Doctor of Philosophy / Department of Agricultural Economics / Michael R. Langemeier / This study applies recent advances in nonparametric techniques to investigate growth in labor productivity and convergence in the Kansas farm sector for a panel of 564 farms for the period 1993-2007. The study seeks to answer two questions: First, what are the sources of labor productivity growth in the farm sector and second, is there evidence of convergence or divergence in the growth rate of labor productivity across farms? Following Kumar and Russell (2002), the nonparametric production frontier approach is used to decompose the growth in output per worker into three components: efficiency change, technical change, and capital deepening. Kernel density estimation methods are used to investigate the evolution of the entire distribution of labor productivity and the effects of each of those three growth components on the evolution of the distributions over the sample periods, 1993-07, 1993-02, and 1996-05. Cross-sectional regression methods (ordinary least square, partial linear model, and smooth coefficient model) are later employed to test for convergence in labor productivity growth and the contribution of each of the components to the convergence process. The study yields the following results. First, capital deepening and technical change are the main sources of labor productivity growth. Efficiency change is a source of regress in productivity growth. Second, technical change is not neutral. Third, the distribution of labor productivity in the farm sector has remained unimodal. Capital deepening and technical change are the main factors contributing to labor productivity distributions. Fourth, despite no evidence of technological catching-up, efficiency change and capital deepening contributed to convergence in the growth rate of labor productivity during the entire sample period. Technical change contributes to productivity disparity in the 1993-07 period. The contribution of technical change in the 1993-02 and 1996-05 periods are mixed with evidence of both convergence and disparity. Finally, the results for the 1993-07 period support the existence of a positive relationship between the annual growth in technical change and initial level of capital-labor ratio, suggesting that technology is embodied in capital accumulation.

Doctor of Philosophy / Department of Agricultural Economics / Jeffrey M. Peterson / The High Plains aquifer is a primary source of irrigation in western Kansas. Since World War II, producers increased irrigation and the irrigated acreage with the widespread adoption of newer irrigation technologies, causing a reduction in the saturated thickness of the High Plains aquifer. In an effort to conserve water and reduce further decline of the aquifer, the state of Kansas administered cost-share programs to producers who upgraded to an efficient irrigation system. But evidence suggests that the efforts to reduce water consumption have been undermined by producers, who under certain conditions have increased irrigation and irrigated acreage of high-valued and water-intensive crops. The state of Kansas is in a quandary to reduce water consumption and stabilize the saturated thickness of the aquifer while maintaining the economic viability of irrigated agriculture. A producer is faced with the choice of crop, irrigation timing and irrigation technology at the start of the season. This research identifies the conditions for risk-efficient crop choices and estimates the effect of an irrigation technology upgrade on the aquifer. Simulation models based on data from Tribune, Kansas were executed under various scenarios, varying by crop (corn or sorghum), irrigation system (conventional center-pivot or center-pivot with drop nozzles) and well capacity (190, 285 or 570 gallons per minute). Each well capacity was associated with a pre-season soil moisture level (0.40, 0.60 or 0.80 of field capacity). Each scenario was simulated over weather data observed during the 36-year period (1971-2006). Results indicate that producers with slower wells could maximize their net returns while conserving water by choosing less water-intensive crops like sorghum, while irrigating with a conventional center-pivot irrigation system. Producers with faster wells could maximize net returns by choosing water-intensive crops like corn and irrigate with the more efficient center-pivot with drop nozzle irrigation system. In order to reduce groundwater consumption and maintain the saturated thickness of the aquifer, water policies should internalize the interests of all stakeholders and be a combination of irrigation technology, economic factors, hydrological conditions, agronomic practices, conservation practices and local dynamics of the region.

Master of Agribusiness / Department of Agricultural Economics / Bradley J. White / Recent literature regarding potential shortages of food animal veterinarians has sparked interest in how to improve economic sustainability in this profession. Business management practices influence profitability, but relatively little work has been done evaluating the impact specific practices have on mixed animal veterinary practice growth. The objectives of this research were to determine potential associations between practice management factors and both practice size and practice growth measured over a 5-year period. Results from a cross sectional survey of mixed animal veterinary practitioners (n=54) were analyzed to address these research objectives. Survey participants had practiced a mean of 19.6 years and most (85%) practiced in towns with populations of less than 25,000. Practice size was measured by the 5-year average of number of veterinarians (NV), gross practice income (GPI), and gross income per veterinarian (GPIV). Positive associations were identified among all three measures, and active client communication was associated with higher GPI. Practices employing a business manager were associated with increased GPI and GPIV. Practice growth was measured by the mean percent change in number of veterinarians (NVG), percent growth in income per veterinarian (DVMG), and percent growth in gross income (GRSG). Practice size variables indicate influences of business management practices on the size of veterinary practices while practice growth variables indicate whether the practice has changed in size and how business management practices are associated with those changes. On average, practices exhibited positive growth in NVG (4.4%), DVMG (8.1%) and GRSG (8.5%) during the study period, but the growth rate was highly variable among practices. Practices with a marketing plan exhibited a higher DVMG, while frequency of adjusting prices and pricing structures were associated with higher GRSG. Results from this study provide insight into the associations between specific management techniques and veterinary practice size and growth rate.

