Duration: 10/01/2004 to 09/30/2010

Administrative Advisor(s):

NIFA Reps:

Non-Technical Summary

Statement of Issues and Justification

NCT-195 members recognize that the three external forces of trade arrangements, bio-terrorism threats and renewable fuels requirements will have a substantial impact on the U.S. grain and oilseed sector. The forces are external to the firms in the grain and oilseed industry, producers and consumers, and largely outside of their control. They were set in motion by governments, political bodies, non-governmental organizations, and more recently, potential enemies of the U.S. On the timeline of history, changes in trade arrangements have a long record with recent ones, such as NAFTA, being very significant. They are expected to continue. Renewable fuels have a shorter record of changes, but the current federal legislation will cause a major upward jump in usage with a corresponding derived demand effect on the corn sector. Bio-terrorism threats are a relatively new phenomenon but potentially serious enough to warrant an assessment of the consequences. Research is being proposed with the following justifications.

Trade Arrangements

The globalization of world markets, expedited by international policy changes since the Uruguay Round, has created an increasingly competitive world economy. The movement to reduce trade barriers continues through the World Trade Organization (WTO). These efforts are a means to accelerate economic growth, increase incomes and improve living standards. Countries seeking increased regional trade have moved to create regional agreements that free up trade and investment among neighboring countries.

The European Union (EU) is the first, and perhaps best, example of successful regional integration that has increased intra-EU trade and accelerated economic growth. The EU plans for expansion by ten countries in 2004 will have important implications for global grain and oilseed markets. Many other nations have formed similar regional agreements. The North American Free Trade Agreement (NAFTA) among Canada, Mexico and the United States has improved trade among the three countries. Argentina, Brazil, Uruguay, and Paraguay formed the Common Market of the Southern Cone Countries (MERCOSUR) to stimulate trade among member countries. The agreement created a regional market with a population of over 200 million people. Several more groups, including the Andean Pact, the Central American Common Market (CACM), the Caribbean Community and Common Market (CARICOM), have signed agreements, and discussions are under way to form a Free Trade of the Americas (FTAA) that would include all of North and South America.

All these agreements have the potential to increase competitiveness and open markets, both regionally and globally.

Terrorism

One of the most crucial problems facing the U.S. economy is the possibility of a terrorist attack on its food sector. The implications for its stakeholders, who are highly dependent on this sector for their economic livelihood as well as their food supplies, can be profound. Analogous but not direct examples include: foot and mouth disease in the U.K. in 2001 at an estimated cost of $12 billion (Poe, 2000); mad cow disease in the U.K. in 1996 at an estimated cost of $4.2 billion (Turfey, Mafoua, Schilling and Onyango, 2003); southern corn blight in the U.S. in 1970 at an estimated cost of $1 billion (Rogers, Whitby and Dando, 1999); karnal bunt fungus in wheat in the U.S. in 1996 at an estimated cost of $295 million (Turvey, Mafoua, Schilling and Onyango, 2003).

When considering the possibility of a terrorist attack on the food sector, the question seems no longer to be whether such an attack might take place, but rather when, where, and how it will occur. In general, U. S. agriculture is vulnerable to such an attack because of its size and importance to the global economy; as well as its accessibility, lack of genetic diversity, and susceptibility to foreign diseases (Huff, Meilke, and Turvey, 2003).

In addition to being able to predict the likelihood of a terrorist attack on the U. S. food system, and thereby attempting to prevent it by developing various security measures, it is equally important to provide information on the economic impact of an attack on important sectors. The sectors include the soybeans, corn, rice, and wheat markets in the U.S. and their vitally important stakeholders should such an attack occur.

Terrorism is defined as the use of force or violence against people or property in violation of criminal laws with the purpose of intimidation, coercion, or ransom. Bio-terrorism is a form of terrorism that uses biological agents and toxins to produce intentionally disease in susceptible populations. Bio-terrorism is also called agro-terrorism (Davis, 2001). Biological agents include bacteria, viruses, and chemicals (Diez-Gonzalez, 2003). Although an attack on the grain and oilseed industry is usually considered highly improbable, since the September 11, 2001 attacks on the World Trade Center and the Pentagon, it is not regarded as impossible. Biological agents and toxins can devastate locally, regionally, and nationally. Products that are produced in these areas might not be allowed to enter commercial channels because of the possibility of contaminating other areas or causing sickness or deaths of civilians and animals. Thus, a bio-terrorist attack can devastate an entire sector of the U. S. economy. It should be noted that corn, soybeans, rice, and wheat, processed ingredients, animal feed, pet food and their delivery vehicles all serve as potential vectors for intentional contamination, resulting in injury to humans and animals.

