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Past research has only studied genetic panel scores and feedlot performance. This research combines impacts of genetic panel scores on a cow-calf operation with previously estimated feedlot impacts to evaluate the potential for misaligned economic incentives in the beef industry. Calves that were higher genetic scores for two carcass traits, marbling and tenderness, had lower weaning weights and lower net returns. Correlations between genetic traits and cow size were small and mostly insignificant. The sum of the effects on feedlot and cow-calf sectors of a one-unit higher panel score totaled $-2.83 per cow year for marbling and $-4.93 per cow year for tenderness.
We investigate differences in profitability of three Aberdeen-influenced breeds, Angus, Red Angus, and American Aberdeen. Using data from North Dakota, we measure differences in birth weights, calving intervals, weaning weights, cow weights, and profitability. Weaning weights differ between breeds, setting up a trade-off between lower feed costs for smaller cows and higher revenue for larger cows. American Aberdeen-influenced cows bred to Red Angus bulls have $1–$6 per acre higher returns than Angus or Red Angus-influenced cows. Aberdeen sires have the lowest returning calves.
The CIF NOLA “river market” represents an important but opaque forward market that serves Gulf exporters and elevators. CIF NOLA bids function similarly to traditional forward contracts; however, like a futures market, firms can offset their forward contractual obligations by offsetting positions in a liquid off-exchange paper market. Analysis shows grain sellers pay a risk premium for fall harvest delivery contracts. However, outside of fall harvest, contract liquidity, coupled with a good institutional balance of long and short market participants, mostly removes the pricing bias commonly found in farmer forward contracting in corn and soybeans.
Anaerobic digestion systems can reduce greenhouse gas emissions while turning waste products into energy. Past U.S. economic research on anaerobic digesters has studied dairy farms, but limited economic information is available on anaerobic digestion systems for swine. Net present values (NPVs) were calculated for biodigesters and covered lagoons under different coproduct and policy scenarios. With no government intervention, covered lagoons are more promising for swine operations than more capital-intensive biodigesters. As there is interest in subsidizing anaerobic digestion systems, subsidies equal to a $38/t social cost of carbon would provide positive NPVs.
Design of government policies that seek greater adoption of anaerobic digesters can benefit from a greater understanding of the motivations for adoption. Using a nationwide survey of U.S. dairy and swine producers, this study seeks to determine how policies, peer group influences, environmental beliefs, and farm characteristics affect the decision to adopt a digester. Results suggest that neighborhood effects, farm type and size, and nonmarket benefits of anaerobic digestion are important for predicting whether or not a producer will consider this technology for manure management. However, the decision to actually adopt is more dependent on government policies and economic considerations.
Hedonic modeling of Oklahoma cow auction data is used to determine the market value of bred cow characteristics. We use Agricultural Marketing Service data that let us consider more years and more lots of cattle than is typical for a cattle hedonic study. The greatest price premiums were for black, late-gestating cows, categorized as high quality by market reporters and weighing between 1,600 and 1,700 lb. Previous research on optimal cow size finds much smaller-size cows are optimal, and our research finds that larger cows receive a lower price per pound but still receive a substantially higher price per head.
Past research shows that prices move in response to World Agricultural Supply and Demand Estimates (WASDE) reports immediately prior to and after a report. This research develops trading models based on knowing the next WASDE report in advance. This should help traders evaluate investments to predict information contained within the report and in determining how best to use such forecasts. The price-forecasting models use regressions against the ratios of ending stocks to use. Results show a steady increasing return to trading over the report month. The highest returns are produced by trading during the growing and harvest seasons.
Both schools and industry members are concerned about wages in the veterinary profession that are low relative to the years of schooling and tuition costs. This study examines the differences in starting salaries for the 2009–2014 graduates of the 28 schools accredited by the American Veterinary Medicine Association. Findings show relatively small (less than $4,000) but statistically significant differences in starting salaries related to school choice. A larger differential effect is present among the different practice types of veterinary medicine, with equine practitioners and private industry veterinarians (e.g., pharmaceutical researchers) representing the least and greatest average starting salaries, respectively.
Agricultural economists' research on price forecasting and marketing strategies has been used little by those in the real world. We argue that fresh approaches to research are needed. First, we argue that we need to adopt a new theoretical paradigm, noisy rational expectations. This paradigm suggests that gains from using price forecasting models with public data or from using a marketing strategy are not impossible, but any gains are likely to be small. We need to conduct falsification tests; to perform confirmation and replication; to adjust research to reflect structural changes, such as increased contracting; and always to conduct statistical tests. We also provide a modest agenda for changing our research and extension programs.
