Academic journal article Journal of Agricultural and Resource Economics

The Economic Impact of New Technology Adoption on the U.S. Apple Industry

Academic journal article Journal of Agricultural and Resource Economics

The Economic Impact of New Technology Adoption on the U.S. Apple Industry

Article excerpt

(ProQuest: ... denotes formulae omitted.)

Introduction

Fire blight is a bacterial disease that can affect various parts of the apple tree at different growth stages, including the blossom, fruit, roots and shoots. Fire blight outbreaks cause serious damage to apple producers. In 2000, Michigan lost more than 600 acres of orchards and more than 220,000 trees aged two to five years to the disease, leading to a loss of more than $42 million to the region (Norelli, Jones, and Aldwinckle, 2003). Typical annual losses from fire blight are more than $100 million in the United States. We use a temporal and spatial partial equilibrium model to evaluate the impacts of new apple production technologies on fire blight damage in the U.S. apple industry.

Many recently introduced apple varieties, particularly 'Red Delicious' and 'Golden Delicious', are more susceptible to fire blight than the dominant traditional varieties (except 'Granny Smith', introduced in 1868) (Briggs and Yoder, 2012). These newer varieties include favorites such as 'Fuji' (introduced in 1930), 'Gala' (1974), and 'Cripps Pink' (1992). Growers of these new varieties have suffered significant production losses from fire blight, which can be as large as 5% annually (Gianessi, Silvers, and Carpenter, 2002). As consumers substitute the susceptible varieties for traditional varieties ('Red Delicious' production in 2008 was only 65% of its 2000 level, while 'Cripps Pink' production nearly tripled in that same period), there is increased concern about the sustainability of production in regions where fire blight is prevalent.

Given current concerns about bacterial resistance to commonly used antibiotics, researchers are exploring ways to chemically and genetically reduce fire blight damage. Three important advances have been achieved in the past century to help control fire blight: rootstock breeding programs, the development of genetically engineered cultivars, and advances in chemical treatments (Norelli, Jones, and Aldwinckle, 2003).

The technology that is the base for our research focuses on short-term and long-term adjustments to production. Scientists involved in the Integrated Genomics and Management Systems for Control of Fire Blight research project are evaluating different strategies against the bacterium that causes the disease. In the short term, research is under way to generate an environmentally safe bio-control method that is more effective against fire blight than current treatments. Kim et al. (2012) obtained promising results using a microencapsulated bio-control agent, E325, to control fire blight. In the long term, scientists are working to identify fire blight resistant genes and develop fire blight resistant cultivars of preferred varieties that are currently highly susceptible. Wang, Korban, and Zhao (2010) highlighted some of their work in isolating the genes that express resistance to fire blight. The scenarios used in our study are based on the findings of Kim et al. (2012); Wang, Korban, and Zhao (2010); and personal communication with the scientists involved in the Integrated Genomics and Management Systems for Control of Fire Blight research project. We use our model to explore technology adoption and its effects on domestic and international apple markets. In particular, we analyze the potential costs and benefits of microencapsulation of a bio-control agent and GM technology using an empirical, thirty-five-year temporal and spatial equilibrium model of orchard management. Our results fill a gap in the literature on the use and impact of these emerging apple production technologies.

Background and Literature Review

Apples are a deciduous fruit grown across the world and consumed fresh or processed as food or drink. In 2010, more than 11.7 million acres of apple orchards produced nearly 69.5 million metric tons (MT) worldwide (U.S. Department of Agriculture, Economic Research Service, 2012). China and the United States were the largest producers in 2010, supplying 48% and 6% of world production. …

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