Master of Science / Department of Agricultural Economics / Ted C. Schroeder / Considerable risk is present in today’s ranching world; especially price and production risk. A producer who can tolerate more risk, and is knowledgeable about how to effectively manage price and production risk, may have opportunity to increase profitability relative to a highly risk averse producer. The purpose of this study is to investigate perceptions and sources of risk, identify how risk management is conducted, assess price and production risks, and view differences between producers’ perceptions versus their attitudes towards risk and factors that affect risk. In order to investigate cow-calf producers’ perceptions of risk, an instrument was created to survey beef cow-calf producers in the Kansas Farm Management Association (KFMA). Respondents provided information on their production practices, marketing methods, operating decisions and risk related to their cow-calf operations. A risk preference score for individual producers was developed from specific survey questions to determine three objectives: to classify producers’ risk preferences related to their operating decisions; determine operating decisions that affect risk preferences; and identify what production and marketing practices in which producers were willing to risk for a chance to increase the net returns to their operations. A bi-directional causality between risk aversion and operation characteristics was illustrated between how operating decisions are related to risk aversion, and risk aversion is related to operating decisions. Factors that were found to influence risk aversion were socioeconomic factors such as age, off-farm income, debt-to-asset ratio, farm size, and number of cows owned, as well as comparative advantages of producer’s: use and analysis of new technology, business planning skills and marketing skills. Models showing how risk aversion was related to production management focused on producer’s financial soundness, production practices and marketing methods, specific to retained ownership. Producers who would participate in value-added programs to increase returns to their operation have a comparative advantage in marketing skills, own more cattle, and are less diversified in terms of their farm enterprise incomes.

Master of Agribusiness / Department of Agricultural Economics / Jeffery R. Williams / Anaerobic digestion is an alternative solution to organic waste management that offers economic and environmental benefits. The Kawangware open air market in Kenya generates approximately 10 metric tons of organic waste per day as a result of farm produce sold at the market. Fresh fruits and vegetables sold at the market account for more than 80 percent of the organic waste. This organic waste is left uncollected, piling up and therefore becoming pollution to the environment. Instead, this waste can be processed by anaerobic digestion to produce energy, organic fertilizer and greenhouse gas credits. The main objective of this project is to help investors and members of Kawangware Waste Utilization Initiative (a waste management community based organization in the Kawangware area) answer the following questions: (a) Is it economically profitable to invest in an anaerobic digestion system to convert the market organic waste to methane and fertilizer? (b) Is it economically profitable to burn the methane to generate electricity? To answer these questions, the study examines the costs and returns of producing methane, electricity, and fertilizer from organic waste under various scenarios using net present value, internal rate of return and payback period analysis techniques. Three production conditions under various scenarios using the anaerobic digester are examined. The conditions include: (a) Production of methane and organic fertilizer. (b) Production of methane, organic fertilizer, and carbon credits. (c) Production of electricity, organic fertilizer, and carbon credits. From these three production conditions examined, production of methane, organic fertilizer and carbon credits had the highest net present value of $332,610, internal rate of return of 21.4%, and the shortest payback period of 7.9 years. If carbon credits could not be sold the next best alternative would be production and selling of methane and organic fertilizer which has a net present value of $246,752, internal rate of return of 19%, and a payback period 9.2 years.