An equilibrium displacement model of the U.S. meat markets is used to measure the potential impacts of promotion investment, differentiating meats by types and by supply source, taking into account the U.S. participation in global meat markets, and considering imperfect competition in the meat industry. The increase in U.S. producer welfare resulting from a 10 percent increase in promotion ranges from -$1.29 million to $2.60 million for U.S. beef producers and from -$0.96 million to $1.67 million for U.S. pork producers, depending primarily on the advertising elasticity used.
There is often a need to respond quickly to assess the likely implications of policy changes. Here, an equilibrium displacement model is adapted to study international bans on U.S. beef. An equilibrium displacement model offers a convenient way of quickly predicting the effects of supply and demand shocks. The equilibrium displacement model used here has an international sector, which allows the study of issues that past models with only a domestic sector could not. The estimated welfare loss of U.S. beef producers, due to both Japanese and South Korean bans after the discovery of bovine spongiform encephalopathy (BSE) in the United States, is $565.31 million.
A method was developed with time series models to test hypotheses about the relationship between market structure and spatial price dynamics. Long-run dynamic multipliers measuring the magnitude of lagged adjustment for spatial milled rice prices were calculated from the time series model and used as the dependent variable in a regression model that included a number of factors expected to influence price determination. Results show that price adjustments were slower as regional submarket concentration increased and were faster in the regions with a higher market share. Arkansas, the state with the largest market share, was consistently a price leader.
A dynamic model of daily cash and futures prices for cotton was developed using time series analysis. The time series model was included in a recursive Monte Carlo simulation model. Validation of the model was performed with a stochastic, dynamic simulation of the estimated model over the observation period 1975-1982 and with a static, deterministic out-of-sample forecast from December 9, 1981 through March 9, 1982. The model was then used to incorporate futures trading strategies into a policy simulation model.
The recently implemented Rainfall Index Annual Forage pilot program aims to provide risk coverage for annual forage producers in select states through the use of area rainfall indices as a proxy for yield. This article utilizes unique data from a long-term study of annual ryegrass production with rainfall recorded at the site to determine whether the use of rainfall indices provides adequate coverage for annual forage growers. The rainfall index is highly correlated with actual rainfall. However, it does not provide much yield loss risk protection for our cool-season forage data.
The growth in winter canola acreage in the southern Great Plains has led to questions about the best way to reduce price risk because there is no U.S. canola futures market. Cross-hedge ratios and hedging effectiveness are calculated, and encompassing tests are conducted for short-horizon hedging. Possible cross-hedge markets considered are U.S. soybeans, soybean oil, soybean meal, hard red winter wheat, and Canadian canola. The selected cross hedge is a combination of soybean oil and meal futures, but its hedging effectiveness is substantially less than what is typically provided by a direct hedge.
One frequently proposed policy is to consolidate rural school districts in order to save money by obtaining economies of size. The effects of school district size on both expenditures and standardized test scores are estimated for Oklahoma. Results indicate that economies of scale with respect to expenditures per student exist up to an average daily membership (ADM) of 965 students, but that as school districts become larger, tests scores decline. Even if savings in school district administration from consolidation are spent on instruction, state average test scores would decrease slightly. Thus, school district consolidation can reduce costs, but it will also reduce student learning.
Quality discounts and premiums for rough rice in Texas rice bid/acceptance markets are analyzed. The most important quality factors determining the value of rough rice are head yield and peck. A one percentage point reduction in peck damage raises the price received per hundredweight of rough rice by $.13 to $.68 across markets and years. Since peck damage can be reduced by controlling the rice stinkbug, evaluation of alternative methods for better control of this pest in Texas rice fields is needed.
In an inverted market, current prices are higher than future prices and thus the price of storage is negative. Market inversions as measured with futures spreads rarely occur during early months of the crop year. However, market inversions frequently occur across crop years and near the end of the crop year. In the last half of the crop year, market inversions clearly reflect a signal to sell stocks. Too few inversions occur early in the crop year to reach a definitive conclusion for that period. Behavioral finance offers possible explanations of why producers would hold stocks in an inverted market.
Obtaining estimates of pesticide productivity is an economic response to the growing public concern about the steady increase of pesticide use in the United States. This type of research indicates the cost of limiting pesticide use in terms of foregone output. Previous empirical studies give a “snap-shot”, or “average”, look at pesticide productivity. This research effort employs a random coefficient model to determine the trend of the marginal value product of pesticides in agriculture in the United States. Results show a distinct downward trend in two states, Iowa and Texas. California, however, shows no evidence of a downward trend.
This paper determines the effects of cattle feeders' risk aversion on feeder cattle prices using pen data of Kansas feedlots. Higher profit risk results in lower feeder cattle prices. The elasticity of feeder cattle price with respect to profit risk was small (-0.013). The risk elasticity estimated here is similar to risk elasticities in previous studies and thus, the use of pen-level data does not seem to add much to the study of risk.