Specific Objectives of the Project
Examine the benefits from precision agriculture technology and mechanisms of adoption in heterogeneous production environments. Studies of precision agriculture technology have traditionally been done in applications to field crops, and comparatively little research has been done on specialty crops, especially perennial crops. The objective of this study is to examine and document the emerging applications of precision agriculture technology to high-value specialty crops in California, and to demonstrate the potential benefits from adoption.

Project Report/Summary of Results
Over the winter quarter we employed a GSR to compile a literature review of the existing studies on the benefits of precision agriculture technology for agronomic and horticultural crops. We found that precision agriculture technologies available to agricultural producers are abundant, but studies on the economic benefits of these technologies and the rates of adoption are scarce. We decided that the best course of action for completing this project would be to supplement the review of the literature with a review of the current best practices related to the production of major horticultural crops, and, possibly, interviews with representatives of the industry to gauge the trends of adoption of major new technologies. We plan to complete this work over the summer, as it requires a more targeted approach and a slower pace.

The development and deployment of an animal identification (ID) and traceability system nationwide is necessary to protect the health of the human population and animal agriculture industry and to minimize the economic losses due to an animal disease outbreak. In addition, an efficient animal ID system is a necessary precursor to a food safety and traceability system.

While the costs of the system are relatively easy to measure, the accurate measurement of the benefits of such a system is a challenge for several reasons. First, it is necessary to separate the primary and secondary benefits of the system, because we are only interested in measuring the primary benefits of the system. Second, under the National Animal Identification System (NAIS), voluntary participation required adoption of the system where primary benefits do not exist and where only secondary benefits provide value. Third, the evaluation of the secondary benefits varies depending on the type of animal operation, the size of the operation, and the individual needs of the operation. Fourth , the primary benefits of the system are non-excludable and therefore develop characteristics of a public good with associated free rider problems.

This paper outlines the network effects and network externalities associated with the system, the measurement of the primary and secondary benefits of the system and potential solutions to the free rider problems.

In this paper, we estimated the effects of two shocks to rbST use in the dairy industry using discrete-time duration analysis, a method that has been used frequently by other social scientists but less so by economists. The main advantage to using discrete-time duration analysis to model technology choice is that most technology choice decisions are inherently discrete and therefore more accurately modeled as a repeated series of binary decisions.

In our empirical application, we examined the effects of two shocks on the use of rbST by California dairy farmers. We show that the disadoption rate in 2004 was not statistically different from the disadoption rate in earlier years. This suggests that dairy producers interpreted the rationing imposed by the shortage as an atypical event that did not increase their estimation of the costs and risks associated with rbST use enough to warrant disadoption.

The ban in 2007, however, had a large and positive effect on the disadoption of rbST. The disadoption rate was significantly higher in 2008 than in any other year in whichthe disadoption of rbST was possible. While this result is not surprising, it does indicate that for many producers, the benefits from using rbST were not large enough to encourage producers to seek other buyers for their milk and/or pay the surcharge that processors charge to store and handle rbST-milk separately.