Master of Science / Department of Agricultural Economics / Kevin C. Dhuyvetter / When purchasing feeder calves, bulls are typically discounted relative to steers. Most would agree that a discount is warranted but determining the appropriate discount to apply is considerably more difficult. Being able to calculate this discount under varying conditions would help stock operators maintain a certain level of profitability or recognize opportunities to make more profit when excessive discounts are being applied. The goals of this study were to determine how castration timing affects performance (as measured by average daily gain), morbidity, and carcass quality and how morbidity affects performance and carcass quality. Ordinary Least Squares regression and logit models were estimated to quantify the effects of various management and environmental factors on performance, morbidity, and carcass quality. These model estimates of production variables along with price and cost assumptions were used to calculate breakeven purchase prices and price discounts for bulls relative to steers, accounting for the possibility of contracting bovine respiratory disease, if owned for a short background period or if ownership is retained through slaughter. Model results confirm that late-castrated steers do indeed exhibit diminished performance and increased morbidity probabilities relative to early-castrated steers. Increased morbidity also decreases average daily gain. However, this study found that castration timing and morbidity during the backgrounding period have minimal effects on carcass quality, with morbidity only impacting hot carcass weight and castration timing significantly affecting days to market and only tending to impact hot carcass weight. Ultimately, based on 2009 market conditions, bulls should be discounted at feeder calf sales compared to steers. The average calf arrived at 459 pounds, and at this weight bulls should be discounted $4.69/cwt relative to the same weight steers. The discount increases to $5.37/cwt for 400 pound calves and drops to $4.20/cwt for 500 pound calves. If ownership is retained through slaughter, required discounts will change to $6.77/cwt, $4.91/cwt, and $7.55/cwt, respectively.

Master of Science / Department of Agricultural Economics / Hikaru H. Peterson / Alexander E. Saak / Notable changes are occurring in the U.S. organic food sector. First, the U.S. organic food system is increasingly relying on imports, because the expansion in the organic production has failed to satisfactorily meet the rapidly growing demand for organic foods. Second, the “locally grown” concept has become appealing to consumers, with some evidence of consumers switching from certified organic foods to local, conventional foods. Third, organic food has penetrated the mass-market channel, and organic foods are no longer being sold exclusively in natural product stores. And fourth, the social and environmental awareness among consumers is increasing. Thus, consumers are also willing to pay a price premium to support small farmers. To understand how these changes are affecting the demand for organic foods, this study used survey data to assess U.S. consumers‟ preferences for fresh organic apples that are sourced from various places and from supply chain operations that vary in scale. The survey was administered via the Internet to a random sample of 285 households across the U.S through a research company. Choice experiment was selected as the valuation method. Results indicate that among the levels of the location attributes, the “locally grown” label was associated with the highest average WTP. The “regionally grown” was the second most preferred, “U.S. grown” the third, and “imported” the least. The “locally grown” label was valued higher than the “certified organic label”. Also, consumers were willing to pay a higher value for apples produced on a small farm compared to those from a large farm. However, they did not distinguish the type of retail outlets where apples were offered. The analysis incorporating the effects of consumer characteristics suggest that the perceived importance of public benefits impacted the values of origin attributes more than the private ones; the type of retail outlet attributes became significant among certain gender and age segments; and the value of small farm attribute increased with consumers‟ income. Finally, results from a theoretical model suggest that the variability in the WTP obtained among the origin attributes could be explained by the reputation of product quality depending on their origin.

Master of Science / Department of Agricultural Economics / Ted C. Schroeder / Newer marketing techniques and production technologies have made large amounts of data available in fed cattle production that previously were not available to the cow-calf producer. The application of this data in breeding and management practices has only begun to be evaluated. This research used individual records, taken from birth to slaughter, on 6,360 calves from a single cow-calf producer who retained ownership of the calves through a custom feed yard and marketed them in a grid system. Using this information, four major topics were analyzed; identifying profitability drivers among animal characteristics, assessing weaning weight as a predictor of finished performance, utilizing lifetime performance of calves to evaluate cow productivity, and quantifying the effects of illness on cattle efficiency and carcass quality. The main profitability driver was hot carcass weight, while avoiding quality and yield grade discounts was also imperative to returns. Weaning weight did not prove to be a highly accurate tool to predict the finished quality and profitability of an animal. Evaluations of cow performance based on calf productivity were accomplished, accounting for all variation possible, however since sires were not known these performance evaluations may not be capturing an accurate picture of maternal influence on calf genetics. Performance evaluations can still be useful, but it is suggested that they not be the basis for all culling and replacement decisions. Evaluating calves based on the age of their dam highlights a peak in performance in most all measures when a cow is 7 years old. Illness in the feedlot linearly affected Net Return in a negative fashion and also negatively influenced Return to Ranch. This was mostly related to losses in efficiency, but also losses in hot carcass weight and dressing percentage in highly treated animals.

