco producing states. The web had over 267,000 hits in 2005. Newsletters (77,000 copies) were sent to all North Carolina quota owners and information packets were mailed to 11,000 growers. The information provided helped farmers decide whether to retire, accept off-farm employment, switch to other farm enterprises, or expand their tobacco production. Information provided to financial providers, attorneys, tax preparers, farmers and quota owners helped them with decisions regarding tax treatment of buyout payments, investment of buyout payments, whether or not to take a lump sum from a financial institute, and estate-related questions.
Contact: Dr. Blake Brown, Department of Agricultural and Resource Economics, N.C. State University
Visit Dr. Brown's Web Page |
Industry Recruitment & Farm Labor |
Industry Recruitment
Dr. Mike Walden wrote the economic impact model used by North Carolina Department of Commerce to evaluate the use of State incentives in recruiting companies to North Carolina. To date, the model has been used to support an aggregate investment of over $1 billion in the State's economy.
Contact: Dr. Mike Walden, Department of Agricultural and Resource Economics, N.C. State University
Visit Dr. Walden's Web Page
H-2A Farm Labor Rule Changes
In September 2009, the U.S. Department of Labor (DOL) proposed amending H-2A rules governing nonimmigrant foreign temporary farm labor to increase the wage rate by about $1.44/hour. North Carolina farms employ almost 19% of all H-2A labor.
Economic analysis of the proposed wage rate increase revealed that the impact would be an annual transfer from farm employers to H-2A workers of about $150 million, nationwide. And, since H-2A workers typically send their wages back to their home countries, almost all of the proposed transfer would effectively leave the U.S. economy. If the transfer from the U.S. economy will exceed $100 million, the DOL is required to complete a more in-depth analysis than that completed in 2009. While the Department of Labor ultimately approved the increase in the H-2A wage rate, the process delayed wage rate increases to 2011, rather than 2010. Potential savings resulting from the delay exceed $28 million for North Carolina farmers. According to the North Carolina Growers Association, the NCSU analysis was instrumental in achieving this savings for farms.
Contact: Dr. Blake Brown, Department of Agricultural and Resource Economics, N.C. State University
Visit Dr. Brown's Web Page
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Calculating Water Quality Benefits |
By statute, many states, including North Carolina, must calculate the dollar value of benefits associated with policies aimed at improving water quality. |
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A method allowing state-level analysts to perform these calculations in a rigorous but accessible way is needed. Using funds awarded by the Environmental Protection Agency, Dr. Dan Phaneuf's group designed a protocol packaging methods for valuing water quality improvements into a user-friendly spreadsheet and the tool was then taught at a workshop attended by water quality managers from North Carolina, Georgia, Mississippi, Vermont, and Virginia. Participant and EPA staff attendant feedback from the workshop suggests that the protocol will be used as part of the policy process in several southeastern states, including North Carolina. Aspects of this research have also been used in assessing the benefits of efforts to bring Falls Lake into compliance with Clean Water Act standards.
Contact: Dr. Dan Phaneuf, Department of Agricultural and Resource Economics, N.C. State University
Visit Dr. Phaneuf's Web Page
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Federal Broadband Loan Programs |
Increasing broadband availability in rural communities has been an important U.S. rural development policy goal over the past decade. Since 2000, federal broadband loan programs authorized under consecutive Farm Bills have directed more than $1.8 billion to private telecommunications provides in 40 states with the explicit goal of making high-speed data transmission capacity available or rural residents and businesses. Most recently, the American Recovery and Reinvestment Act of 2009 authorized $2.5 billion in new federal funding for these same purposes. Arguments in favor of these programs are supported by research projecting large economic benefits from widespread broadband deployment.
However, these projections obscure the fact that the distribution of these benefits is not likely to be uniform, either spatially or across industries. Dr. Mitch |
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Renkow's group provides the strongest evidence to date that the USDA's Broadband Loan Program has affected the performance of the agricultural sector positively, throughout the entire country.
The research revealed that:
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Counties receiving either a pilot broadband loan, administered before 2003, or a current broadband loan, administered following the 2002 Farm Bill, saw an increase of in total commodity sales of 6.6% and 6.1%, respectively, after receipt of the loan.
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Total farm expenditures rose about 3.2% (3.4%) in counties receiving the pilot (current) broadband loan. Combined with the findings regarding sales increases, this finding translates to a farm profit increase of about 3% as a result of the broadband loans.
