Downstream firms transform the paste in final consumer products. According to the Food Institute, at the end of the process, raw material account for 39%-45% of total production cost. According to the ERS, there was a radical structural change in the processing industry in the late 1980’s and early 1990’s. A period of relatively high prices in the late 1980s triggered new investments. This finally resulted in excess supply and decreasing prices. As a consequence, many processors went bankrupt and the whole industry was restructured. The current structure is the result of such adjustments.A brief industry description highlights two key points prior to the estimations. Price expectations. The majority of production is sold under contract. This has two implications: i) producers know prices when planning production, so we do not need to model expectations; rather we assume perfect information, ii) the actual contract price is unobservable, being industry private information.We use the spot price as a proxy for the real contract price. However, since the measurement error is likely to be correlated with the error terms in the production equations we use an instrumental variable approach. The instrument is the previous year’s spot price, which is correlated with the current spot price, but uncorrelated with random shocks in current production. Structural change. The industry underwent structural changes from the late ‘80s until the early ‘90s. Much of the change is likely due to continued expansion in food-service demand, especially for pizza, taco,4×8 flood tray and other Italian and Mexican foods .
Increased immigration and changes in America’s tastes and preferences have contributed to rising per capita tomato use . Commercial varieties were developed to expedite packing, shipping, and retailing in the processing market. Mechanical harvesting and bulk handling systems replaced hand harvest of processing tomatoes in the California in the 1960’s as the new varieties were introduced. Increases in yields are due to the development of higher yielding hybrid varieties and improved cultural practices such as increases in use of transplanting . The hypothesis of structural change was tested on both the supply and demand side.The acreage model was estimated assuming a partial adjustment process. Price expectations have been modeled using the previous year’s price for the period 1960-1987 and a two-year lagged price before the period 1988-2002. This was done because after the structural change, the prices exhibits an alternate pattern, so that the current price is negatively correlated with the previous year, but positively correlated with two periods before. Finally we tested the influence of the processing industry on the fresh tomato acreage, by using the price of processing tomato as a regressor. What accounts for the structural break in 1987 in fresh tomato acreage? Much of the increase in California acreage can be explained as a response to changes in consumption patterns, according to the USDA. In terms of consumption, tomatoes are the Nation’s fourth most popular fresh-market vegetable behind potatoes, lettuce, and onions. Fresh-market tomato consumption has been on the rise due to the enduring popularity of salads, salad bars, and sandwiches such as the BLT and subs. Perhaps of greater importance has been the introduction of improved tomato varieties, consumer interest in a wider range of tomatoes , a surge of immigrants with vegetable-intensive diets, and expanding national emphasis on health and nutrition.
After remaining flat during the 1960s and 1970s at 12.2 pounds, fresh use increased 19 percent during the 1980s, 13 percent during the 1990s, and has continued to trend higher in the current decade. Although Americans consume three-fourths of their tomatoes in processed form , fresh-market use exceeded 5 billion pounds for the first time in 2002 when per capita use also reached a new high at 18.3 pounds. Because of the expansion of the domestic greenhouse/hydroponic tomato industry since the mid-1990s, it is likely per capita use is at least 1 pound higher than currently reported by USDA . One medium, fresh tomato has 35 calories and provides 40 percent of the U.S. Recommended Daily Amount of vitamin C and 20 percent of the vitamin A. University research shows that tomatoes may protect against some cancers.The own price elasticity of tomatoes is estimated to be -0.32, which is highly statistically significant. Therefore demand for fresh tomatoes is relatively inelastic with respect to changes in retail prices. The own-price elasticity of carrots is -0.53 and for lettuce it is -0.71. The estimate of the own price elasticity of cabbage is positive at 0.12, which is counter intuitive. This finding, however, is not statistically significant. The estimated second-stage expenditure elasticities are all positive and range in values from 0.89 to 1.44. In all cases the expenditure elasticities are statistically significant. All of the cross prices elasticities are negative indicating that the four fresh vegetables are complements. Only the complementarities between tomato quantity with carrot and lettuce prices are statistically significant.Models for both fresh and processed tomatoes were developed and estimated. An almost ideal demand subsystem was estimated for four fresh vegetables that included tomatoes, carrots, lettuce, and cabbage. The second-stage own-price elasticities were all inelastic except for cabbage which was unexpectedly positive. The conditional expenditure or income elasticites varied from 0.89 for fresh tomatoes to 1.44 for carrots. All of the cross-price elasticities were negative indicating that the four fresh vegetables aregross complements. A plausible explanation for this is that the four commodities are used in salads, especially given that no significant complementarities were found with respect to fresh cabbage.
