An Empirical Analysis Of Honeybee Pollination Markets

Pollination by honeybees plays an important role in modern agriculture. Some crops are greatly dependent on honeybees (almonds, apples, avocados, blueberries, and cherries are examples) while the yields and quality of other crops are significantly enhanced by honeybee pollination. The importance of understanding pollination markets has increased recently due to changes brought on by the twin scourges of Varroa and tracheal mites. Both are infestations of feral and domestic bees that imply greater future reliance on domesticated bees at higher cost. In the United States a complex market has evolved that connects itinerant beekeepers and their bee colonies with farmers who demand their services. While the fields of entomology and crop science have developed a large literature on general principles of beekeeping and its application to particular crops, there has been little economic analysis of pollination markets. In this paper, we begin to remedy this lack of attention by analyzing an extensive panel data set of individual pollination transactions for Oregon beekeepers. The Oregon panel constitutes a considerably larger and richer data set on pollination markets than the data set examined by Cheung (1973), which is our only empirical precedent. Using cross-sectional time series regression models, we find results that are consistent with Cheung's earlier findings on the consistency of pollination market outcomes with economic theory. Fees charged for placing colonies on crops that yield marketable honey are found to be less than for crops that yield no honey income to the beekeeper: the pollination fee for crops that produce honey is about $17 per colony less than for crops that produce no honey. Pollination fees also vary over time in response to changes in both crop prices and honey prices. Because bees are paid according to their value of marginal product in the production of crops, pollination fees should vary positively with crop prices. We find that a ten percent increase in crop prices causes pollination fees to increase by about $.40 per colony. With respect to honey prices, we find that a ten percent increase is estimated to decrease pollination fees by about $2.50 per colony. This estimated effect is a previously unexplored link between the now-defunct honey program and its longstanding public policy rationale, the encouragement of honeybee pollination. Insofar as the honey program successfully maintained the price of honey above levels that would otherwise have been observed, our analysis suggests that elimination of the program has resulted in a reduction in pollination services and an increase in pollination fees.