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Total commodity sales in counties receiving either of the broadband loans are driven primarily by an increase in crop sales.
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The current broadband loan program does not seem to affect total farm acreage, but the earlier pilot loan program does appear to have increased acreage by about 3.6%.
Contact: Dr. Mitch Renkow, Department of Agricultural and Resource Economics, N.C. State University
Visit Dr. Renkow's Web Page |
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Impact of USDA Food Stamp Program on Adult and Childhood Obesity |
Obesity is associated and increased risk for heart disease, stroke, type-2 diabetes, arthritis, and certain forms of cancer — all of which are serious (and costly) conditions. It has been estimated that medical expenditures associated with obesity account for 9% of all national medical expenditures in a given year. Nearly half of this bill is paid for by the government through Medicare and Medicaid expenditures, translating to a higher tax bill for all tax-paying citizens. Moreover, it has been estimated that obese individuals who are Medicare (Medicaid) participants cost on average $1,486 ($864) more per year than their healthy weight counterparts. A sizable body of research has addressed the impact of social welfare programs on the obesity outcomes of participants. One program that has received significant attention is USDA's Food Stamp Program (FSP), designed as a safety net to ensure that low-income families have an adequate amount of food for survival. This research has revealed a considerable amount of evidence linking the FSP to obesity in adult women. However, the research that addresses the connection between FSP participation and childhood obesity failed to identify a similar effect.
In fact, this work has found that FSP participation does not increase, and may actually decrease, the prevalence of childhood obesity. These divergent findings create an interesting economic puzzle, since they suggest that FSP |
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participation affects women and children, who presumably live in the same household as the women, differently. This effect is especially surprising when one considers that the food purchasing and preparation choices are made at the family level, incorporating the preferences of all family members, and that children's food consumption is often controlled by parents. Consequently, adult and child food and weight fluctuation patterns would be expected to be similar.
A team headed by Dr. Xiaoyong Zheng addressed the divergent findings from two bodies of literature, and conjectured that the puzzle derives from the fact that the FSP affects maternal and non-maternal participants differently, a suggestion driven by the underlying pattern that mothers purchase healthier foods. Previous research has, in fact, failed to consider the impact of motherhood on weight and obesity outcomes.
If mothers make health food-related choices and do not have an increased probability of becoming obese from FSP participation, |
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then it is not surprising that children in FSP households do not experience increased obesity risk. Conversely, if the effect of FSP participation on obesity described by previous literature is found to hold for both mothers and non-mothers, alike, then the puzzle remains unsolved.
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To examine this conjecture, the economists performed two separate, distinct, analyses. First, they examined the effect of FSP participation on weight |
accumulation in a dynamic framework. In this portion of the analysis, they found evidence that FSP participation increases the likelihood of obesity for non-mothers, but not for mothers. This finding indicates that FSP participation affects the two groups differently and, further, that women who are not mothers may be driving the effect previously identified in the literature.
Next, to further test the hypothesis, the economists examined whether the underlying mechanism embedded in their conjecture is in fact operative. In particular, they analyzed the nutritional quality of foods purchased, and presumably consumed, by FSP households. Employing data from the A.C. Nielsen HomeScan Survey, they estimated the nutritional quality of food bundles purchased by Food Stamp Eligible (FSE) households. Their results show that households with children do, indeed, purchase healthier foods than households without children.
Given that obesity is a condition commonly attributed to consuming large quantities of unhealthy foods, and that these findings indicate that FSP households with children are less prone to buying unhealthy foods than FSP households without children, the divergent findings of prior research are not surprising. It is, then, not surprising that children living in FSP households are no more likely to become obese than children living in households that do not participate in the FSP.
Thus, the puzzle is solved.
With the knowledge gained from this research, policymakers can redesign the FSP program to improve its efficiency and effectiveness. The FSP has a current annual budget of |
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about $80 million, and accounts for 60% of the USDA's budget. Thus, any improvement in the way the program is managed can result in savings of millions or even billions of dollars. Furthermore, improvement in the program can potentially improve the health of FSP participants and, in turn, save millions, if not billions, of dollars in terms of health care costs.
Contact: Dr. Xiaoyong Zheng, Department of Agricultural and Resource Economics, N.C. State University
Visit Dr. Zheng's Web Page |
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