Moreover, one should not assume that consumers and the public are the terrorists sole targets. Terrorists may also cause severe economic hardship and market disruptions by damaging production assets and distribution methods (American Feed Industry Association, 2001). Not only will corn, soybean, rice, and wheat producers be impacted if bio-terrorists should ever attack their crops with various biological agents and toxins but other agribusinesses will also. Farm suppliers, agricultural transportation firms, grocery stores, restaurants, equipment distributors, as well as consumers, will all pay dearly. Small towns could possibly be wiped out and put the supply of our food in peril, and perhaps for an indefinitely long period of time (Davis, 2001). Therefore, it is imperative that the economic impact of bio-terrorists attack on this sector of the nations economy and its infrastructure be evaluated.

Economists can be valuable in assessing the economic dimensions of six types of impacts caused by invasive species: (a) production; (b) price and market effects; (c) trade; (d) food security; (e) human health and environment; and (f) financial costs impacts (Evans, 2003). The committee members plan to measure the economic dimensions of these types of bio-terrorism on the corn, soybean, rice, and wheat markets and their infrastructures.

Renewable Fuels

In 2002, the 107th Congress came close to passing comprehensive national energy legislation, and in 2003 the 108th Congress continues to pursue legislation to decrease the nations reliance on imported energy. The Renewable Fuels Standard doubles the minimum use of ethanol to 5 billion gallons per year by 2012. The legislation modifies the small ethanol producer tax credit to allow farmer-owned facilities to fully utilize the credit and updates the definition of a "small producer" to up to 60 million gallons per year of production (Refined Fuels Association, 2003).

In 2002 annual ethanol production surpassed two billion gallons, a 20 percent increase over 2001 production, and a 45 percent increase over 1999. Production capacity exceeds 2.7 billion gallons and a record number of new ethanol plants are scheduled for the future.

These legislated requirements for the use of ethanol in fuels and the incentives for farmer-owned plants will have a substantial economic impact on producers and the U.S. grain sector. The growth in plant capacity over the last four years and the anticipated future growth provide clear indications of the geographic extent and potential size of the impact.

Stakeholders

The major stakeholders include farmers, farmer cooperatives, rural communities, commodity associations, grain shippers, processors, and exporters. Many stakeholders have participated with the grain marketing research committee and plan to continue their participation in the future (Table 1). They have been willing to cooperate in our survey work, host industry meetings, and participate in joint workshops.

Table 1: Stakeholders Participating with the Grain Marketing Committee
Jeanne Reeves	Cotton Inc.	Rural Sociology
Bob Zelenka	Minn Grain& Feed	Grain & Feedstuffs Marketing
Don Hutchins	Nebraska Corn Board	Corn Products Marketing
Pat Ptacak	Nebraska Grain&Feed	Grain & Feedstuffs Marketing
Gary King	Ohio Agribusiness Assoc	Grain &Feedstuffs Marketing
Gary Sebree	U.S.A. Rice Federation	Rice

Multi-State Effort

The national and international inter-dependencies of the proposed research justify a multi-state research effort. This research committee includes members and participants with expertise in several disciplines, including agribusiness, transportation, systems analysis, management, international trade, price analysis, policy analysis, finance, microeconomics and macroeconomics as well as food scientists and engineers. This committee will coordinate with the multi-state committee on grain quality, NC-213, that is working on Management of Grain Quality and Security for World Markets given the complementary nature of the research areas.

Complex economic models are needed in several areas: for interactions among commodity market in several countries; for relationships with other sectors of the economy; and analysis of strategic behavior of governments. Further, specialists close to government decision processes know the range of feasible policy choices. Increasingly, scientists are also needed in the environmental and food-safety disputes of international trade.

The grain marketing research committee has plans for continuing three types of participation with other disciplines. First, sub-projects with external funding formally include participants from other disciplines when technical and economic research issues are both involved. Second, members of this committee informally exchange information with members of other disciplines at their respective institutions when there is no grant money. Agronomists, food technologists, and engineers provide studies or data that can be used in economic analysis. Third, scientists from industry also provide information on technical processing relationships, which makes it possible to conduct cost and location studies.

Many scientists have a history of participation with the grain marketing research committee and plan to continue this participation (Table 2). They have been willing to provide access to the literature and data from their discipline. They participate and function well in interdisciplinary projects and grant activity. These scientists are currently involved with grain marketing research committee members and plan to participate in the new project.

