Academic journal article Journal of Agricultural and Applied Economics

Willingness to Pay for Broadband Access by Kentucky Farmers

Academic journal article Journal of Agricultural and Applied Economics

Willingness to Pay for Broadband Access by Kentucky Farmers

Article excerpt

Since the Internet's inception its impact has been felt across the United States, but the distribution and adoption of the Internet has not necessarily been uniform geographically. As more consumers and businesses rely on the Internet to access information, the data transmission requirements have also increased. Consequently, access to broadband has become increasingly more important since dial-up cannot realistically handle the increased requirements. The use of broadband in agriculture can provide better access to price, weather, and management information while also opening new markets. However, many rural communities lag behind urban areas in broadband access and adoption rates. This study evaluates, through the use of a producer survey, the level of broadband Internet use, motivations for its use, degree of access to broadband, and willingness-to-pay (WTP) to fund broadband infrastructure investments. Results from the producer survey suggested farmers utilize the Internet primarily for accessing weather reports, e-mail, market reports, and agricultural news. Notably, the survey's WTP questions allowed for the use of an interval regression to calculate producer WTP for varying demographics. The results suggested that producers who were younger, farmed larger farms, and those who currently use the Internet but do not have broadband access were WTP more in property taxes to support broadband infrastructure investments than those of a differing demographic. Because WTP levels varied drastically depending on the underlying demographics, it becomes difficult to pinpoint a WTP level for a one-time payment in property taxes that would be acceptable from a policy standpoint.

Key Words: broadband, rural community, willingness-to-pay

JEL Classifications: Q13, Q31, Q38

The Internet has increasingly become more important to individuals and industries as a means to facilitate transactions and disseminate information. The Internet's increasing importance has impacted the agricultural industry, like many other industries, by improving management and marketing decisions. Decisions are enhanced by providing access to instantaneous weather reports, market prices, input prices, and potential marketing opportunities. As the Internet has progressed over the last decade its applications and graphics have become more complex, which increases the data transmission and speed requirements. Consequently, broadband technology has become more important since it can transmit greater amounts of data at faster speeds than traditional dial-up Internet service. Therefore, availability to broadband Internet for farmers has become important for them to fully benefit from the Internet's wide array of uses on the farm.

Availability to broadband Internet, though, has been unevenly distributed across rural and urban communities, with significantly lower access to broadband in rural communities. The lower population in rural communities increases the cost to deploy broadband on a per household basis compared with urban communities (Federal Register, 2011). These higher costs per household deter private providers in the most rural areas from investing in the necessary infrastructure to support broadband because subscriber revenue may not be high enough to recuperate the initial investment and support the maintenance requirements (Federal Register, 2011). Limited access to broadband in rural communities can lead to asymmetric information for farms and agricultural businesses, as well as diminished network economies. Asymmetric information can potentially impede the decision-making process for farms and rural agribusinesses, which may negatively impact their profitability and long-term viability. Subsequently, network capabilities for the transfer of information or the sale of products can also be hindered when fewer people are utilizing the Internet's capabilities.

Agriculture remains a cornerstone for many rural communities and their local economy. …

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