Ordinary least squares and instrumental variable techniques were used to obtain estimated partial adjustment acreage functions of processing tomatoes. The estimated short-run own-price elasticity estimates were between 0.47 and 0.41. Chow tests confirmed a possible structural break in the acreage function for processed tomatoes around 1988. One possible explanation of the break is the increase use of contracts around this time period. Estimated own-price elasticities for processed tomatoes in the production function varied between 0.45 and 0.55. Producers respond to prices increases in a positive manner, in accordance with theory. With respect to demand for processing tomatoes, the own-price elasticity was estimated to be – 0.18 and the cross-price estimated elasticity of tomato paste on processing tomatoes was 0.16. Thus, as the price tomato paste increases the derived demand for processed tomatoes increases, as expected. For the second period the estimated own-price elasticity in the acreage equation was 0.23 indicating that producers respond positively to increases in prices. The short-run elasticity of fresh tomato production with respect to price was 0.22 prior to 1987 and 0.27 after 1987. Thus, through out the sampling period, the own-price elasticity in the fresh tomato production function was found to be inelastic. The exchange of CO2 between forested ecosystems and the atmosphere has received significant attention in recent years in the context of global carbon cycling. In contrast, the role of forests as sources or sinks of less abundant carbon trace gases such as methane , methanol,indoor garden and other volatile organic carbon compounds is relatively poorly understood. It is challenging to measure the atmospheric exchange of such gases because of low fluxes and high spatial variability, yet scaled over large areas the mass flux of these compounds is sufficient to influence atmospheric chemistry and climate. Methane is particularly noteworthy because it is an important greenhouse gas, contributing about 20% of current radiative forcing, and a key compound governing hydroxyl radical concentrations that regulate much atmospheric chemistry. This paper provides a brief review of recent evidence suggesting that our knowledge of CH4 production in upland forests is insufficient to meet the demand for accurate accounting of radiatively active gas sources. It was motivated by the groundswell of interest that followed the first report of CH4 production by aerobic plant tissues . We begin with an overview of CH4 cycling because the topic is unfamiliar to many tree physiologists.Our current understanding is that CH4 is an end product of organic carbon degradation performed by a consortium of microbes in an O2-free environment . After a series of hydrolytic and fermentation reactions that simplify complex organic matter, microorganisms within the domain Archaea—the methanogens—produce CH4 as a respiratory end product of either H2 oxidation coupled to CO2 reduction, or acetate fermentation. Because methanogens are poor competitors for H2 and acetate, their activity is suppressed by other microbes that couple oxidation of the same electron donors to the reduction of nitrate, ferric iron and sulfate . Exposure to O2 inhibits methanogens indirectly by regenerating oxidized forms of N, Fe and S that support competing microorganisms, and directly through O2 toxicity.
Methane can be produced in soils without being emitted to the atmosphere because it is also consumed by aerobic microorganisms that oxidize CH4 to CO2. Methanotrophic bacteria grow by coupling the oxidation of CH4 to the reduction of O2. They are ubiquitous in soils and explain why upland soils are generally net CH4 sinks . Despite much research on methanotrophs in upland soils, there are no isolates of these organisms to date and little is known about their ecology. To our knowledge, no one has investigated the possibility that methanotrophs exist on the surfaces of upland plants. However, they occur symbiotically on Sphagnum tissues where they provide CO2 to support photosynthesis . Methane is produced abiotically from combustion of organic carbon during biomass burning and by thermal alteration of sedimentary organic carbon. It has been proposed that CH4 is produced abiotically in aerobic plant tissues .Despite generally inhospitable conditions, there is abundant evidence of methanogenic activity in upland soils. Andersen et al. used a 14CH4-labeling technique to infer that two forest soils produced CH4 even though the soils as a whole were net CH4 sinks. von Fischer and Hedin used a stable isotope technique to make direct measurements of gross CH4 production in 130 soil cores from 17 sites and found that even dry, oxic soils produced CH4. Aerobic forest and agricultural soils have been reported to switch from net CH4 uptake to CH4 emission in the presence of a compound that blocks CH4 oxidation . Finally, upland soils incubated anaerobically begin producing CH4 within days or weeks . Collectively, these studies suggest that upland soils harbor populations of methanogens and are capable of becoming net sources of CH4 when sufficiently wet. The possibility of CH4 production in upland soil microsites is consistent with the occurrence of denitrification and Fe reduction in upland soils, and observations that acetate, a CH4 precursor, is found in upland soils . Although studies of methanogen isolates suggest they are extremely O2 sensitive, other evidence suggests that they can tolerate a certain amount of O2 . Methanogens have been reported to survive long periods in dry and oxic soils , perhaps protected from O2 by reactive soil minerals . The evidence that upland soils can support low rates of methanogenesis suggests that CH4 oxidizing bacteria consume CH4 from two sources, the atmosphere and the soil itself . The juxtaposition of these sources may explain a puzzling observation about the response of CH4 fluxes to changes in soil water content. Andersen et al. reported that an intact upland forest soil core left uncovered at room temperature changed from a net sink for atmospheric CH4 to a net source. Isotopic data showed that CH4 oxidation fell to almost zero over this period, suggesting that CH4 oxidizing bacteria attached to soil surfaces were more sensitive to soil drying than methanogens buried in the anaerobic center of soil aggregates. The cessation of CH4 oxidation could have been caused by a physiological drought response among methanotrophic bacteria, more rapid CH4 diffusion from the soil to the atmosphere due to low tortuosity , or both. In other circumstances, decreases in soil water content can enhance CH4 oxidation in upland soils by increasing CH4 diffusion from the atmosphere into soil pore spaces . In addition to microsites, anaerobic conditions occur in saturated zones that coincide with the water table surface. Soils with a deep source of CH4 have a soil CH4 concentration profile characterized by two maxima—one at the soil surface and the other near the water table—separated by a minimum. Such profiles have been observed in a variety of upland ecosystems, including desert , temperate hardwood forest and temperate coniferous forest . It is possible that plants transport CH4 from a deep groundwater source through the transpiration stream, effectively bypassing the zone of CH4 oxidation . The most direct evidence of methanogenesis in upland soils is that they occasionally emit CH4 to the atmosphere.