Table 2: Scientists Participating with the Grain Marketing Committee
B. Shanks	Iowa State	Chemical Engineering/Processing
T. Richards	Iowa State	Agr. Engineering/Biomass
Marv Paulson	Illinois	Agr. Engineering
Sam Gobner	Louisiana State	Food Science
Joan King	Louisiana State	Food Science
Wm. Wilcke	Minnesota	Agr. Engineering/crop quality
Hans Jung	Minnesota	Animal Science/Alt. seed crops
Ken Bichel	Minnesota	Mechanical Engineering
Peter Thomison	Ohio State	Crop Science/corn
Gene Pesti	U. Georgia	Poultry Science/Feed Additives
Romeo Toledo	U. Georgia	Food Science & Technology
Loren Giesler	U. of Nebraska	Plant Pathology
David Huxsoll	Louisiana State U.	Veterinary Medicine

Likely Impacts

The information provides baselines for assessing the impacts of existing and proposed domestic grain policies and international marketing agreements. Data and information from the project will be available for economic and policy analysis at local, regional and national levels. To the extent that the created information enhances grain-marketing opportunities for producers, they also enhance the economic well-being of the rural communities that those farmers inhabit. The unbiased information will help the players identify developing trends and to make more informed choices, which should work to enhance profitability, resolve entry, expansion or exit decisions, and identify developing trends.

Work on this project will foster more cooperation and dialogue among the participating institutions and individuals than would otherwise be the case. No one state has the resources to conduct research in all three (production, processing and distribution) sectors of the grain industry but within the committee, research in all three sectors of the grain industry are well represented. This cooperation also has its spillover benefits into the discharge of the teaching students and extension outreach responsibilities of the principal investigators.

Technical feasibility of the research

The research committee has the scientific and technical know how to complete the proposed research activities. The committee has a vast understanding of the industry and many years of experience that qualify the members to examine the proposed issues in the grain and oilseed industry. The researchers have the econometric and mathematical models needed to conduct the analysis. The computer hardware and software is developed and available in the various universities. The research group has the contacts with the public and private sector needed to obtain the relevant data and information.

Related, Current and Previous Work

Research coordination across committees and other research institutions is an efficient vehicle for achieving a multi-disciplinary perspective. Other regional projects as well as the Economic Research Service (ERS), of the U.S. Dept. of Agriculture (USDA) conduct research complementary to this proposed project. Important differences between the proposed project and related projects are discussed below. None of the related projects looks specifically at the effect of policy reform or technology change on competitiveness and value added in grain and oilseed markets or the impacts of bio-terrorism on grain and oilseed markets.

The members of the NC-224 Multi-state Research Committee had a very successful record of publications, paper/poster presentations, financial leverage, outreach and service activities. Through these activities, the group continues to provide many contributions to achieving the objectives of this project by providing analyses of the competitiveness and value-added in the U.S. grain and oilseed industry in domestic as well as in a global framework. For example, the committee had 130 papers published, forthcoming or in review in various outlets including refereed journal articles, proceedings, station bulletins, and departmental reports during the life the five-year project. The members presented 94 papers and posters at professional meetings and many of these papers are published on association Web sites. The research committee leveraged over $1.2 million through the collaborative effort of the researchers. Examples of joint work include Gallagher, Dikeman, Fritz, Wailes, Gauthier, and Shapouri (2003) who collaborated on a study of the supply and social cost estimates for biomass crop residues in the United States. Larson, Dahl, and Gallagher (1998) edited a book on grain marketing that included chapters authored by 15 members of the NC-224 committee. Thus, the research output of the committee continues to have major impacts on the U.S. grain and oilseed industry. Although the group has accomplished much through the current project, many important issues will be studied in the proposed new project. The NC-224 annual reports on the web site provide more much more information on the project output and leverage activities (http://grainindustry-nc224.unl.edu.).

A search of the CRIS information base for multi-state projects using the terms grain marketing, competitiveness, value added, and bio-terrorism identified 12 multi-state projects including the recently completed NC-224. The multi-state project (WCC-72) also appears in the search. As discussed below, the NC-224 members coordinate activities with WCC-72. The remaining 11 projects had only one (S-1016) that addresses issues related to this project. S-1016 is a trade agreement and economic policy project focused on Southern agriculture. The project is oriented to trade for all agricultural products and does not concentrate on grain products, as does the current proposal. A second search of CRIS using the key words grain marketing, value added, competitiveness, trade, and bio-terrorism identified 394 projects. Of these projects, nearly all were technical projects and not economic based projects. In addition, nearly all were state level projects that focused on other commodities and that had little or no focus on grain marketing.

