Master of Science / Department of Agricultural Economics / Michael R. Langemeier / Retained ownership can generally be described as when a producer does not sell his or her calf crop immediately after weaning but keeps the calves for an extended period of time. This is a decision that is made by the cow-calf producer every year and may or may not change from year to year. For some, the decision is based on past practices while others will evaluate the market before making a decision. There are various levels of retained ownership that can be modified to fit a producer’s operation and can range from a preconditioning program to finishing the cattle in the feedlot. This study specified various retained ownership scenarios in order to be able to analyze the situations. Budgets were used to analyze the optimum phase of production at which to sell calves that is most profitable while taking risk into consideration. Specifically, budgets were developed for scenarios of four cow-calf herds, four backgrounding phases, two grazing phases, and six custom feedlot phases. These budgets were used to produce sixteen potential retained ownership scenarios. The scenarios range from selling the calves immediately after weaning to owning the cattle through finishing at the feedlot. Each scenario was then analyzed based on the net returns over a 10-year period. Additionally, the scenarios were analyzed based on net returns over feed costs. Target MOTAD was used to analyze the risk component of the scenarios. Although most of the net returns were negative for all scenarios, retained ownership showed a trend of improving net returns. However, along with the improved returns came a greater variability in returns which is unattractive to a risk adverse producer. Target MOTAD results on a net return basis selected the cow-calf only phase of production in all scenarios.

Doctor of Philosophy / Department of Agricultural Economics / Tian Xia / This dissertation examines several different issues regarding pricing and contracting decisions as well as risk management practices affecting the Unites States livestock industry. The resulting policy and market implications are applicable to industry stakeholders in the beef cattle industry. Each topic is presented in the following chapters. Chapter 1 uses time series techniques to identify movements in regional fed cattle prices under a mandatory price reporting system. Mandatory price reporting altered the structure of livestock markets by requiring supply and demand conditions to be reported twice daily thereby affecting the price discovery process. Results suggest the level of information flow and the transparency of prices increased, markets respond to new information quicker, and larger volume markets behave as a price leader to smaller markets with less volume. Chapter 2 uses closeout data to measure the variability of profits in fed cattle production. A mean-variance approach was used to model yield risk factors relevant to and known at the time cattle are placed on feed. Results indicate yield factors were influenced by several preconditioning variables such as gender, placement weight, feedlot location, placement season, and overall animal health and vitality. Estimates from the yield equations were then used to simulate the overall ex-ante distribution of expected profits for the cattle feeder and the results provide information regarding the effect of production risk and price risk on cattle feeding profits.

Doctor of Philosophy / Department of Agricultural Economics / Allen M. Featherstone / A solidarity nuanced economy has the potential to be an antagonist to inequality and poverty. Solidaric features in an economy can serve development initiatives in that solidarity fosters cooperation and promotes self-help. Exchange is one of the most ubiquitous of all human behaviors. A principle of exchange is that both parties, either individuals or groups, must derive greater benefit than sacrifice for the exchange to occur. Exchange enhances an economic agent’s utility. Solidarity informs utility; thus, solidarity impacts exchange. Solidarity can be tersely defined as “social cooperation.” Utility maximization unwrought is based on the premise of self-regarding behavior. Solidarity, on the other hand, is other-regarding behavior. These two elements in exchange need not be in discord; quite the opposite, they act in concord. Solidarity is articulated as being distinct from large group collective action. Collective action can incorporate features of revenge and punishment. Solidarity, as a specialized form of collective action, is strictly associated with cooperation and charity. Solidarity is a process of other-regarding mutual exchange. The inescapability of living out solidarity is described and the case is presented that solidarity is of individual initiative. Because incentives (dis-incentives) are felt at the individual level, it is here that other-regarding behavior (i.e., solidarity) is incubated. The Inequality Predicament suggests that economic inequality is the most pressing issue hindering development (United Nations, 2005). The inequality phenomenon calls for more attention to the role of economic solidarity. The inequality predicament may not be so much a matter of wealth inequality as it is inequality of access to resources and markets. Solidarity is an implement of engagement in gaining access to markets. Few studies in collective action literature are addressing how rural households are affected by changes in property rights and how land policies impact incentives to engage in solidarity. Land rights can only be properly understood in the context of their development. The uniqueness of land rights is informed by past and present culture. This dissertation presents a conceptual framework for examining the relationship between solidarity (i.e., cooperation) and access to land markets. The focus of this study is on the interplay between property rights and solidaric utility decisions of individuals or small groups. The arena of research is land fragmentation and agricultural development in the Republic of Moldova.

Master of Science / Department of Agricultural Economics / Timothy J. Dalton / Smallholder farmers in Tanzania remain susceptible to food insecurity and poverty. To combat these challenges, the country and development organizations have turned to agriculture. In particular, value chains have been identified as a point of interest. Specifically, the maize value chain is of critical importance since maize is the staple crop of the country as well as the staple carbohydrate in the Tanzanian diet. Markets are beneficial because they enable households to specialize in agricultural production according to their comparative advantage. Specifically, markets have been shown to be one tool for increasing welfare, measured through the proxy income. The objective of this thesis is to identify the determinants of a household’s decision to participate in the maize market as well as identify the determinants of a household’s decision regarding how much maize to sell in a given market. This research examines formal and informal market participation among 908 households during the 2008 long rainy season. Probit models were estimated to determine market participation for the formal, informal, and aggregate sale market levels. A Heckman OLS model was used to further analyze the value sold by the household in a given market. Econometric results indicate that “quantity harvested” positively and significantly impacts market participation decisions as well as value sold decisions. The variable “male-headed households” was positive and significant in the formal market while the variable showed no significant impact in the informal market participation model. Both “radio ownership” and “mobile telephone ownership” proved to be positive and significant in the formal model while only the ownership of a radio was significant in the informal market. Additionally it was found that for the formal market participation decision, “bicycle ownership” was positive and significant. Overall, it appears that households participate in the informal market as a way to meet cash needs since farmers were not price-responsive. However, in the formal market farmers were found to be very price-responsive, following neo-classical economic theory.

