Master of Science / Department of Agricultural Economics / John A. Fox / We designed a mail survey to investigate consumer choices between whole-grain and regular grain products. Consumption of whole-grain foods has been linked to numerous health benefits including reduced risk of heart disease, diabetes and obesity. The prevalence of obesity has increased in recent decades and has been shown to be negatively correlated with education levels and income. Data from the survey are used to investigate correlations between the likelihood of choosing whole-grain alternatives and various demographic and behavioral characteristics including an individual's Body Mass Index (BMI). We also investigate the impact on consumer choices of providing information about the health benefits of whole-grain foods. Results indicate that education level and the use of food labels are both positively correlated with the likelihood of choosing whole-grain foods. Provision of information about health benefits also had a positive impact on the likelihood of choosing a whole-grain over a conventional grain product, but given a low sample size in this study the effect was not statistically significant. Choices were found to be largely insensitive to changes in relative prices, and no correlation was found between BMI and the likelihood of choosing a whole-grain product.

Doctor of Philosophy / Department of Agricultural Economics / Ted C. Schroeder / Risk is an inevitable part of agricultural production and all producers face various forms of risk. Output price has been shown to be the major contributor to the risk in cattle feeding, yet few choose to manage this risk. This study used subjective price expectations and price distributions of survey participants to determine how producer's expectations compare with that of the market. In addition, demographic information gathered from survey participants allowed for further examination as to how these factors effect price outlook and variability. Data used for this study were gathered through survey responses from Kansas State University Extension meeting and workshop participants and other meetings targeted to livestock producers. First, data were aggregated and analyzed at a group level. Only two of the twelve price forecast were significantly lower than the futures settlement price. On the other hand, all but one of the aggregated group volatility expectations was different. Typically nearby contract price risk expectation was underestimated and distant contract price risk expectation was overestimated. Individual respondent's discreet stated price and price distribution information was fitted to a continuous distribution and an implied mean and standard deviation were determined. These were compared to market price and price risk data. Respondent's expectation of price was significantly lower than the market for distant months for five of the six groups. Individual volatilities resulting from each fitted distribution were significantly lower from the volatility measure resulting from Black's model. Demographic data were estimated to show the impact of this information on overall error of price forecast and price risk expectations. Those living outside the Northeast and Northern Plains tended to have larger error in their expectation of price volatility. Larger backgrounding operations reported lower price variance error and selling more fed cattle each year increased price risk expectation error. Lastly, prior use of risk management tools for the most part did not have an impact on error in either price expectation or price volatility expectation.

Master of Agribusiness / Department of Agricultural Economics / Jeffery R. Williams / Economically optimized ration formulations were used to test whether California dairy producers who implemented price risk management strategies on both the input and output sides achieved significantly higher net returns as measured by milk income minus feed costs compared to producers who bought feed and sold milk on the spot market. Two ration formulation models were developed, a least cost and a profit-maximization. The least cost method formulates a ration that meets the nutritional requirements of a lactating cow at the lowest possible cost for a given level of milk production. The profit maximization model incorporates into its algorithm a production function between net energy intake and milk production that increases at a decreasing rate. For today's high producing cows, after being supplied with enough energy to meet maintenance requirements, all additional energy is partitioned for milk production. Up to a certain point, depending on the price of milk and the price of feed, the cost of providing additional feed units is more than offset by the revenues derived by the extra milk produced from the larger quantities of feed consumed. The profit-maximization model used formulates a ration using both feed and milk prices where the cost of the last unit of feed provided is equal to the revenues of the last unit of milk produced. To compare returns, a ration program was designed that could either use spot or forward values for feed costs and milk price to economically optimize the ration on a weekly basis in the cow’s milk production cycle. To better gauge the impact of price volatility on both the input and output sides and to account for the extended nature of the forward contracts, the 305-day lactation cycle of a high producing cow over six successive cycles was used. The federal order Class III milk price was used for milk values and it was assumed that unless the producer engaged in some sort of forward contract, the milk price received was the monthly Class III value. To account for forward sales, the Class III futures contract traded at the Chicago Mercantile Exchange was used. For the feed prices, the ration model had a library of 16 different ingredients, 11 of which had forward and spot values. Similar to the output side, it was assumed that unless the producer engaged in some sort of forward contract the feed price used was the spot value averaged for each month. Most California dairy operators use some version of the least-cost method when formulating their rations. A large number also forward contract a significant portion of their feed as the concept of forward contracting feed is much more common in the western U.S. as compared to other regions in the country. Conversely, there has been little interest in locking in future milk prices as the tools for forward contracting are relatively new and many producers are not familiar with the mechanics. This helps explain the limited use of the profit-maximization model since milk prices are an integral part of this process. Results of this study show that producers who formulate using the profit-maximization model attain higher milk production and derive higher milk revenues, albeit with higher feed costs. Nonetheless, across every situation, that is whether one forward contracts feed, milk, or some combination thereof the profit-maximization model returned anywhere from $0.14 to $0.19 of milk revenues in excess of feed costs per hundredweight of milk as opposed to the least-cost method. For a producer milking 1,000 cows this represents another $50,000 to $70,000 of income per year. The results also show that whether least-cost or the profit-maximization method is employed, feed costs were lower when producers forward contract at least a portion of their needs. Milk prices, on the other hand, were lower relying on the spot market as opposed to either of the two forward milk contracting models that were developed. Finally, the variability of returns as measured by the coefficient of variability show less volatility in revenues when producers forward contract milk and less variability with input costs when producers forward contract feed.