The Western Coordinating Committee (WCC-72) on Agribusiness Competitiveness focuses on management and strategic issues facing agribusinesses. The WCC-72 and NC-224 coordinated their activities at a joint meeting in 2002 and some researchers are on both committees. WCC-72 members communicate individual research on general agribusiness issues, and it does not concentrate on grains and oilseeds, as does NC-224.

The multi-state committee on grain quality, NC-213, emphasizes genetic, environmental and handling factors that influence grain quality. Members represent multiple departments and disciplines, including genetics, engineering, entomology, agronomy and food science. The NC-213 committee was approved for a new project. The title is: Management of Grain Quality and Security for World Markets. The objectives are to: 1) develop practices and technologies to support quality management systems for production, distribution, processing, and utilization of quality grains and oilseeds, 2) develop basic knowledge, science-based standards and technologies that promote crop quality, food security and food safety in grain markets, and 3) create and disseminate scientific knowledge that will enhance public confidence in market driven quality management systems for grain. The first two objectives of NC-213 complement the research focus of NCT-195, and efforts will be made to coordinate mutual research interests. NCT-195 participants will be especially receptive to the multidisciplinary knowledge evident in NC-213. Joint participation on the third objective, dissemination of scientific knowledge, will also be pursued.

Ongoing research conducted at USDA/ERS touches on some of the issues under investigation by the regional committees discussed above. For instance, researchers at the Crops Branch of ERS are now involved in the analysis of new products. In addition, the Europe Branch of ERS has developed models of Europes agriculture and policy. ERSs results will serve as inputs for further analysis under the proposed project. Through the participation of ERS representatives in activities of the proposed project, the ERS researchers and participants in the proposed project will maintain a liaison.

Objectives

1. 1. Analyze economic effects of trade arrangements, U.S. renewable energy programs, and genetically modified technology on the markets for corn, soybean, rice, and wheat.
   
2. 2. Identify risks and evaluate economic effects of bio-terrorism on corn, soybean, rice, and wheat markets.
   
3. 
   

Methods

Objective One

Five areas of focus are planned for the research with a lead university and participating universities identified for each area. The five areas of focus are: corn, soybeans, rice, wheat, and biofuels/value added.

International trade agreements will be analyzed to determine impacts on grain and oilseed trade flows between the U.S. and the EU and among NAFTA partners-U.S., Canada and Mexico and the expansion of NAFTA to form the Free Trade Area of the Americas (FTAA). The potential for endogenous adjustment in agricultural trade policies will also be examined. Investment, non-tariff trade barriers, processing, identity preservation, GM technology products, and storage issues will define additional scenarios.

The committee members will cooperate in building data bases on corn, soybean, rice, and wheat production, consumption, livestock numbers, grain movements, exports and prices for use in analytical models. Members of this committee will informally exchange information with members of other disciplines at their respective institutions. Agronomists, food technologists, and engineers can provide studies or data that can be used in economic analysis. Scientists from industry also provide information on technical processing relationships, which makes it possible to conduct cost and location studies.

The University of Nebraska will lead development of a domestic and international mathematical programming framework for corn. The geographic delineation of the model is surplus and deficit corn states in the U.S. and foreign countries that import and export corn. Relative prices will be determined for the states and countries. Both corn movements and price relationships will be used for model validation. The period of study is 1990-2001, which corresponds to a pre and post-NAFTA situation.

The following states will jointly specify scenarios for analysis that affect their states and multistate area: Ohio, Minnesota, Iowa, Illinois, Georgia, and Nebraska.

The University of Minnesota will lead development of a spatial equilibrium and logistics simulation model of the world soybean complex using the 2001 crop year as a baseline. This model will be used to evaluate issues such as changes in regional or country demand, expansion or contraction of production in specific areas, changes in relative transport costs, and plant location and other logistics issues. Models to explore the impact of strategic differences in vertically aligned systems will be developed.

The following states will jointly specify scenarios for analysis that affect their states and multistate area: Arkansas, Ohio, Minnesota, Iowa, Illinois, Georgia, and Nebraska. For example, interested states will examine how multinational firms are adapting to nontariff, GM type restrictions on trade between the U.S. and E.U.

North Dakota State University will lead analysis of strategic implications for world wheat trade. A model to test for market power in the grain- processing sector will be developed. Also, tests of hypotheses of factors inducing structural change will be analyzed. The role of capacity expansion, merger or acquisition in the handling and processing industries will be evaluated. Collection of data, descriptive studies, time series and econometric techniques will be undertaken in the evaluation and communication of the testing of the impacts of changing industry structure.