Master of Agribusiness / Department of Agricultural Economics / Michael W. Babcock / Today’s rail industry is the outcome of years of regulatory and technological change. Since the passage of the Staggers Rail Act of 1980 the industry has seen consolidation through mergers and acquisitions. The rail industry in Montana has a rich rail history that includes the completion of a northern east-west route over 100 years ago that provided a commerce route from the interior of the US heartland to the ocean ports in the Pacific Northwest. In those hundred years the rail traffic across Montana has seen dramatic change. In the past, those routes have provided access for Montana freight; today those routes primarily serve the needs of consumers and industries far beyond Montana. While the state’s economy is primarily agricultural, the largest user of rail transportation is the energy industry. This leaves the agriculture industry with a lower priority for access, providing a quandary for rail service for the grain industry in the state. In a state where more than eight national and regional rail carriers once operated, Montana is now only serviced by a small handful, one of which operates over 80% of the rail miles within its borders. Furthermore that carrier provides service through those regions that are almost strictly agricultural, needing the greatest access to the most cost effective means of transportation for the bulk movement of grain. The objectives of this thesis are to develop a model to measure railroad costs and competition; determine the principal cost determinants and measure intramodal competition by comparing the rates in a captive market (Montana) to one with more intramodal competition (Kansas).

Master of Agribusiness / Department of Agricultural Economics / Vincent R. Amanor-Boadu / Over the last few years there have been many changes to the container export industry. There are a variety of reasons for these changes including exchange rate fluctuations, fuel and energy price fluctuations and their effects on bulk freight rates. The pressure to enhance and remain competitive has also increased amid these rapid changes. An effective strategy is for companies to focus attentions on costs they can control. In the container freight industry, one of these costs is reducing the “paper” aspects of operations and increasing its “electronic” aspects. This thesis focuses specifically on evaluating FileBound®, document management software, for the purpose of going “paperless” in a Container Freight, Non-Vessel Operating Common Carrier (NVOCC) and freight forwarding company. Going paperless has many advantages: increased efficiency, paper and printing cost savings, time savings, storage cost savings, environmental benefits, efficient file retrieval, and enhanced customer service. By adopting the FileBound® technology, the case study company hopes to achieve most of these benefits, allowing it to reduce overall costs, and especially, reduce the number of employees managing physical documents and move people into sales and marketing. The critical assumption of the study was that the electronic processes contributed to time savings and it is from these time savings that most of the other benefits emanated. Therefore, a time study was conducted to determine the time savings resulting from using FileBound® in comparison to the current method in the file completion process. The data collected was analyzed using regression analysis to determine the factors that influenced time savings, if any, and their statistical significance. There are three specific activities involved with the process of completing a transaction in the container freight business: booking, instruction and bill of lading. The analysis was conducted for each of these steps in the process. The results show that the different methods, FileBound® or manual, were not statistically significant on determining the time it took to complete the file. That being said, this thesis recommends that a mixture of both the FileBound® and manual method be used to take advantage of the potential cost savings.

Master of Agribusiness / Department of Agricultural Economics / Vincent R. Amanor-Boadu / Biofuels such as ethanol and biodiesel are looked upon as the future source of alternative energy. These biofuels will supplement the needs of the ever increasing demand for fuel. Bio-energy feedstock is in high demand and current bio-crude oil prices such as soybeans and palm oil are higher than fossil fuel crude oil prices. Unless the price of fossil fuel crude oil increases beyond that, it would not be economically viable to produce biofuels from these feedstock. Jatropha curcas has been touted as the future of biodiesel. The seeds from the Jatropha curcas are crushed and processed using transesterification. The product of the chemical reaction results in bio-oil and glycerin. The objective of this paper is to study the economics of Jatropha curcas as an alternative bio-energy feedstock. Comparisons are done on Jatropha curcas oil, soybean oil, and palm oil. The Jatropha curcas industry is at its infancy, and crude Jatropha curcas oil is either not available in the open market or extremely difficult to find in any significant amount. However, soybean oil and crude palm oil are traded commodities and their prices are dependent on their demand and supply pressures. Given these conditions, the approach adopted here involved the establishment of a vertically integrated company that grows and harvests the Jatropha curcas feedstock and crushes the seeds to obtain the crude oil, and finally processes it to obtain biodiesel and glycerin. The financial analysis provided results that indicate that the Jatropha curcas has the potential to be a successful feedstock. The conclusion after conducting net present value comparisons shows that the price per kilogram of the Jatropha curcas seed would be the determining factor in the success of this bio-fuel feedstock. As more work goes into the genetic selection of Jatropha curcas for high yield varieties, the feedstock’s potential increases and its potential as a solution to the search for the competitive sources of biodiesel becomes more real.

