Modeling corn producer demand for herbicides: Implications for pesticide reduction policies

Margaretha Veronica Rudstrom, Purdue University

Abstract

There has been much concern about the use of pesticides in agricultural production. It is no longer a question of whether pesticide use will be reduced, but how will the reduction be facilitated. The objectives of this research are to evaluate the potential effectiveness of a tax policy to reduce herbicide use in corn production and to evaluate the relative costliness of banning particular herbicides. Analytical models are developed and used to estimate demand elasticities for four herbicides commonly used in corn production under two scenarios: herbicides applied post-emergent and herbicides applied nonpost-emergent. The herbicides included are atrazine, cyanazine, metolachlor, alachlor, and dicamba. The own-price and cross-price elasticities are used to evaluate the impacts of ad valorem taxes on herbicide usage. The impacts include possible reduction in rates as well as herbicide substitutions. Further, cross-price elasticities are used to rank the herbicides according to the relative costliness of banning them. Given the magnitude of the elasticities, ad valorem taxes on herbicide prices do not appear to be an effective tool for facilitating herbicide reductions. This is especially true for the herbicide atrazine. There is virtually no reduction in application rates of this herbicide when any of the herbicide prices are increased. Given the number and relative size of cross-price elasticities of the herbicides, atrazine would be the most costly to ban, while cyanazine would be the least costly.

Degree

Ph.D.

Advisors

Doering, Purdue University.

Subject Area

Agricultural economics

COinS