The following states will jointly specify scenarios for analysis that affect their states and multistate area: Kansas, Ohio, Minnesota, Iowa, Illinois, Georgia, and Nebraska.

The University of Arkansas will lead development of spatial equilibrium, economic-engineering and econometric models of the U.S. and global rice economy. These models will be used to evaluate changes in supply and demand, trade and prices in response to new technologies, domestic and trade policies. Genetically modified rice has the potential to change production location, processing costs, and end-use markets. Regional and multilateral trade agreements are important for liberalization and expansion of US and global rice markets.

Iowa State University will lead the bio-based fuels research with assistance from Louisiana State University, University of Minnesota, The Ohio State University, the University of Arkansas and the Rural Business Cooperative Service, USDA.

Multi-state research for the analysis of biofuels and products is effective because diverse specialists can be brought together to solve a problem. First, scientists must help to describe the potential of new biotechnologies. Further, specialists on market data must help to describe the effect of new technology on grain markets, new products and production processes. Finally, economic analysis must be extended to non-traditional product markets, such as bio-fuels or bio-based plastics and containers.

Market research on new uses of corn, soybeans, rice and wheat will use a variety of appropriate research procedures. Competitive supply to these markets from corn, soybeans, rice and wheat will be examined by firm-level analysis on the costs of production, value of co-products, costs of substitutes and new technology generation and adoption. Economic-engineering cost analyses will identify the firm-level cost of production, including co-products that result from further processing. Size and scale economies will be identified.

Economic and non-economic factors driving the demand for renewable fuels and bio-based products will be analyzed using a variety of research procedures. In addition to price and income, consumer concerns about health and environment may influence the demand. Contingent valuation and mathematical programming methods will be used to measure the private and social benefits (clean air). The effect of policy changes, such as health-based product bans, performance and environmentally based standards, and trade barriers, on emerging value added markets will be determined. The impacts of energy policy changes on grain and byproduct markets (gluten feed, distillers grain) will also be determined.

The effects of expanding bioenergy industry on the organization and performance of local and international grain markets will be studied. Specific studies include pricing in local and international grain markets; a second study will be the international competitiveness of the ethanol industry compared to Brazil and the appropriate scale and organization of value added processing.

Objective Two

Research on objective two will identify the risks and economic effects of bio-terrorism in corn, soybean, rice, and wheat markets. Mississippi State University (MSU) will develop an instrument to survey and assess firm vulnerabilities to bio-terrorism, estimates on the costs to firms, and measures taken to safeguard against these threats. This instrument will be administered by -- Louisiana State University, University of Minnesota, University of Nebraska, University of Arkansas, Iowa State University, The Ohio State University, University of Georgia, Purdue University, University of Illinois, Oklahoma State University, North Dakota State University, and the University of Massachusetts.

NCT-195 will collaborate with scientists from other disciplines. These individuals include Huxton (veterinary medicine), Giesler (plant pathology), Toledo (food science) and Wilcke (agricultural engineering) - see Table 2. In addition, the committee will coordinate with plant pathology, food science and other disciplinary members from the NC-213 committee on grain quality to learn more about the nature, scope and severity of threats from biological agents, toxins and other contaminants that could facilitate extensive acts of bio-terrorism.

The Rural Business Cooperative Service, USDA, will augment the information obtained by the MSU instrument with a survey of farm supply and marketing cooperatives. Bio-security methods for this study are defined as series of measures or steps taken by agribusiness firms to prevent the spread of biological diseases in soybean, corn, and wheat markets. Surveys and secondary sources will be used to determine the extent to which agribusiness firms have set up preventive programs and guidelines for employees, plant security, manufacturing and processing, distribution and transportation of corn, soybeans, rice, and wheat. The results from these surveys and secondary sources will provide valuable information to stakeholders in the soybean, corn, and wheat industry so that they will be better able to anticipate attempts by bio-terrorists to introduce harmful biological agents and toxins into the grain production and distribution process. In addition, the surveys will be used to describe and analyze the costs incurred by corn, soybean, rice, and wheat firms to establish programs and guidelines for preventing, monitoring, inspecting, and responding to bio-terrorist threats, and the savings, if any, associated with the agribusiness firms setting up these programs.

Louisiana State University, Iowa State University, Mississippi State University, and the University of Georgia will develop economic and financial models to analyze the costs and savings associated with firms who have preventive programs versus those agribusiness firms that do not have these programs established for preventing bio-terrorists attacks at their facilities.

