Demand of Honeybee Pollination

 

Background

Pollination services are an essential input for the production of many cash and high value crops (e.g. Canola, apples, almond, berries, other horticultural products etc.).  Without a “sufficient” pollination, both yield and product quality would decline substantially.  In modern agriculture, pollination services are mainly provided by managed honeybees.  However, other bee species have been successfully domesticated and managed for rendering pollination (e.g. alfalfa leaf-cutting and bumble bees). 

Demand of commercial pollination continues to grow with no sign of abating. This growth is the result of increased planted acreage of pollination-dependent crops and continued decline of wild pollinators’ population.  Faced with somewhat an inelastic supply of honeybee hives (due to local shortage of hives, high transportation and/or transaction costs, and increased diseases), hive rental fees have risen dramatically in recent years.  The direct impact of this surge in rental fees is the increased cost of crop production.  Through the food supply chain, this increase in cost will be passed to downstream consumers and will translate into higher food prices.

Despite the importance of commercial pollination services to agricultural and food production there is a little known about the factors that affect growers’ demand of these services.  Rucker et al. 2008 and Cheung 1973 argued in favor of the “competitive market” hypothesis i.e. inputs are paid their value marginal product in the context of pollination services and provided empirical evidence to support this hypothesis.  In their inquiry, however, they assumed no transaction costs i.e. contracts between growers and beekeepers are costless and enforceable at no cost, no public input (free pollination provided by local wild bees) , and no spillovers (no free-riding by neighboring growers).  These forces, arguably, play an important role in growers’ decision whether to use commercial pollination, and, if so, to what extent they use it. 

 Objectives

The two main objectives of this project are (1) to understand to what extent transaction costs (contracted vs. non-contracted pollination service), free pollination provided by local wild bees, and spillovers from neighbors affect the growers’ decision to hire bee hives; and (2) to examine the indirect impact of these economic forces on crop yields.  A secondary objective is to examine several farm and grower characteristics as well as production practices on the decision to use commercial pollination and the extent thereof.