Master of Agribusiness / Department of Agricultural Economics / Mykel Taylor / Agriculture subsidization policies have a long history and have been criticized, reformed and heavily discussed multiple times over the last centuries. However, most countries in the world use farm subsidies as a policy instrument and spend billions every year. Especially highly developed and wealthy countries seem to have a tendency to subsidize production agriculture and the agricultural industry. The objective of this thesis is to improve understanding of the impact direct payments or subsidies may have on farm land values via farmers paying higher dollars for ground they rent and capitalization of those higher rents. Analysis is done by comparing the allocation of subsidy dollars from the Common Agricultural Policy on two wheat farms in Germany and Czech Republic, which are member countries of the European Union, to wheat farms in the United States and Australia, countries with relatively lower subsidy levels. Data for the farms include their cost structures, total revenues, and total direct payments. Comparisons of their relative land values and rental rates paid will provide evidence to test the hypothesis that direct subsidies are likely to increase land values. Based on the economic costs of production for the farms in Germany and Czech Republic, the value of land is not necessarily the residual claimant for the direct payments paid out through Europe’s Common Agricultural Policy. Possible explanations for this include restrictions on farmland use and farmland ownership structures held over in former communist countries where farms were owned by the state. These factors are likely to affect potential farmland owners’ perceptions of property rights and their willingness to pay a full market value for land.

Master of Agribusiness / Department of Agricultural Economics / Vincent Amanor-Boadu / The beef industry is a very important in the food sector of agriculture and over the past two decades the United States beef industry has faced many challenges. Over time the distribution of beef exports have changed due to food safety issues and government policies, not just in the U.S., but on a global scale forcing U.S. beef producers to diversify their export outputs to other countries that were not previously strong leaders in the export business. The U.S. must be strategic in their production decisions in order to continue to compete on a global level to avoid significant loss during adverse conditions. One of the major challenges that the U.S. industry has faced is the discovery of BSE in late 2003 in the state of Washington, which led to the closing of many borders to countries who had a significant impact on the beef industry in the U.S. Since U.S. beef is highly regarded by consumers for its quality worldwide, it is important to understand what changes have taken place in the past to have a full understanding of what changes need to be made in the future. The objective of this thesis is to look at how the distribution of the value, volume and price of U.S. beef exports have changed over the past two decades. By looking at how this has changed we will be able to see what countries are emerging as important customers and how others have declined. This is extremely important since some of the major importing countries have changed or put restrictions on the U.S. beef industry over the past two decades and the industry needs to understand these changes so that they can remain strong in the export sector. By analyzing the global trends of U.S. beef exports by value, volume and price across principal regions of the world, research will show us how to change for future changes. By assessing the effect of the discovery of BSE in the U.S on changes in the distribution of beef exports across the global regions, research will show who emerged when other countries declined. By using this research, the foregoing results will be helpful to inform the industry on what export market strategy can be developed for the U.S. beef industry. The results suggest that BSE had some negative effect on the U.S. beef industry in terms of the value and volume but did not have an impact on the price per pound of beef. Some regions had a larger impact than others when BSE was discovered, such as East Asia, but during this other regions, such as North America, came through and became the leaders in exports for U.S. beef. While there was some growth from the Rest of the World, there was not enough of an impact to compete with the foregoing countries.

Master of Agribusiness / Department of Agricultural Economics / Vincent Amanor-Boadu / The overall objective of this research is to develop a business continuity plan for a relatively large livestock company located in Francophone West Africa. This is very important in an environment when both internal and external risks can lead to significant disruptions in the business processes. The research, thus, focuses on developing a process that can be applied to establish a business continuity management process in this firm and provides the framework for implementing such a plan successfully. The livestock company, let us call it Livestock Co. to protect its identity, wants to define strategies for recovery, resumption of business and other key activities under the potential scenarios. Its managers desire to formulate crisis response strategies that would be implemented quickly when these disasters hit. The thesis envisages the potential conditions that may trigger these crises and develops the management systems to mitigate them, returning the business to it activities as quickly as possible. Some of the natural disasters that may be considered are fire, accidents and political upheavals. Some technical disasters that may be imagined may be related to infrastructure, labor crisis, and grain dust explosions. Unlike natural disasters, which often are uncertain, technical disasters can be predicted based on careful assessment of the environment or the assets. The research evaluates the process for developing a business continuity management plan and offers an implementation process to ensure its smooth execution.