Master of Science / Department of Agricultural Economics / Jeffery R. Williams / This study examines the economic profitability of reduced-tillage and no-tillage systems for corn, soybeans, and grain sorghum production in annual rotation with winter wheat, and monoculture wheat and grain sorghum in south-central Kansas. Net returns to land and management per acre for each of 13 production systems are calculated several different ways. Net returns are calculated using the 10-year average yield for each crop, the average crop price from 2009, and 2009 input prices. A distribution of net returns is also calculated using the actual historical yields and crop prices from 1997 to 2006 and 2009 input prices. This process is repeated, except average crop prices from 2006, 2007, 2008 and 2009 are now used. Finally, net returns are calculated using simulated yield and price distributions based on actual historical yields, four historical monthly price series, and 2009 input costs. Overall, the reduced-tillage wheat-soybean systems (RTWS) have the greatest net returns for each of the net return distributions. No-tillage wheat-soybean (NTWS) generally has the second highest net returns. Stochastic Efficiency with Respect to a Function (SERF) is used to determine the preferred management strategies under various risk preferences. SERF analysis indicates that RTWS is the system most preferred by all producers, regardless of their level of risk aversion. NTWS is typically the second most preferred system to RTWS. Using historical annual prices for 1997 to 2006 and the simulated monthly prices series for 2006 to 2009 and 2007 to 2009 to calculate the net return distributions, managers with higher levels of risk aversion prefer reduced-tillage wheat-grain sorghum (RTWG) over no-tillage wheat-soybean (NTWS). Sensitivity analysis shows that as the price of glyphosate falls, no-till systems become relatively more profitable. SERF analysis using the historic yields, 2006 to 2009 simulated monthly prices, and 2009 input costs with reduced glyphosate prices indicate that NTWS would be the system most preferred by producers at all levels of risk aversion. RTWS closely follows NTWS as the next preferred system with those conditions also for all levels of risk aversion.

Master of Agribusiness / Department of Agricultural Economics / Michael W. Woolverton / A business plan serves two main functions: One is to provide a set of guidelines and expectations for running the business and the other would be to request funding from either a traditional or non-traditional lending source. Most business plans consist of the executive summary, business description, market analyses, management team, operations, and financial projections. Stephenson Enterprises is in the process of obtaining funding for a start-up business that will manufacture a biodegradable low cost substitute loose-fill packaging material. Due to the relatively high cost of this start-up, external funding is necessary. The first choice is to approach a large bank with the business plan, secondary choices if necessary would include smaller banks. The third choice would be alternative funding such as nonprofit organizations that provide start-up funding, however many of these are limited in the amount they lend. In order to garner funding for this entrepreneurship, it was decided that a business plan was needed. A business plan has two primary functions. One function is to set forth some guidelines as to how a firm is operated as well as what is projected. The second, and perhaps most often the reason a business plan is developed is to secure funding from a financial institution. Within the business plan a myriad of financial data was gathered to include: financial analysis, financial projections, cash flow, balance sheet, break-even analysis, sales proforma, income statements and sensitivity analyses. In addition to the financial data, a market analysis was conducted to provide insight into the local market. This business plan will not only provide an estimate of financials but will also serve as a guide book for operating the business.