Master of Science / Department of Agricultural Economics / Allen M. Featherstone / The number of farmer suicides has been high in Andhra Pradesh, Karnataka, Kerala, Maharashtra, and Punjab since 2000. Farmers‟ suicide in India is reported to be due to the burden of debt. While it makes some sense to attribute farmer suicides in Kerala, Karnataka, Maharashtra, and Andhra Pradesh to indebtedness in view of the widespread poverty, it is more difficult to consider in the context of the Punjab which is known for its prosperity. Others have found that the prime cause for farmer suicides is indebtedness. The purpose of this research focuses on identifying and quantifying the reasons for farmers‟ indebtedness compared to non-indebted farmers in the same region. This was achieved by documenting the socio-economic profile of the farmers; studying the extent of indebtedness and pattern of capital use by farmers, and evaluating the farm business performance. Results obtained for the socio-economic profile of the farmer indicated that age, education, family size and landholding had a significant effect on the probability of a farmer being indebted. Family size had the largest effect on the probability of indebtness. A study on the extent of indebtedness and pattern of capital use showed that farmers depend on non-institutional loans for meeting their financial needs and some loans are used for non-agricultural purposes. Farm business performance of the sample respondents showed that they had a negative balance on farm business performance. Some of the methods to improve the situation would to improve and expand free and compulsory primary education, thereby reducing the debt incurred on education; diversifying towards high value/more remunerative crops, reviewing the system of subsidization of agricultural inputs, and expanding institutional sectors for providing loans at reasonable interest rates.