Mississippi State University and the University of Arkansas will formulate willingness-to-pay methods and procedures to determine the extent to which agribusiness firms in the soybean, wheat, rice, and corn marketing systems are willing to pay for bio-security measures to protect their facilities and their products.

The University of Minnesota, University of Nebraska, and the University of Arkansas will use spatial equilibrium models to accomplish this objective. The committee currently has spatial models dealing with corn, soybeans, rice, and wheat. These models will be modified and extended to include, among others, reduction or complete elimination of corn, soybean, rice, and wheat shipments to the Port of New Orleans as a result of bio-terrorists attack on this complex and how the distribution patterns, costs, and volumes will be affected.

Mississippi State University will use input/output models such as the Impact Analysis for Planning (IMPLAN) Model to estimate how employment, output, incomes, and tax revenuers will be affected by bio-terrorist attacks on the corn, soybean, rice, and wheat sectors and how other sectors of the U.S. economy might be impacted because of these attacks.

Also, Mississippi State University, Louisiana State University, the University of Arkansas, and the University of Georgia will develop econometric models to analyze factors that might influence terrorists to attack the soybean, wheat, rice, and corn sectors of the U.S. economy through biological agents and toxins.

Measurement of Progress and Results

Outputs

• The research output from this project will be channeled to refereed journal articles, papers presented at scientific meetings and conferences, experiment station publications, popular periodicals, symposia, multi-state research committee meetings with agribusiness firms, extension newsletters and electronic distribution at: <A HREF="http://grainindustry-nc224.unl.edu/">http://grainindustry-nc224.unl.edu</a>. The committee plans to organize special sessions (e.g. bio-terrorism, trade) at the annual meetings of the American Agricultural Economics Association (AAEA) the International Agribusiness Management Association (IAMA), and the Western Coordinating Committee (WCC-72) on Agribusiness Competitiveness. Other deliverables will include case studies on processed grain in food products and industrial uses that will increase the competitiveness of the grain processing industry; and analysis of the effects of changing policy and genetically modified technology on the U. S. presence in international grain markets.
• <U><FONT FACE="Times Roman,Times New Roman">Funding & Leverage</p> </u></font><P>A strong point of this committee has been its ability to include the right people at the table for particular research problems, even when the needs extend beyond the formal committee organization. Multi-state research funds will be leveraged to seek funds from commodity associations, state agencies, from the renewable energy portion of the 2002 Farm Bill, cooperative research agreements with the Economic Research Service and the Foreign Agricultural Service. Private agribusinesses will also be consulted for collaboration and funding. </p> <P>Jointly funded work and jointly authored publications on grain trade and bio-terrorism issues, will receive emphasis from the grain marketing research committee. To initiate the jointly funded work, the grain marketing research committee will develop joint grant proposals on one or more of the following topics: bio-terrorism, regional trade agreements and bio-based energy products. The new grain marketing committee has already agreed to seek funding from the USDA National Research Initiatives (NRI) to support the bio-terrorism research. In addition, the new committee will seek funds from the U.S Food and Drug Administration and the Department of Homeland Security. Some jointly funded work is already underway. To wit, the University of Arkansas is leading a study of economic engineering models in rice milling that is funded by the World Bank.

Outcomes or Projected Impacts

• The information output from this research will contribute to informed public decision making. The projected impacts will focus on commodity prices, farm incomes and the general economic viability of production agriculture.
• Price and market impacts of bio-terrorists attack on the corn, soybean, rice, and wheat crops will likely affect the quantities of the grain crops demanded or supplied. The exact impact on the market and the duration of the impact will depend on the type of biological agent or toxin used by bio-terrorists to attack or destroy the grain crops, and market size (for example, the Iowa corn crop versus the Tennessee corn crop).
• Trade impacts of bio-terrorists attack on the corn, soybean, rice, and wheat crops could cause exporters to lose their competitive advantage and edge in export markets as countries that normally import these crops from the U.S. might now prohibit these crops from entering their countries. This could cost exporters in terms of incomes, jobs, tax revenues, and reduce the effectiveness of the United States negotiations in foreign policy, national security issues, trade policy, and food aid programs as the importers now look for corn, soybeans, rice, and wheat from other sources rather than from the U. S. Food security and nutrition impacts will likely occur when countries that are highly dependent on the U.S. markets for soybeans, corn, rice and wheat are not able to obtain the necessary quantities and qualities of these crops that are needed by them to meet their domestic demands due the lack of the availability of these crops from the U.S. These countries might not be able to find alternative market supplies of these crops at reasonable prices for meeting their demands. This situation may be especially devastating for developing countries since these countries will likely be more dependent on bulk commodities than will highly developed countries from the United States.
• Financial costs are preventive measures that could be taken at the farm, regional, national, and perhaps most importantly, at international levels to control, eradicate, or mitigate a bio-terrorists attack on the grain crops. Such costs could include the costs of inspections, monitoring, prevention, and responses to bio-terrorists acts to cripple or destroy the U.S. corn, soybean, rice, and wheat industries and their infrastructures.

