Agricultural Economics and Marketing Research
The Department of Agricultural and Resource Economics at Colorado State University is engaged in many research projects regarding demand, supply, and agent behavior in the agricultural and food sectors. In addition to the traditional study of agricultural production, management, and finance in the field, DARE faculty and students are also engaged in research related to marketing, consumer behavior, risk and decision analysis, and industrial organization. In addition, our focus on applied research results in a considerable body of policy-relevant research. Our location along the Front Range of Colorado provides ample opportunities for applied research on Colorado and other Western agricultural sectors, including local and organic food systems, the beer and wine industries, fruit production along the Western slope, potatoes in the San Luis valley, livestock and animal ID systems, cooperatives, and agricultural management under resource scarcity.
Agricultural marketing and price analysis is an area of economic study that assesses the performance of agricultural markets from several perspectives. This field emphasizes analysis of marketing systems, food processing, and underlying institutions needed to achieve vertical coordination and supply chain management in the agricultural and food marketing system. DARE faculty look at the behavior of prices across time, form, and place. We also look at the influence of industrial organizations and food businesses on the performance of agricultural markets, where competition can determine the level of prices to a degree.
Some of our studies of price behavior have looked at retail pricing in numerous fruit and vegetable markets, including products such as potatoes and canned fruit, and also looked at issues in cattle markets related to price transmission across vertical stages in the marketing system and retail meat price linkages across products in the meat case.
DARE faculty members involved in research in the area of agricultural marketing and price analysis include Dr. Marco Costanigro, Dr. Steve Davies, Dr. Steve Koontz, Dr. James Pritchett, Dr. Dustin Pendell, Dr. Dawn Thilmany, and Dr. Jennifer Keeling Bond.
As consumer preferences for food products become increasingly diverse, agents in the supply chain face greater challenges and opportunities when marketing their products and services. Economics provides a theoretical foundation and analytical tools to understand today’s complex, dynamic market place. DARE faculty members work with various local producer groups and retailers, providing analyses that aid them to competitively market their products and services to a more demanding customer. Specifically, consumer demand, preference, and trend analysis can assist with new product development and placement, forming pricing strategies, and making a wide variety of marketing decisions; promotion evaluation can aid groups in determining where their advertising dollars go the furthest; and value chain analysis can suggests areas of potential cost savings and value creation. Econometric tools used to conduct these investigations may include hedonics, conjoint analysis, contingent valuation, and sophisticated regression analysis, among many other techniques.
Dr. Dawn Thilmany assists numerous local producers and industry groups in assessing marketing opportunities including specialty market analysis and value-added agribusiness feasibility studies. Dr. Jennifer Keeling Bond works with cooperatives, individual producers, and marketing organizations to investigate and publish in areas of consumer demand, new-product market potential, promotion evaluation, governance, business feasibility, and financial issues related to value-added agricultural enterprises. Dr. Marco Costanigro has published works on product attribute valuation and market segmentation, particularly as they apply to the U.S. wine industry and devised innovative econometric methodologies to account for consumer heterogeneity, product differentiation, and market segmentation in hedonic modeling. Other DARE faculty members who research in the area of consumer demand include Dr. Craig Bond, Dr. Dustin Pendell, and Dr. Steve Davies.
Almost everyone in the department is involved in agricultural and resource policy in some way or another. Research interests cover a broad spectrum of contemporary issues from the local level to the national level. CSU is uniquely situated near the headquarters or hubs for several Federal agencies like the US Department of Agriculture, the US Geological Survey and US Forest Service, which expands the range of projects we work on. Dr. James Pritchett, Dr. Andy Seidl, Dr. Dawn Thilmany, Dr. Greg Graff and Dr. Dana Hoag, for example, conduct research on the national farm policies including commodity support programs, conservation, food and nutrition, research, technology and development, and rural development. Working locally with USDA, Dr. Dustin Pendell looks at animal identification systems. In cooperation with the State Department of Agriculture and USDA, Dr. Dawn Thilmany has a research program about product labeling and farmers markets. Dr. Jennifer Bond is interested in how Cooperatives function, and Dr. Steve Koontz is concerned about whether cattle markets need government intervention to stay competitive.
Since there is an emphasis in the department on natural resources and the environment, several faculty also work on policy issues where agriculture has an impact on or is influenced by the environment. Dr. Chris Goemans, Dr. Marshall Frasier, Dr. James Pritchett, Dr. Craig Bond, Dr. Dana Hoag, Dr. John Loomis, and Dr. Andy Seidl have looked at water use and conservation, organic foods, wildlife (e.g. prairie dogs, elk, deer), ecosystem function, sustainability, public and private land use, water pollution from agriculture, conservation easements and agricultural preservation. Our department cooperates with faculty in several other departments including Soil and Crop Sciences, Animal Sciences, Natural Resources, Engineering, Sociology, Psychology, and Family and Consumer Sciences.
