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An econometric analysis of orchard replanting in the British Columbia apple industry

University of British Columbia

The British Columbia Apple industry, primarily located in the Southern Interior of the province, has undergone varying levels of tree removal and replanting as growers attempt to maximize profits. This study models their behaviour by using econometrics in a supply response model. The economic environment of the fruit industry is described. The variables affecting acreage responses to removals and replanting of new and traditional apple varieties are estimated using Ordinary Leased Squares in three separate equations. Data are pooled and aggregated at the regional level. Several versions of the original model are run to test for robustness of the variables and of the original model. The econometric models illustrated that the plantings of new varieties increases when expected profits from vintage trees decline. However, planting and removals of traditional varieties are positively related to excepted profits from vintage trees and this does not follow apriori expectations. More striking in the model is the regional differences and their responsiveness to removals and replanting. Regions with younger, better educated farmers replant to new varieties at a faster rate than other regions. Replant programs are shown to have a negative effect on the rate of replanting. These programs maintain basic criteria for their eligibility to funding and seemingly decreased the acres replanted. Increasing the monetary value of the replant grants results in the effect of increasing the acreage of traditional varieties being planted. Policy implications are examined in a post modelling analysis. The effects of top loading subsidy effects are shown to have decreased the acreage of trees replanted over time. These effects are shown to cause a dead weight loss to society of approximately $13 million over 20 years.

Thesis/Dissertation

application/pdf

2009-02-09

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http://hdl.handle.net/2429/4331

Agricultural Economics

University of British Columbia

UBCV

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