Milestones

(2005): <UL><li>Prepare and submit NRI funding proposal on bio-terrorism research. <li>Identify evolving value-added markets for corn, soybean, rice and wheat using reviews of literature, surveys of processors and end-users. <li>Analyze international trade agreements to determine impacts on corn, soybean, rice, and wheat trade flows. <li>Conduct economic-engineering cost analyses to identify the firm-level cost of production, including co-products that result from further processing. <li>Bio-terrorism questionnaires will be developed by Mississippi State University (MSU) (October 1, 2004January 1, 2005) <li>MSU will e-mail questionnaires to participating state representatives for reviewing and representatives will return to MSU via e-mail for revisions. <li>Each state will compile a list of agribusiness firms in the soybean, wheat, rice, and corn industry that are willing and able to participate in the bio-terrorists survey (January 2, 2005April 1, 2005) <li>MSU will e-mail revised questionnaires for final approval by state representatives. Approved questionnaires will be returned to MSU (April 2, 2005June 2, 2005) <li>MSU will make final revisions on the questionnaires received from state representatives and request the final questionnaire approval by the MSU Institutional Research Board (IRB) (June 3, 2005August 3, 2005) <li>MSU will e-mail the IRB approved questionnaire to participating states to get them approved by their organizational research board for mail-outs to agribusiness firms that agreed to participate in the bio-terrorist survey (August 4, 2005October 31, 2005)</UL>

(2006): <UL><li>Develop spatial equilibrium and/or simulation models for corn, soybeans, rice, and wheat. <li>Assess the competitiveness of corn, soybean, rice and wheat products at the industry level by comparisons with the costs of close non-agricultural substitute products. <li>Industry-level analysis will apply spatial equilibrium analysis to identify the optimal number, size and location of processing facilities. <li>Participating states will mail out bio-terrorism questionnaires to agribusiness firms for the completion of the questionnaires (November 1December 1, 2005) <li>Follow up letters with questionnaires will be mailed to those firms that did not respond to first mail-outs by due date (January 1, 2006) <li>States will compile, edit, and summarize data and information received from participating firms and send that information to MSU for aggregation of overall responses to the bio-terrorist survey. MSU will compile, edit, and summarize data in figure and tabular formats for participating states (February 2, 2006-April 1, 2006) <li>Descriptive and analytical models including logistics models will be developed and used by MSU with the cooperation of other participating states (April 2, 2006June 2, 2006)</UL>

(2007): <UL><li>Analyze the corn, soybean, rice, and wheat content of industrial products using Census of Manufacturers data to identify the trends in use. <li>Construct econometric and mathematical programming models to measure private and social benefits from the use bio-based products and to identify consumer demand. <li>Prepare paper presentations, publications, workshops, seminars, conferences with regional and national commodity organizations and at professional and scientific meetings to provide information on the survey results (June 3, 2006December 15, 2006). <li>Organize special sessions on bio-terrorism at the AAEA, IAMA, and WCC-72 professional meetings.</UL>

(2008): <UL><li>Analyze governmental, environmental and changing trading bloc responses to GM technology to determine impacts on corn, soybean, rice and wheat trade flows between the U.S. and the European Union and among NAFTA partners-U.S., Canada and Mexico. <li>Apply simulation techniques to examine non-tariff trade barriers and processing and storage issues to the corn, soybean, ric

Projected Participation

View Appendix E: Participation

Outreach Plan

The new project will provide research output, descriptive reports and program assistance to state extension personnel. Timely and direct communication between NCT-195 committee members and extension specialists will be implemented so that new information is available for use in extension and outreach programs. At times, the NCT-195 member may be an active participant in the programs. An ongoing dialogue with extension personnel will assist in guiding research activity.

In addition, the committee will pursue opportunities to go directly to the National Corn Growers Association, the American Soybean Association, the National Association of Wheat Growers, the National Grain and Feed Association, and other national associations in order to participate in programs and report on research findings. Corresponding state associations will also be pursued, and will likely involve the assistance of extension personnel.