Given the competitive nature of production agriculture, much of the research in this area is focused on determining the efficient use of resources in the production process. These resources include both fixed and variable input factors involved in producing products. Examples would include land, water, labor, capital used to purchase operating inputs (seed, fertilizer, fuel, etc.) and capital used to invest in producing assets (cows, ewes, irrigation systems, etc.).
Often research in production agriculture entails a multi-disciplinary approach to account for the many ramifications of the decision outcome. For example, research into beef herd expansion has animal nutrition, genetics, feed and forage, financing, and marketing implications associated with the decision. Thus, Ag production research can involve a myriad of questions requiring an interdisciplinary interchange to properly address the many issues facing today’s producers.
A key area of the Department's research into Agricultural Production is related to limited irrigation systems. The Limited Irrigation Agriculture Project (with Drs. James Pritchett, Ajay Jha, Marshall Frasier, and Craig Bond)is a multi-disciplinary project with the objective of developing integrated water, weed and tillage management techniques that efficiently use limited irrigation water supplies to enhance economic sustainability. In addition to field trials, economic analysis of the results will be used to develop decision support systems for limited irrigation in the Great Plains. Benefits and methods of site-specific weed management will be evaluated, and the regional economic activity generated by limited irrigation will be quantified and analyzed.
All economic analysis is a form of Decision Analysis. Researchers in DARE are looking at risks in markets, production and institutions. Marketing professors are looking at how producers at every level of the supply chain make decisions and how market institutions, like the futures market, effect decisions. For example, currently researchers are looking at the role of individual identification for livestock. Production professors examine how producers make decisions about tillage, water, labor, pesticide and other inputs as they relate to farm viability and community health. Institutions of interest include government agencies that attempt to influence farming systems such as the Natural Resource Conservation Service.
One major risk effort is the research and outreach program called RightRisk, involving Drs. Dana Hoag and Jay Parsons. The program includes a ten-step management program and a computer simulation workshop that puts users in realistic agricultural management scenarios. Another that is becoming more widely discussed as well as accepted by agricultural producers in Colorado is insurance. Utilizing insurance as a revenue (income) protection tool involves understanding one’s ability to bear or carry risk as well as analyzing the level of coverage and selecting the appropriate insurance product to meet the needs of the individual producer is very important.
Finally, many researchers are looking at risk indirectly through decision analysis. Economic theory provides a rich tapestry for explaining behaviors like when and why farmers and ranchers adopt technologies, why politicians advocate one policy over another, or why some people adopt environmental protection measures more readily than others. Knowing why people donate land for conservation easements can help society better protect land. Likewise, understanding how markets work can help a decision maker use the futures market to manage risk.
Our core research in management and finance considers how small and medium sized businesses allocate their physical, human and financial resources. Research encompasses many dimensions including entrepreneurial activities, strategic positioning, direct and niche marketing, evolving consumer preferences, investment analysis and succession planning. Many business forms are examined including sole proprietorships, limited liability companies and cooperatives.
Faculty that work in this area include Dr. Jennifer Keeling Bond who investigates the management, marketing, and financial features of agricultural cooperatives, marketing orders, and small agribusinesses. Dr. Norm Dalsted has extensive experience in the area of financial reorganization, Chapter 11 and 12 bankruptcy, financial mediation, financial statement preparation and analysis. Moreover, Dr. Dalsted has developed materials explaining succession planning and estate planning while working with a number of Colorado farm and ranch estates. Dr. James Pritchett’s applied research considers firm level risk management (crop insurance and marketing plans), investment analysis using real options, strategic planning for cooperatives using benchmark data, best management practices for nutrient recycling (manure) and the adoption of limited irrigation practices. Dr. Dawn Thilmany’s applied research program includes feasibility analyses for value-added and alternative enterprises, as well as analysis of how financial performance may vary across regions and areas with more or less urban influence.
Graduate students in management and finance receive valuable, hands-on training when working on applied management and finance issues. These students have recently completed internships with a Fort Collins agricultural marketing cooperative, the USDA Agricultural Research Service and CoBank, the national bank of cooperatives. As part of the research team, graduate students interact extensively with agribusiness and government stakeholders including Colorado’s Potato Advisory Committee, the Colorado Association of Wheat Growers, the Colorado Department of Agriculture, the USDA Animal and Plant Health Inspection Service, the Colorado Livestock Association, the Colorado Wine Industry Development Board, Colorado Homestead Market, Western Sugar, Inc. and many more. Students are actively engaged in research presentations at national meetings and many have the opportunity to develop their teaching skills through assistantships in our undergraduate agribusiness program.
Industrial Organization research focuses on the strategic behavior of firms among different stages of the food marketing supply chain, and work in the department is primarily focused on effects of contracting relationships (Drs. Steve Koontz, James Pritchett, and Jennifer Keeling Bond), potential market power exerted because of consolidation (Dr. Steve Koontz) and coordinated activities to retain value and product identity through supply chain relationships (Drs. Marco Costanigro, Dawn Thilmany, and Jennifer Keeling Bond).