Master of Agribusiness / Department of Agricultural Economics / Kevin Gwinner / Under the leadership of the Van Eekeren family, Land O’ Frost has become one of the fastest growing meat processing manufacturers in the United States. “Premium” is Land O’ Frost’s flagship brand which makes up 57% of the company’s total sales dollars. Of the line of Premium lunchmeats, Honey Smoked Turkey is ranked #3 in total sales dollars. However, if you rank the product’s performance by dividing its all commodity volume (ACV) by the number of pounds sold, it is ranked #7 out of the nine single pack flavors offered in retail. There has been internal speculation that the Honey Smoked Turkey’s sales performance is related to a lack of honey/sweetness flavor in the lunchmeat. As a result, Land O’ Frost needed to determine if the current level of honey/sweetness flavor of the Honey Smoked Turkey needs to be increased in order to stimulate higher growth in sales. A third party consultant conducted a consumer test between Land O’ Frost’s honey smoked turkey and their top two competitors’ honey smoked turkey. Based on the results, the Land O’ Frost product was the least likely preferred and was rated as having the lowest sweetness flavor profile among the three products. In an effort to develop a sweeter tasting honey turkey, different test formulations were developed using different honeys, levels of honey and sweeteners. The lighter the honey grade the less flavor impact was present in the turkey. As a result, a test formula containing twice the amount of light amber honey and the maximum amount of sugar was developed to be sweeter and to offer better marketing claims to potentially attract more customers. Due to product process differences between the Land O’ Frost’s honey smoked turkey and its competitor’s, the decision was made to conduct another consumer test between the current control and the newly formulated test product. The data determined that there was not a significant difference between the two products tested. A triangle test was conducted via a third party and it also confirmed the same conclusion. With the test formula having a slightly higher cost per pound than the current control formula, it was decided internally that the test formula could replace the current formula if the test formula price per pound can be adjusted to the same cost as the control. I would recommend that the level of sugar in the new test formula be slightly decreased until the formula cost per pound is the same as the control. The cost of meat raw materials used by Land O’ Frost often changes due to market price conditions. The new formulated honey smoked turkey’s selling potential would still have a positive impact by utilizing claims such as “double the honey” and “lower sodium” on the package. In this case, the selling potential increase would be more heavily executed from a marketing perspective than from flavor development.

Master of Agribusiness / Department of Agricultural Economics / Christine Wilson / Over the last decade, the United States horse industry has seen a decline in all segments of the industry. Both people and organizations within and outside the industry have debated the cause of this decline, with the 2007 horse slaughter ban being at the center of this debate. The purpose of the report is to analyze a specific segment of the industry to determine what has led to this decline over the last decade. To do this, we will look specifically at the total number of thoroughbreds sold over a thirty-year history, and using regression analysis, determine if a controversial bill that banned the slaughter of horses in the United States for the purpose of meat was the cause of this decline or if other key variables that played a key role. These additional variables will include hay prices, corn prices, oat price, gas prices, and a macro economic indicator variable. The regression results show that the horse slaughter ban did in fact have an impact on the decline of the total number of thoroughbreds sold within this specific segment of the industry. Also, both hay and the unemployment rate had an effect on the decline of the total number of thoroughbreds sold, while gas prices appear to have had an unexpected positive effect, which is contrary to common thought. This thesis shed a new light on the decline of the horse industry within the United States and the effect the ban has had on the thoroughbred industry.

Master of Science / Department of Agricultural Economics / Timothy Dalton / Previous research on small-scale farmers in KwaZulu-Natal, South Africa indicates that certain genetically modified maize seed types improve production efficiencies and increase net returns (Regier 2012). Yet despite the substantiated advantages, not all farmers have adopted genetically modified maize. The purpose of this research is to identify the determinants of adopting certain types of genetically modified maize over traditional or conventional hybrid maize for 184 small-holders in two villages in KwaZulu-Natal, South Africa. Previous adoption studies use socioeconomic characteristics of the farmer as well as farm-level production characteristics to determine the probability that a farmer will implement an improved agricultural technology. While many studies employ a binomial approach to adoption, this study tests the probability of adopting three different GM varieties—the insect resistant Bt maize, the herbicide tolerant Roundup Ready® maize, and the stacked trait BR maize. Furthermore, the model is enhanced by farmers’ open-ended explanations of their perceptions on genetically modified maize and of the major production constraints they face. Following results from previous adoption studies, this research tests three hypotheses in a three different model structures. The first hypothesis tests whether farmers are more likely to adopt if they have greater financial means to cover higher expected production costs. This is tested by variables measuring off-farm employment and expected production costs. The second hypothesis tests whether farmers with less labor availability are more likely to choose maize with the herbicide tolerant technology, either the Roundup Ready® or stacked BR maize, which reduce the need for weeding. The final hypothesis is whether there are differences in the determinants of adoption that differentiate GM adopters into three distinct categories. These hypotheses are tested in three model structures that test the binary probability of adopting GM maize over non-GM, the probabilities of adopting each maize variety separately, and the intensity of adoption. The first finding is that many non-adopters have greater access to income and are more likely to sell a portion of their yield than are many farmers who adopted, especially in comparison to those who plant RR maize. Also, BR farmers are more likely to report input expenses as a major constraint in their adoption decision. Results for the second hypothesis show that those who planted either RR or BR maize did in fact have less family labor available, used less total labor, and used a greater proportion of family to hired labor. Finally, there are differences in the determinants for geographic site, education, self-sufficiency in maize supply, number of family members working off-farm, and whether households planned to sell any of their maize yields. This indicates that adoption should be considered according to each genetically modified trait.