Master of Agribusiness / Department of Agricultural Economics / Vincent R. Amanor-Boadu / Many small communities in the Alps are facing the same problem of ensuring a durable economic development, protecting their natural resources and preserving their traditions under the constraints of higher production costs, distance from markets, isolation, severity of climate, a lower level of public services. This is the situation faced by Bagolino, a small town of roughly 4,000 inhabitants located in the Italian Alps. One of the major supporters to the growth of Bagolino, along with tourism, is its cheese Bagòss , whose origin dates back centuries. The Bagòss cheese is a semi-cooked cheese that is produced under strict processing methods that have been practiced for centuries. The Bagòss industry, with its unique organizational system, challenges researchers to investigate what factors are decisive in explaining its success. It is an example of a common situation in the Alps whose products arise from history, traditions and natural environment. This research aims to explain which factors influence the production of the Bagòss cheese and which factors explain differences among producers. Various aspects of interest of the Bagòss industry were examined through a literature review: social and economic situation of Bagolino and history of the town helped to get a better understanding of the background of the industry. The review of literature about entrepreneurship and supply chain was aimed to get a better understanding of the Bagòss industry organization; whereas theories about rural development and sustainable development described the social and environmental context of this production. Last the review of the main economic theories helped to analyze the Bagòss industry from the economic perspectives: monopolistic competition and the resource based view of the firm. Data were collected from multiple sources; the main source of data was a survey of farmers that involved all Bagòss producers. Data from administrative source were important for revision and also furnished data that could not be obtained from farmers. Qualitative interviews with experts were important for checking purposes and for understanding of the social and economic environment in which the Bagòss production takes place. Analytical tools of this thesis were of three different types: qualitative data used mainly to describe the growth medium of Bagòss and to formulate hypotheses to be tested with an econometric model. Statistical analysis provides a complete description of the industry. The Bagòss industry is not characterized by highly diversified use of the land: summer pastures, long term meadows and forests are the three main categories of the use of land. Almost all labor force is made up of family members and relatives. There are a total of 657 adult milking cows involved in the Bagòss production, with an average of 24.33 cows per farm; most farmers process all or part of their cow milk. The main product is the Bagòss cheese. We estimated the production at 146.5 tons of Bagòss. 69% of Bagòss is sold after aging for less than a year. In terms of marketing the most important channels are Bagolino’s retailers, consumers buying directly and retailers located outside Bagolino. According to our estimates EBITDA equals to 1,388 thousand Euro, an average of more than 55 thousand euro per farm. Two factors are able to explain most of the variability in the milk production: the number of workdays in the farm and the total cost of purchased feed. The EBITDA / tons of milk ratio is an indicator of the farm efficiency: the explanatory model for this is based on the operator’s age and level of education, the percentage of Bagòss sold after aging for one year or more, the percentage of Bagòss sold by direct sale to consumers and the size of the herd. Finally, a model able to explain the variability of the EBITDA / work days ratio was built; this ratio is considered to be an indicator of the labor productivity. This model is based on the percentage of Bagòss sold after aging for one year or more, the percentage of Bagòss sold to restaurants and hotels, the total milk production and the cost of rent of pastures. The first three have a positive impact on the dependent variable, whereas the fourth has a negative impact. The last two models show that small farms tend to be less efficient in their use of resources, and also less efficient in the use of labor.