Master of Science / Department of Agricultural Economics / Mykel Taylor / Forward contracts are one of the main tools used by producers to manage price risk because forward contracts shift the risk from producers to the grain elevator offering the contract. The elevators protect themselves from this risk by hedging, leaving them susceptible to basis risk, which they offset by adding a risk premium to the forward contracts they offer producers. This risk premium is affected by increased volatility and by differences in elevator-specific characteristics at elevator locations across Kansas. This study replicates the results in Taylor, Tonsor, and Dhuyvetter (2013) and adds a set of elevator-specific characteristics to measure their effect on risk premiums. A random effects generalized least squares model is estimated due to the data gathered being panel data. The contribution of this study is to further examine the drivers of risk premiums in forward contracts for Kansas wheat. The results indicate that all of the elevator-specific characteristics in the data set have a statistically significant impact on the value of risk premiums on forward contracts for Kansas wheat. The results also confirm the findings in Mallory, Etienne, and Irwin (2012) and Taylor, Tonsor, and Dhuyvetter (2013) that increased volatility post 2007 caused increases in risk premiums. The risk premiums after the structural break in 2007 increased by $0.069695/bushel, as the average risk premium prior to 2008 was $0.158682/bushel, while the average risk premium after 2007 was $0.228378/bushel.

Master of Agribusiness / Department of Agricultural Economics / Sean Fox / The commodity markets have seen a great deal of volatility over the past decade, which, for those involved, has created many challenges and opportunities. Some of those challenges and opportunities are related to the behavior of the basis – the difference between the local cash price of grain and its price in the futures market. This thesis examines factors impacting basis for corn and soybeans at an Illinois River barge terminal, inland grain terminals in central Illinois, and in the Decatur processing market. Factors used to explain basis behavior include the price level of futures markets, the price spread in the futures market, transportation cost, local demand conditions, and seasonal patterns. Using weekly data on basis from 2000 to 2013, regression models indicate that nearby corn futures, futures spread, inverted market, days until expiration, heating oil futures, and some months are significant drivers of corn basis. For inland terminals and processor regression models nearby corn futures do not appear to have significant effects. Using the same parameters for soybean basis nearby soybean futures, futures spread, inverted market, heating oil and some months are significant drivers but days until expiration do not appear to have a significant effect.

Master of Agribusiness / Department of Agricultural Economics / Brian Briggeman / “Skyscrapers of the plains” is a term which refers to the country elevators spread throughout Kansas and the Midwest, along with the elevators are farmer cooperatives. Farmer cooperatives have been around for more than a century to serve the area farmers as a place to store and market their grain and to purchase their farm inputs. The objective of this research is to identify key profitability drivers of farmer cooperatives of different sizes throughout time. This will be done by using a unique data set gathered from the CoBank’s RiskAnalysis database and examining it with the DuPont model. The project breaks down the data by size, large vs. small, and location. If a cooperative has done more than 100 million dollars in sales in 2010, it was classified as large for the entire time period, all other cooperatives were small. Location was either Kansas or Midwest. In this model, operating profit margin or earns, asset turnover ratio or turns, debt-to-equity ratio or leverage, and spread are examined. Also examined are Return on Assets, the operating performance, and Return on Equity, the financial performance, of the cooperative. Board of Directors and cooperative managers will be able to take this information and hopefully make decisions which make their respective cooperatives more profitable. With the information provided, cooperative managers and Board of Directors will be able to financially compare themselves versus other cooperatives of similar size whether they are in Kansas or in other Midwestern states.

Master of Agribusiness / Department of Agricultural Economics / Vincent Amanor-Boadu / Farming is an important industry in the United States. The custom harvesting industry plays a major role in feeding the world. Schemper Harvesting is a family-owned and operated custom harvesting service that employs 20-25 seasonal workers and understanding how to manage a custom harvesting business professionally and efficiently is the key for its success. Today, there is data available through JDLink on John Deere combine performance beginning in year 2012. The purpose of this study is to examine the usefulness of this JDLink data to assess the efficiency of each of Schemper Harvesting’s seven combines, including machine efficiency and different combine operators. The goal is to determine how the data can improve Schemper Harvesting’s overall performance. Statistical methods were used to analyze Schemper Harvesting’s performance. The analysis indicated that fuel is a major expense and there are ways Schemper Harvesting can conserve fuel. This information may prove valuable in being able to operate a combine more efficiently and save money on expenses. Overall, the objective is to improve Schemper Harvesting’s performance, which results in higher profit without sacrificing quality. Precision technology is an added expense to the business. Being able to justify this expense with profit is the answer. Fuel, labor and machinery are the biggest inputs in the custom harvesting business. These costs related to production agriculture have increased the demand for precision agriculture to increase efficiency and profitability. In order to compensate for the investment in technology, it has been demonstrated that it pays for itself. Making correct use of precision technology adds to productivity. With experience, operators improve increasing their overall efficiency. Incentive plans can be utilized through this data. With the availability of data, the costs and benefits of precision technology can be further evaluated. Five of the seven combines are operated by family members and the other two by non-family employees. This study shows that the performance of the non-family employees was below that of family members. The initial assessment for this difference may be attributed to experience because all the family members have been operating combines for most of their lives. This implies that employing people with excellent performance experience records and/or a need to train non-family employees to help them understand the performance expectations at Schemper Harvesting. The results indicate that tracking operational output performance indicators, such as acreage and volume harvest should be completed so that they may be assessed in concert with the technical indicators such as time and fuel use. The study provides the potential benefits of using John Deere’s JDLink data service providing telematics information for its customers with the latest precision agriculture technologies.