The committees web site http://grainindustry-nc224.unl.edu/ will post all research reports. It will be made available as a hot link for use by extension programs, and the respective national and state associations.

Organization/Governance

This project will be organized and operated in accordance with the instructions on the CSREES Web site for multi-state research projects.
Committee membership shall include:

1) a technical representative of each cooperating experiment station,

2) a representative of CSREES,

3) representatives of other relevant USDA agencies, and

4) an administrative advisor

This project will have an executive committee comprising the officers (president; vice-president, and secretary/treasurer) elected by the membership, to coordinate the research and administrative work of the project. This project will organize and coordinate research by subcommittees one and two, parallel to the OBJECTIVES and METHODS. Each subcommittee will elect a chairperson responsible for coordinating data collection, research, and supervising regional publication of research results. The chairperson of this multi-state research project will appoint a program coordinator within each subcommittee, and together they will organize the dissemination of research results on the economic assessment of bio-terrorism and competitiveness in U.S. grains and oilseeds.

Literature Cited

American Feed Industry Association, American Feed Industry Association Guide to Bio-security Awareness, American Feed Industry Association, 1501 Wilson Boulevard, Suite 1100, Arlington, VA, Internet Site: http://www.afia.org/img/assets/1108/biosecurity2.pdf (Accessed June 2003).

Annou, M., J. Hansen, E. Wailes, and G. Cramer. 2001. "Implications of Rice Biotechnology on Optimal Rice Crop Rotation in the Mississippi River Delta Region," Journal of Agricultural and Applied Economics, 33(3):633.

Davis, Radford G., "Agricultural Bioterrorism," College of Veterinary Medicine, Department of Veterinary Microbiology and Preventive Medicine, Iowa State University, October 2001, Internet Site: http://www.actionbioscience.org/newfrontiers/davis.html (Accessed June 2003).

Diez-Gonzalez, Francisco, FScN 1102 Food: Safety, Risks, and Technology, Class Notes and Reading Material on "Food Bio-security and Bioterrorism," Food Science and Nutrition, Internet Site: http://courses.che.umn.edu/03fscn1102-1f/main%20pages/topics.html (Accessed June 2003).

Evans, Edward A., "Economic Dimensions of Invasive Species," Choices, The Magazine of Food, Farm, and Resource Issues, The American Agricultural Economics Association, June 2003, Internet Site: http://www.choicesmagazine.org/current/2003-2-02.htm (Accessed June 2003).

Gallagher, P.W., M. Dikeman, J. Fritz, E. Wailes, W. Gauthier, and H. Shapouri. "Supply and Social Cost Estimates for Biomass from Crop Residues in the United States." J. of Environmental and Resource Economics. 23: Forthcoming 2003.

Huff, Karen M., Karl D. Meilke, and Calum G. Turvey, "Issues in Modeling Bio-terrorism in the Agrifood Sector," paper presented at the WCC-72 Western Coordinating Committee on Agribusiness Meeting, Las Vegas, Nevada, June 9, 2003.

Huff, Karen M., Karl D. Meilke, Calum G. Turvey, and John Cranfield, "Modeling Bioterrorism in the Agrifood Sectors of NAFTA Members," Principal paper presented at the Annual Meeting of the Canadian Agricultural Economics Society, Montreal, Quebec, Canada, July 28, 2003.

Larson, Donald W., Reynold P. Dahl., and Paul Gallagher, (edts.) 1998. Structural Change and Performance of the U.S. Grain Marketing System, Columbus: The Ohio State University, Department of Agricultural, Environmental, and Development Economics, 305p.

Poe, Gregory L. "The Other Side of the Pond: UK Farm Crises: Ignored Lessons About Agriculture and Society." Choices. Fall 2000. pp. 34-35.

Renewable Fuels Association. RFAs Ethanol Industry Outlook 2003. http://www.ethanolrfa.org/outlook2003.shtml

Rogers, Paul, Simon Whitby, and Malcolm Dando. "Biological Warfare Against Crops." Scientific American. June 1999. p.73.

Turvey, Calum G., Edouard Mafoua, Brian Schilling and Benjamin Onyango. "Economics, Hysteresis, and Agroterrorism." Principal paper presented at the Canadian Agricultural Economics Society 2003 annual meeting. Montreal, Quebec. July 27-30, 2003. pp. 27-28.

Attachments

Land Grant Participating States/Institutions

AR, GA, IA, IL, IN, KS, LA, MA, MN, MS, NC, ND, NE, NJ, NY, OK

Non Land Grant Participating States/Institutions

USDA