Economic Impacts of Soybean Rust on the US Soybean Sector

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Abstract

The spread of Asian Soybean Rust (ASR) represents a real threat to the U.S. soybean sector. We assess the potential impacts of ASR on domestic soybean production and commodity markets as well as the competitive position of the US in the soybean export market. We develop a mathematical stochastic dynamic sector model with endogenous prices to assess the economic impacts of ASR on US agriculture. The model takes into account the disease spread during the cropping season, the inherent uncertainty regarding the risk of infection, and the dichotomous decisions that farmers make (no treatment, preventive treatment, and curative treatment) facing the risk of infection. Our results suggest substantial impacts from potential ASR spread on agricultural output, prices and exports. Our simulation results suggest that substantial losses to the US soybean producers may be avoided by establishing effective soybean rust controls. ASR control policies can be particularly efficient if applied in the gateway regions on the path of the ASR spread. On the other hand, our results indicate a possible gradual shift in soybean production from lower-latitude states toward higher-latitude states.

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WP 2009-17 May 2009
JEL Classification Codes: C61; Q13
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2009-05-01
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Charles H. Dyson School of Applied Economics and Management, Cornell University
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Asian Soybean Rust; Stochastic Models; Dynamic Models
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