Master of Science / Department of Agricultural Economics / Arlo Biere / A major story in the recent history of US agriculture is the evolution and growth of the ethanol industry. A crucial factor in the profitability of an ethanol plant is the choice of its fixed location, as this has implications in the transportation costs associated with the acquisition of grain and sale of distiller’s grains. When the industry was in its infancy, where to locate, often, was based on strictly local factors. Primary considerations were local availability of grain and producer and community investment interests. Today, the ethanol industry is more mature and consolidated. As such, investment criteria have broadened from a localized to a total systems perspective. The focus of this study was to analyze construction, abandonment, and expansion of plant locations in ethanol producing regions, and the effects of regional transportation costs on the geographic growth of the industry. Comparison to previous research provided the basis to evaluate industry change. Current ethanol plant locations and their capacities were complied and compared with earlier data to identify plant exits, expansions and new construction. Aggregating those plant capacities by USDA crop reporting districts, feedstock consumption by biorefineries were calculated by crop reporting district, as was livestock feed demand from livestock numbers. Those data along with coarse grain production by crop reporting district were used to calculate excess feedgrain demand (supply) by region. Those regional data were used to construct linear programming network-flow models for the transportation of feedstock and for DDGS, respectively. Two models were used; the first was used minimize the interregional cost to transport feedstocks from excess supply regions to excess demand regions. The second was used to minimize the interregional cost to transport DDGS from excess supply regions to excess demand regions. These regional transportation costs were combined to find the total interregional transport by crop reporting district. Differences in such interregional transport costs affect the competitiveness of plants across crop reporting districts and should affect the strategic position of each plant location. Current plant locations and transportation cost results were compared with those from previous research and, with additional consideration to changes in production factors, provided further understanding of the recent growth and development of the ethanol industry.

Master of Science / Department of Agricultural Economics / Kevin Dhuyvetter / Land accounts for more than 75% of a farm operation’s total assets and thus knowledge of land values are very important to landowners. However, many other parties, including lenders, appraisers, investors, and researchers also have significant interest in land markets. Over the past few decades, land prices in Kansas have increased significantly for many different reasons. The main objective of this research is to estimate the impact of various factors on Kansas land values using a hedonic regression model. In cooperation with the Property Valuation Department (PVD) of the Kansas Department of Revenue, farmland market transactions from 1986 to 2009 were obtained for this study. Hedonic models were estimated using Ordinary Least Squares to determine the impact of interest rates, urban areas, location, parcel size, and income on nominal and real Kansas land values. The estimated nominal and real models explained 24.1% and 17.2% of the variation in land prices, respectively, and the results from this study are generally consistent with previous research. This research went further into investigating the relationship between PVD data and United States Department of Agriculture (USDA) surveyed data. Results from this study indicate that USDA surveys significantly underestimate the true market for land prices across Kansas.

Master of Science / Department of Agricultural Economics / Ted C. Schroeder / This study focuses on the effects of food safety recalls on a firm’s shareholder value. In this study, the effects of six recalls are studied using the event study method. Three models were used involving the daily stock returns for each recall, the daily prices from the S&P 500 and the S&P 500-Packaged Foods and Meats prices. Each of these models was used to determine the abnormal returns for the individual recalls during a determined event window. The four companies responsible for the recalls are all large, highly-diversified food production companies. Overall, the results from this study show there is short-term effect on shareholder values for the companies included in this study. This is an important topic that was widely studied in the late 1990’s and early part of the 2000’s. There have not been any notable studies in this area in the past decade which is why this study is useful. Results of this study are comparable to those mentioned in the literature review section.