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Master of Agribusiness / Department of Agricultural Economics / Vincent R. Amanor-Boadu / The intent of this thesis is to conduct a case study on the optimization of blending soft red winter wheat, prior to processing into flour, in order to meet specific solvent retention capacity, SRC, specifications, based on predetermined customer specifications. The thesis will provide the company with a greater understanding of how to effectively manage the customer’s demands, and the costs associated with these activities in order to create greater customer value. If optimizing wheat blends is successful, the company will be able to provide similar SRC information to other customers as a value added service. (Solvent retention capacity) is a test that provides analytical data that measures three specific physical components within soft wheat flour. Traditionally, wheat flour is sold according to moisture, ash, protein content, and basic dough characteristic data; though this information is important, SRC provides specific flour functionality information that will aid customers. SRC examines the: glutenin characteristics of the flour, pentosan content and gliadin characteristics, and the starch damage from the milling process. These values describe the functionality of the flour and provide information regarding the flour’s ability to absorb water during the mixing process and the flour’s ability to release that water during the baking process. SRC quality endpoints include: reduced mixing and baking times, reduced levels of breakage after baking, and greater overall ingredient consistency throughout all the customer’s commercial bakeries. This thesis develops a process that the company may use to meet SRC quality specifications determined by the customer. The company gains customer loyalty by supply a consistent product to the customer. This product in turn yields savings for the customer in the areas of lower water use, shorter baking time and consequently lower energy use.

Master of Science / Department of Agricultural Economics / Xianghong Li / Hikaru H. Peterson / The organic food market in the United States expanded rapidly at annual rates between 12% and 21% from 1997 to 2008, yet the adoption rate of organic farming remained stagnant. Industry sources suggest that the degree of outsourcing organic inputs has been increasing during the most recent years. Organic foods are available at traditional supermarkets and mass merchandisers. Many retailers now offer organic food products in their private labels. This study focuses on organic soymilk, which illustrates these recent trends. China, a major low income country which supplies organic agricultural ingredients to the U.S. , has raised food safety concerns fueled by recent incidents. Organic foods have been marketed in China as eco-products in an effort to promote safer foods to meet domestic needs. While organic soybean is one of China’s primary organic exports, China has been the leading importer of conventional soybeans with U.S. as its largest source, but most U.S. production is transgenic. China has a labeling policy on GM (genetically modified) products, which has been more tightly enforced in recent years. This thesis examines U.S. and Chinese consumers’ valuations of attributes of processed organic products, with an emphasis on eliciting their preferences of organic ingredients from different origins, in the case of soymilk. A survey was designed for each country. The U.S. survey was administered online nationwide. An enumerated survey was administered at three types of food retail channels in Beijing, Shanghai and Guangzhou in China. Respectively, 316 and 300 responses were collected from the U.S. and China. Choice experiment was used to elicit consumer values for various attributes of soymilk in both markets. The results show that consumers in both countries are willing to pay premiums for processed foods such as soymilk with organic and non-GMO ingredients. The premium for organic soybeans is significantly higher than that for non-GMO beans. The results also indicate that U.S. consumers hold strong preferences for organic soymilk produced with domestically produced soybeans. In terms of brand preferences, U.S. respondents are willing to pay more for national brands relative to store brands, with taste as a major differentiating factor. In contrast, Chinese consumers’ valuations depend greatly on nationalities of certifying agencies. U.S. certified organic product was perceived higher than EU or Chinese certified organic products, but Chinese-certified non-GMO products were preferred over those certified by U.S. agencies. Chinese consumers’ values varied by cities and retail types where respondents were surveyed.

Master of Science / Department of Agricultural Economics / Vincent R. Amanor-Boadu / This study focuses on determining what key differences predispose a consumer to regularly purchase and be willing to pay a premium for sustainably-produced fruits and vegetables. Organic, local, and small farm are the three cases used in the study. The research used a structured questionnaire to conduct an online survey of U.S. internet users with email addresses in the spring of 2011 with logit and ordered logit regression used as the analytical tools. Cost was the most important factor for consumers who did not purchase organic and local products more frequently while unavailability was the principal reason for not consuming produces from small farms. The study showed consumers of small farm products often (98.5 percent of the time) consume local fruits and vegetables also but not the other way around. The relevant socio-economic factors for determining organic purchasing frequency were gender, household size, and education. For small farm they were the ability to influence local change and the respondents’ frequency of purchase of local products. Socio-economic characteristics did not prove to be a factor in local purchasing decisions. Regular purchasers of organic fruits and vegetables provided a consistent perception of organic products with the USDA certified organic definition. Local consumers reported that taste and freshness are the most defining characteristics of local products while small farm consumers could not provide a clear picture of the definitional statements defining fruits and vegetables produced by a small farm. This implied that there is need for more work by small farm producers to differentiate themselves in the market. On the contrary, both local and organic producers have a clear point of differentiation to reach their customers. Industry marketing efforts can be greatly improved by focusing on the characteristics of the consumers they are trying to reach. Our results can be further investigated by completing the following recommendations. First, to conduct more targeted studies such as interviews or focus groups, second, to gain a deeper understanding of how consumers perceive these attributes and third to conduct a comprehensive study on the similarities and differences between small farm and local consumers.

