Three essays on the idiosyncrasies of a perennial crop : the case of the US almond market

Abstract

The United States (US) is the dominant global producer and exporter of almonds, and its exports are sensitive to both the supply and demand in other countries. In the first essay a proposed framework that captures supply idiosyncrasies of perennial crops is developed to estimate the excess demand elasticity for US almonds. Global supply, demand and price transmission elasticities are estimated and excess demand elasticities computed. The 2003-2013 mean export demand elasticity for US almonds was -0.244 in the short-run and -0.681 in the long run. Ecosystem Services (ESS) play a key role in providing necessary natural resource inputs into almond production in California. When ESS are threatened, it affects producer investment decisions and the longer-run supply responses of perennial crop producers. In the second essay, a framework incorporating an ecological and economic (eco-economic) approach is proposed. An explicit ecological variable representing water availability is incorporated into perennial producer supply response models. The new eco-economic framework improves fit compared to traditional model specifications. Almond production in California is not only dependent on quality water for irrigation but also commercial pollination services. Since 2005, commercial pollinator service fees for US almond producers have skyrocketed attributed to colony collapse disorder (CCD), which increased bee colony mortality. In the third essay a model incorporating the influence of both CCD and water availability on Californian almond producer behavior is used to estimate producer welfare impacts of these two threatened ecosystem services. Simulation results indicate that the extreme drought reduced production leading to higher prices and a positive impact on producer surplus, whereas CCD increased farmers' costs and negatively impacted producer surplus. The net influence of these mixed impacts from drought and CCD from 2005/06 through 2015/16 was $656 million increase in US almond farmers' producer surplus.