Master of Agribusiness / Department of Agricultural Economics / Hikaru Hanawa Peterson / This thesis focuses on the question of the effect of commodity pricing and Federal programs on the cost of food in the United States. For many decades the debate around subsidy payments has been argued in the halls of Congress and in farm fields across the country. Corn, wheat, and soybeans are the three largest crops subsidized in the United States today; arguably, the prices of these crops are influenced by subsidy payments. The goal of this thesis is to determine the effects of the prices of the top three subsidized crops on the thrifty market basket for families for four published by the USDA, factoring in transportation costs, market spread, agricultural technology advancements, and market value share. Previous studies have focused on direct subsidy payments as a whole and their aggregate influence on the price of food. This paper builds on the past studies by evaluating the effects of crop-specific programs on the cost of food. Econometric regression analysis was used to analyze the data gathered to support or refute the hypothesis that commodity prices and Federal payments do influence the cost of food. Initially data were gathered from January 1960 to December 2012. The data were adjusted for inflation using the Producer Price Index and Consumer Price Index where appropriate. After multiple attempts of modeling it was discovered that data from 1960 to 1970 needed to be discarded due to the difference in the market basket price calculations from the rest of the series. Furthermore, the model was adjusted based on the presence of multicollinearity, and the Hildreth-Lu Method was utilized to correct for the autocorrelation in error. The regression results illustrated that the only commodity of the three considered in the study that had a positive and statistically significant impact on the cost of food over the sample period was corn (p-value = 0.005). The coefficients on wheat and soybean prices were statistically insignificant. The historical fuel price had the expected positive sign and was statistically significant. The agricultural technology factor was not significant. The results also suggested that the cereal grains supply chain has significantly increased the cost of food. Both the cereal grain farm value share and the retail-to-farm spread for cereal grains were statistically significant (p-value < 0.000) with positive coefficients. The price spread of fruit was statistically significant, (p-value = 0.000), but the farm value was not. The regression results were initially surprising for the crop price variables. The overall analysis supports previous studies that crop subsidies alone may not have impacted food prices per se, but biofuel policies may have had unintended consequences. Crop-specific results provide more information to consider when discussing The Farm Bill and the implications of such a complicated and omnibus piece of legislation.

Master of Science / Department of Agricultural Economics / Mykel R. Taylor / Land value research has been conducted over many decades with efforts being focused on a broad spectrum of topics encompassing many different issues. The research in this thesis will focus on understanding the relationship between net farm income, cash rent, and land value. This research could provide insight and direction in determining future land value behavior. Understanding land prices is important to many different segments of the agricultural industry. Those involved in the industry want to know where land values are going and what the future looks like. Although certain segments may not be directly affected by land value movements, if value decreases the environment of the agriculture industry is changed. Farmers and ranchers are interested in future land values as they make purchase and sale decisions or as they consider future growth of their operation. Agribusinesses understand the affect a decrease in land value would do to farmer’s decisions regarding capital purchases. Additionally, agriculture finance institutions are interested in the future movement of land value as they are concerned about the affects adverse movements in land value would have on their customer’s balance sheet and ultimately their collateral position. In this paper the relationship between land value and cash rent; where land value is a function of historical cash rent and cash rent is a function of net returns to the land will be tested for its’ existence in Kansas. Data were collected for the nine crop reporting districts in Kansas from 1973 through 2012.

Doctor of Philosophy / Agricultural Economics / Allen M. Featherstone / Christine Wilson / Farmland values have reached all-time highs and have significantly risen over the last few years. This has caused much debate about whether farmland prices are currently on a bubble and ready to burst, much like the earlier 1980s. Much research has been done on farmland values; however, work done outside of agricultural economics, looking at general asset values, can be incorporated into models of farmland value. Information cascades, or herding, are phenomenon where information in the market is sent between investors and this information is bid into the asset price, thus resulting in boom and bust periods. By using a Vector Autoregression (VAR) model, farmland price dynamics are modeled and analyzed for spatial dependencies from one region to the next. VAR allows for no a priori specification of network typology. This allows for the examination of the existence of information cascades and what form the network takes among spatially located farmland markets. This method is then compared to two other spatial estimation techniques. The first is a Spatial Autoregressive (SAR) model where network typology is imposed prior to estimation. The second is a VAR model where no network is modeled, and only the region’s own asset prices can influence future periods. It is found that information cascades exist and network typology is somewhat random. These results caution the current direction of the literature of imposing network or spatial structure. However, due to data requirements, SAR models are easier to estimate since they require less data and if network structure, which the SAR model inherently imposes by the weight matrix, could be determined by an autoregressive process instead of an adjacency rule it could prove to be the most accurate forecasting method.