Master of Agribusiness / Department of Agricultural Economics / David G. Barton / The goal of this thesis was to help Farmers Cooperative Equity Company (FCE) remain a firm, stable cooperative while increasing wealth of their patron owners. This thesis evaluated alternative equity redemption strategies to help FCE decide what decisions need to be made for proper use of equity for financing assets and increasing patronage returns. To develop an understanding of FCE and their current financial structures, we looked at the history of FCE and cooperatives in general. Then we gave a brief background of financial performance measures that were used to evaluate the profitability, solvency, liquidity, and efficiency of FCE. A cooperative performance profile was then run on FCE, by using a financial analysis program called PERFORM, to compare it to other agriculture cooperatives. The results for FCE were very strong in that they were performing at or above the 50th percentile range for many of the measures examined. FCE appears to be a very profitable, liquid, solvent, and efficient cooperative. We then used the results provided by the financial analysis program called PERFORM to make financial projections for the future to evaluate alternative equity redemption strategies for FCE. A computer program called FINPLAN was used to make the financial projections and evaluate the alternative equity redemption strategies. Five different strategies were evaluated and compared to the status quo, “strategy S0,” business as usual. The results showed that if the projections made for the future are correct, FCE would be able to return larger redemptions to patron owners by implementing an alternative equity redemption strategy that adheres to strict balance sheet management. Balance sheet management requires a cooperative to meet predetermined solvency and liquidity goals and then distributes the residual equity over and above that needed to finance assets, in combination with debt, as the equity redemption budget for that year. FCE could return larger redemptions while financing their operations through the use of patron equity and then return excess equity to patrons based upon cooperative usage. FCE’s general manager and board of directors have been provided with this thesis and the full project report. This thesis and project provide FCE with valuable information for them to make critical decisions on cooperative finance, including income distribution and equity management decisions.

Master of Agribusiness / Department of Agricultural Economics / Arlo Biere / This thesis is the plan used to outline a business plan for a prospective business, TASTE ST LOUIS. While working toward my MAB Degree, I realized there were many things I could implement from the program into the business that would help this new business venture to succeed. I was able to research the food service industry to gain a better understanding of how to market and plan for the success of this venture. After I started the research on this business venture, I soon found that we needed a business plan that would answer many questions we had regarding the success of our business. The first part of the thesis is a brief summary of the food service businesses in St. Louis and the geographic analysis that became the deciding factor in locations. The second part of the thesis is an explanation of TASTE ST LOUIS. This section gives the history of the business and explains the development and start-up. The third portion, of the thesis is the small- business plan and pro forma financial statements.

Doctor of Philosophy / Department of Agricultural Economics / Tian Xia / This dissertation presents the development of a new approach to include the interaction of vertically differentiated products, a subject that has been largely ignored in previous studies, to analyze the market power of exporters and importers in the world markets of agricultural commodities. Three theoretical models, a residual demand elasticity (RDE) model, a residual supply elasticity (RSE) model, and a two-country partial equilibrium trade model, are developed, and the corresponding empirical models are specified for U.S.-Japan soybean trade. Genetically modified (GM) and non-genetically modified (non-GM) soybeans are vertically differentiated products in the sense that GM soybeans are largely defined as an inferior substitute to non-GM soybeans. I compare two versions of these models: a new approach in which the interaction between non-GM and GM soybeans is taken into account and the traditional approach in which the interaction is ignored. In each of the three models (the RDE model, the RSE model, and the partial equilibrium trade model), the traditional approach overestimates the market margin of U.S. non-GM soybean exporters and that of Japanese non-GM soybean importers. By considering the interaction between non-GM and GM soybeans, the new approach greatly reduces the estimates of the corresponding market margins of U.S. exporters and Japanese importers to improve the accuracy of such estimates. The statistical significance of the coefficient estimate of the interaction term, the U.S. GM soybean price or the Japanese GM soybean price, in all three models suggests that the new approach, which includes the interaction between non-GM and GM soybeans, is necessary and preferred. The partial equilibrium trade model includes both an RDE equation and an RSE equation in a system to address the possible contemporaneous cross-equation correlation. Thus, the estimation results of the partial equilibrium trade model are further improved, compared to those of the RDE model and the RSE model. Using the traditional approach to estimate the partial equilibrium trade model, I find that the U.S. non-GM soybean exporters’ market margin is 56.5% and the Japanese non-GM soybean importers’ market margin is 16.1%. However, the results obtained by using the new approach show that the market margins of U.S. exporters and Japanese importers are 33.2% and 6%, respectively. By taking into account the interaction between non-GM and GM soybeans, the new approach improves the accuracy of the estimates of market margins of soybean exporters and importers. U.S. non-GM soybean exporters do have a significant market margin in international markets, but it is not as large as the one suggested by the traditional approach. Although Japanese non-GM soybean importers enjoy some market margin, it is relatively small. The theoretical and empirical models and results in this dissertation provide new and more accurate estimates of residual demand and supply elasticities and market power and improve the understanding on world soybean markets. These results can be useful for industry participants in international soybean markets, academic researchers, and policy makers.