Master of Science / Department of Agricultural Economics / Christine Wilson / Allen Featherstone / The objectives of this thesis are to examine the banking strategy of Kansas farmers and to analyze the determinants of lender choice among Kansas farmers. To meet these objectives, econometric analysis was used to examine the financial characteristics of the farm that affect the number of banking relationships and the probability a farmer has a loan with a respective lender. The financial characteristics include variables representing the solvency, liquidity, and profitability of the farm. To analyze banking strategy, a poisson model was estimated to determine how the financial characteristics of the farm affect the number of banking relationships used by the farmer. The solvency, liquidity, and profitability of a farmer was analyzed to examine how these measures affect how many banking relationships the respective farmer has. Additionally, a panel data fixed effects model was used to analyze how the number of banking relationships affects the net farm income of the farm. To analyze the determinants of lender choice for Kansas farmers, six probit models were used to determine how farm and financial characteristics, including dollar amount of inventory for certain assets and dollar amount of loans, affect the probabililty the farmer has a loan with the respective lender. A Heckman selection model was used to further analyze the dollar amount of loans a farmer has with a respective lender using information from the probit models. Results of the study show that the higher the debt to asset ratio the farmer has, the more banking relationships the respective farmer has. It was also found that the amount of inventory for certain asset classifications, dollar amount loans, and the financial characteristics affect the lender the farmer chooses to use.

Master of Agribusiness / Department of Agricultural Economics / Vincent Amanor-Boadu / The purpose of this research was to develop a decision tool to identify and rank potential locations for making a greenfield investment in flour milling. The driving characteristics of the tool developed are transparency, reproducibility, specificity and clarity. Currently, the approach to selecting countries in which to invest is driven purely by ad hoc frameworks that often lack the characteristics driving this investment index tool. The investment index was designed to have three main components: market conditions, economic environment and supporting infrastructure. Market conditions for the product of interest – in this case flour – were defined to encompass per capita wheat-based food consumption growth rate, wheat production versus wheat consumption and wheat flour imports growth rate. The economic environment was defined to incorporate the growth rate of per capita gross domestic product, corporate tax rate , labor productivity, foreign direct investment growth rates, position on the World Bank’s Doing Business 2012 rankings, and the number and extent of the country’s membership in regional economic and trade groups. Supporting infrastructure included electricity reliability, transportation quality, urbanization rate and the physical presence of the investing company in the country. The rationale for this last variable is that when the investing company already has a presence in the country under consideration, it has already incurred some of the hurdle costs that it would have to include in investments in a location where it does have current physical activities. The study started by filtering the scope of potential opportunities by a set of well-defined criteria: target geographical locations; Doing Business 2012 scores; and quantity of wheat flour imports in 2009. This led to four countries emerging as leading candidates for investment considerations: Brazil, Malaysia, Indonesia and Thailand. The investment index ranked these countries according to their relative suitability for investment. The three components of the index carry different weights because of their effect on the potential investment outcome. There is no data to support these weighting and therefore executives must utilize different probing approaches to weight the components. To this end, a base scenario and two other scenarios based on alternative weights were considered. The robustness of the ranking is revealed by the consistency of the rankings under the alternative weights applied to the components. The results showed that under the base scenario Malaysia had the highest investment index score. The results also showed that varying the alternative weights for the scenarios did not affect the overall outcome with Malaysia leading with the highest overall index score for each of the three scenarios.

Master of Science / Department of Agricultural Economics / Andrew Barkley / This study examines the effect of extreme climatic conditions (drought, flood, and bushfires) on the livelihood of households in the Bawku West district of Ghana. The research identified the mechanisms with which households cope in such situations, and analyzed factors influencing the adoption of coping strategies for flood, coping strategies for drought, and coping strategies for bushfires. Data for the study were collected in selected villages across the district in the aftermath of the 2007/2008 extreme climatic events (a prolonged drought period followed by an erratic rainfall). A binary logit regression (BLR) model was then specified to estimate factors that influence the adoption of a given coping mechanisms. Results from the BLR model indicate that literacy level, membership with an FBO, household income, and location of households had positive and significant impacts on adaptation to drought. Similarly, source of seeds for planting, membership with an FBO, household income, and farm size had positive significant influence on adaptation to flood. Adaption to bushfire was positively influenced by radio ownership, seed source and income. The main effect of these climatic extreme events on households included destruction of crops, livestock and buildings; food and water shortage; poor yield or harvest and limited fields for livestock grazing. Therefore, government policies should be geared towards creating revenue generating channels and in strengthening institutions that provide access to farm credit, readily available improve seeds and extension. Additionally, policies that expedite information dissemination through radio and other public media will enhance households’ adaptive capacity.