Master of Science / Department of Agricultural Economics / Andrew Barkley / This research identifies and quantifies the impact of biophysical and economic variables on Kansas crop acreage and yields for the period 1977- 2007. Due to long production time requirements, agricultural producers must make vital decisions with imperfect information, based on expectations of future agronomic and economic conditions. This research analyzes the impact of price, climate, and yield expectations on crop acreage allocations and yield responses for the four major commodities produced in Kansas: corn, soybeans, wheat, and grain sorghum (milo). By modeling and analyzing both biophysical and economic variables, total supply response can be estimated for potential future changes in prices, yields, climate, and weather outcomes. The analysis of both biophysical and economic conditions allows for the estimation of supply response in the short and long run. The results provide updated, more precise results than previous research, which has often separated acreage and yield response.

Master of Science / Department of Agricultural Economics / Ted C. Schroeder / Glynn T. Tonsor / Cattle feeders face significant profit risk when placing cattle on feed. Risks arise from both financial and biological sources. To date, few standardized measures exist to measure current risks against historic levels, or to obtain forward looking risk estimates. Those that do exist could benefit from updates and inclusion of additional risk elements. This study measures the risk of expected profits when cattle are placed on feed. This study creates a forward-looking estimate of expected feedlot profits using futures and options market data as price forecasts. Joint probability distributions are created for prices and cattle performance variables affecting feedlot profit margins. Monte Carlo simulation techniques are then employed to generate probability distributions of expected feedlot profits. Results show cattle feeding is a risky business and cattle feeders have been placing cattle on feed facing significantly negative expected returns since June, 2010. This assessment of negative expected profits is consistent with other findings. Over the study’s 2002 to 2013 time frame, the relative risk to cattle feeding profits accounted for by feed costs has been increasing, while the relative risk levels from feeder cattle and fed cattle prices remain steady. Additionally, the probability of realized per-head profits greater than $100 has been decreasing since 2009 and the probability of realized per-head profits less than $-100 has been increasingly rapidly.

Master of Agribusiness / Department of Agricultural Economics / Allen M. Featherstone / Since 1977, the State of Illinois has used a use-value method of assessing farmland for property taxes. The method establishes farmland value by determining a five year average of net income from the land that is capitalized using a five year average interest rate. Other real estate in Illinois follows a different procedure for assessment. For example, residential property is assessed at one-third of its market value. The differences among the methods of assessment for farmland and other types of real estate, along with recent market increases in farmland values and a strong agriculture economy, have led some to question the current method of farmland assessment. The objective of this thesis is to determine the financial impact to farmers resulting from changing from the current use-value assessment of farmland to market-value assessment. This is accomplished with two sub-objectives: determine the potential change in farmland values that could occur and to determine the impact on net farm income that could occur if property tax policy was changed to market-value assessment. To accomplish the first sub-objective, a model was developed to estimate farmland values in Illinois based on the current use-value assessment property tax policy. This model was then adjusted to estimate farmland values under a market-value assessment property tax policy. The models demonstrated that farmland values could fall 53 percent, or an average of $2,548 per acre, in the year immediately following implementation of a tax policy change. Once farmland values stabilize after implementation of the tax policy change, farmland values would be 30 percent less, or an average of $1,875 per acre less, under market-value assessment than under use-value assessment. A simulation of net farm income over a ten year time frame was then conducted to estimate the potential change in net farm income that could occur from a change to market-value assessment. Like farmland values, the greatest impact to net farm incomes occur in the first year market-value assessment is implemented. Farmland values and the resulting property taxes then stabilize during later years. The simulation of net farm income over a ten year time frame estimates that net farm income would be 8 percent lower per year, or a reduction in net farm incomes of an average of $12,721 per year, under market-value assessment. The analysis also showed the potential for an average of a 2 percent increase in the probability that net farm income would fall below zero over the simulation time frame. The analysis demonstrates that a change from use-value assessment to market-value assessment of farmland could reduce farmland values and net farm incomes. Such a change in policy is not in the best interests of farmers or the agriculture industry in Illinois, as the reduced values and incomes would have wide reaching negative consequences that could reach beyond farmers and farmland owners.

Master of Agribusiness / Department of Agricultural Economics / Jason Bergtold / Company managers continually face challenges in the market, such as increased demand for their services and variability in the types of service requested. In addition, managers may face internal challenges during periods adjustment such as moving the company forward through a hiring freeze. In these situations, a manager must be able to allocate their scarce resources in a way to continue to perform. For employees, this could mean specializing in tasks or increasing crosstraining to improve work schedule flexibility. The objective of this research is to determine the optimal allocation of employees to tasks, given resource constraints and the need for staff flexibility, to satisfy alternative management strategies. The setting is the service industry, in particular a laboratory setting providing testing and consulting services. An optimization model was developed to incorporate key aspects of a company’s operation, and determine labor allocation among tasks, and for how many hours, to satisfy the manager’s objective. The model estimates the optimal allocation of labor and how much production and net revenues would be generated, with more specialized employees. A sensitivity analysis was employed to determine the impact of cross-training current staff. Results indicate that cross-training affords flexibility; however, the impact on overall production varies depending on the employee trained. The highest benefit is derived from training a lower-producing employee into a high value task at a high productivity rate. Specialization can help to improve productivity in net returns for higher valued tasks, but may limit flexibility, as employees cannot switch between tasks as readily.