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Probabilistic Models of Yield, Price, and Revenue Risks for Fed Cattle Production

Published online by Cambridge University Press:  26 January 2015

Eric J. Belasco
Affiliation:
Department of Agricultural and Applied Economics, Texas Tech University, Lubbock, TX
Mykel R. Taylor
Affiliation:
School of Economic Sciences, Washington State University, Pullman, WA
Barry K. Goodwin
Affiliation:
Department of Agriculture and Resource Economics, North Carolina State University, Raleigh, NC
Ted C. Schroeder
Affiliation:
Department of Agriculture Economics, Kansas State University, Manhattan, KS
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Abstract

Cattle feeding enterprises operate amid variability originating in prices and production. This research explicitly models yield risks related to cattle feeding by relating the mean and variance of yield performance factors to observable conditioning variables. The results demonstrate that pen characteristics, such as entry weight, gender, placement season, and location influence the mean and variability of yield factors, defined as dry matter feed conversion, average daily gain, mortality, and animal health costs. Ex ante profit distributions, conditional on cattle placement characteristics, are derived through simulation methods to evaluate the effects of price or yield shocks on the distributional characteristics of expected profits.

Type
Research Article
Copyright
Copyright © Southern Agricultural Economics Association 2009

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