Researchability of modern agricultural input markets and growing concentration.

Several sources of data on seed and pesticide markets are available, but they vary widely in their accessibility for research, ranging from (1) in-house market intelligence compiled and protected by firms as proprietary, (2) confidential sales and cost data provided by commercial marketing services and consultants (such as Doane Marketing Research, Inc.), and (3) public data collected by government agencies. Public data is often not complete due to budget and survey exposure considerations. Marketing services' data are sold to input producers and regulatory agencies (such as the EPA) but are prohibitively expensive for individual research and usually have proprietary restrictions preventing research publication.

Public data collected by the USDA or other government agencies include the Agricultural Resource Management Survey (ARMS), which is the major source of annual data on farm-level input use, acreage, production, resource use, and financial conditions of farm households. It represents the diversity of U.S. farms and farm households, but, as a broad survey, has limited capacity to focus on seed and pesticide markets, particularly at the product and use level. Furthermore, it does not yield panel data.

Other data sources that may offer possibilities for specific cases include trade and other administrative records. For example, if a pesticide is produced abroad or uses an essential ingredient from abroad, public import records can be mined for relevant data. In some cases, these records together with EPA data on overall market activity and the National Pesticide Information Retrieval System (NPIRS) on registrations can enable tracking generic market activity. However, EPA market activity data are typically reported in the form of large numeric intervals that limit accuracy.

Proactive Data Generation as a Profession

Several studies have called for a more proactive role by the AAEA and other organizations in public data collection (e.g., Just and Pope 2002). The Economics, Statistics, and Information Resources Committee (ESIRC) of the AAEA is charged to "monitor the availability and use of publicly available statistics for economic research." We believe that these possibilities, along with AAEA involvement in other organizations that influence public data generation (see various annual ESIRC reports) have been underutilized. But we also suggest that the primary focus of existing surveys, and the AAEA's influence on them, has been on agricultural production and output markets. Given changes in seed and pesticide markets, both in market concentration and the appropriation of benefits due to scientific advancement and genetic engineering, we suggest that greater attention to input markets is now appropriate.

One possibility that might be explored is expanding the sections of the ARMS on seed and pesticide inputs to provide more detailed price and quantity data facilitating assessments of market performance. The chemical use section of ARMS could be coordinated with other relevant USDA surveys and the Census of Manufactures to enhance assessments of market performance. Because competition in pesticide markets is product- and characteristic-specific, corresponding detail in data is necessary for accurate analysis. To improve their use, farm surveys might be combined with data already available through the EPA and NPIRS on pesticide registrations by individual companies, as well as public data such as import/export records, so that impacts of regulation, generic competition, and offshore markets can be analyzed reliably. Other efforts might involve facilitating cooperative agreements with universities to fund input surveys. In some cases, the AAEA may be able to negotiate with consultants who collect data to provide less restrictive conditions for university researchers, perhaps under limited confidentiality agreements that permit research without disclosing basic data.

Concluding Comments

One of the most remarkable changes in U.S. agriculture over the past few decades has been in agricultural input markets. Improved pesticides and seeds have increased agricultural productivity. More recently, genetically engineered seeds and improved pesticides have limited reproducibility and augmented these trends. Accordingly, the ability of seed and pesticide manufacturers to appropriate the benefits has increased. These developments, coupled with large increases in concentration in seed and pesticide supply, raise significant concerns about market power and its impact on agriculture.

Public data are generally unavailable for careful research of these impacts, but preliminary analysis with limited data suggests large impacts on farmers and consumers (Just 2006). Monopoly benefits for innovators prior to patent expiration provide incentives for continued innovation. But obstacles to generic participation in post-patent markets and the impacts of increasing concentration, which reduce competition among off-patent products and patented products with similar characteristics, appear to have reduced competitiveness of the agricultural input sector. Considering new AAEA efforts to increase its proactive influence on data collection, we believe a significant effort should focus on the need to analyze and understand the major agricultural input markets.

Empirical Research in an Increasingly Concentrated Industrial Environment (Mary Ahearn, USDA; Richard Just, University of Maryland; and Jeffrey Perloff, University of California, Berkeley, Organizers)

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Jorge Fernandez-Cornejo is Economist with the Economic Research Service, USDA. Richard Just is Distinguished University Professor at the University of Maryland.