The Effects of Individual Crop Payments on the Cost of Food
Nicole Siderewicz Peter, Otsego, Minnesota, defended her thesis, “The Effects of Individual Crop Payments on the Cost of Food,” on April 21, 2014. Peter is the Senior Continuous Improvement Manager at Land O'Lakes Purina Feed LLC in Shoreview, Minnesota. She is a spring graduate from Kansas State University with a Master of Agribusiness (MAB) degree.
Crop subsidies have long been a topic of discussion in the U.S. Corn, wheat and soybeans have been highly subsidized, and some argue that prices of these crops are influenced by subsidy payments. Peter conducted econometric analysis to determine the effects of the prices of the corn, soybeans and wheat have on the thrifty market basket for families of four. Pricing for the Thrifty Market Baskets are published by the USDA, factoring in transportation costs, market spread, agricultural technology advancements, and market value share.
“The thesis process provided an excellent learning opportunity to understand how intertwined the government is with the nation’s food network,” Peter said.
The regression model showed that fuel, farm to retail price spread for cereal grains and fruit, and farm value share of cereal grains all have an effect on the cost of food.
“The overall analysis supports previous studies that crop subsidies alone may not have impacted food prices per se, but biofuel policies may have had unintended consequences. Crop-specific results provide more information to consider when discussing implications of the farm policy,” Peter said.
As the effects of subsidies will continue to be debated and farm bills will continue to be written every five years, the true impact of direct payments on the cost of food will continue to be examined.
Dr. Hikaru Hanawa Peterson, Professor of Agricultural Economics and Peter’s thesis advisor, said, “Nicole pursued a research topic, not related at all to her current work, but of her interest. Her thesis asks how, if any, commodity prices and other factors are affecting food prices in this country. Her work contributes to the ongoing debate about impacts of the past Farm Bill on food prices and sets a stage to examine the impact of the recently signed 2014 Farm Bill. It was joy to see her ‘run’ with her research—Nicole took great initiative in seeking out all relevant historical data from the USDA sources and applied her coursework in econometrics to critique and justify the regression results.”
The full thesis publication can be found online on Kansas State University’s Research Exchange at http://hdl.handle.net/2097/17739.