Master of Science / Department of Agricultural Economics / Vincent R. Amanor-Boadu / Maize is a staple food to many Zambians. It is for this reason that it has received a lot of support from government as a way of maintaining food security in the nation. No other crop in Zambia currently receives such level of support from government. Factors influencing its availability can thus seriously affect food security. In recent years, Zambia has not been spared by adverse climatic changes that have continued to affect the entire globe. In the early 1980s the southern “maize-belt” part of the country that was devastated by continuous drought that caused villagers to go hungry and lose a lot of livestock that was their main livelihood. The trend of decreasing rainfall in consecutive seasons has continued in many parts of the country. Because most smallholder farmers, who are the major contributors to the nation’s food supply, depend on rain for crop production, there has been a deliberate policy by government through the Ministry of Agriculture and Co-operatives to encourage the farmers to diversify their on- and off-farm activities to improve food security at household and national level. To this end, the government has continued to encourage the growing of cassava. Several studies have suggested that cassava is a nutritious food crop (Chitundu, Droppelman and Haggblade, 2006). Cassava has a number of industrial uses too. Good attributes of cassava lie not only in the nutrition content of the tuber and leaves but also in the fact that as a field crop it does not require expensive inputs like fertilizer and is better able to withstand drought compared to the maize crop. This study attempts to understand the economic factors that influence consumption of cassava to shed light on its potential to avert potential crisis associated with prolonged droughts. Based on the survey conducted in 2007 in Lusaka, the study found that price and quality of cassava meal are the principal determinants of cassava meal demand in Lusaka. Direct price elasticity of demand for cassava is -1.32, suggesting that cassava meal is price elastic. The study also found that the cross price elasticity between maize meal price and cassava meal demand is 0.04 suggesting that cassava meal is a substitute to maize meal, but inelastic. The income price elasticity of demand for cassava meal is -0.12. However, income was found to be statistically insignificant in determining the demand for cassava meal. As such these economic factors are keys to the consumption of cassava. Therefore, the study suggests that the demand for cassava meal in Zambia may be improved through deliberate promotion.

Master of Agribusiness / Department of Agricultural Economics / Kevin Gwinner / Purple Wave, Inc. has five major auction categories: Real Estate; Business Liquidation; Heavy Equipment (Agricultural and Construction); State Surplus; and Personal Property). Although Purple Wave is rapidly expanding in all categories its current focus is on increasing its real estate sales category. Selling real estate via the auction method is the fastest growing sector of the auction industry. The auction process provides a time-defined result, usually 60 to 90 days from contract signing to closing. The process also establishes a true market value established by the public. I have been tasked with evaluating our current real estate marketing methods. I am to determine the best way to allocate marketing funds to attract the most viable, competitive, well funded, and aggressive real estate bidders. The economic rationale of this issue is the ability to market real estate for higher sale prices. The cost of this issue cannot be measured in terms of a direct expense. The issue is how the company could best spend the marketing funds they receive to ensure the auction will reach the maximum price for the property. Purple Wave is paid on a percent of the sale price. The customer and company have everything to gain from a higher sale price since both will receive a larger profit. Purple Wave would like this issue to be solved with the development of a marketing menu. The real estate teams can use this new menu to show a potential customer how their marketing funds will be used to gain them the maximum amount of advertising exposure. The format can also show sellers how we plan to invest the marketing funds in specific promotional areas.

Master of Agribusiness / Department of Agricultural Economics / Arlo Biere / With a large portion of U.S. farm production expenditures related to the cost of fertilizer, seed, and chemicals, producers within the Corn Belt region are looking for new methods and/or planting processes that would deliver higher levels of production efficiencies and lower operating costs. Specifically within the planting operation, Corn Belt producers are faced with the challenge to better manage the higher cost of crop inputs in order to sustain profitability. The primary objective of this thesis is to examine new planting technologies that would better manage planting applications while directly lowering related input costs. Another objective is to understand through regression analysis how various planting variables affect yield potential. Results from the regression analysis illustrate how the various planting variables affect yield and show the importance of “realtime” planter management, advancements possible only with the new planter technology. Customer surveys and several on-site customer visits were conducted throughout the Corn Belt to better understand the actual needs of producers for new planting technologies. Throughout the customer visits, specific questions about the producers’ planting operation were asked to find new ways for precision technology to help increase overall productivity and ultimately profitability. Producer comments and feedback were analyzed through Quality Functional Deployment (QFD) practices and aligned into product development programs. The products developed from the customer research will help producers in the Corn Belt to reduce corn production inefficiencies and, potentially, increase profit margins, assuming profit levels remain steady and/or increase in lieu of reduced input costs.Farm level net present value (NPV) analyses of new planting technologies were performed. Corresponding yield data from efficiencies gained in seed corn placement and control during “real-time” planting applications were integrated into the NPV analyses along with the precision technology costs. The NPV results were positive.

Master of Agribusiness / Department of Agricultural Economics / Glynn Tonsor / To remain competitive in an ever changing pork industry, Hormel Foods required careful evaluation of advertising forecast accuracy. This study determines forecasting accuracy for bone-in loins, boneless loins, butts, and ribs pricing within Hormel Foods and determines the relationship between forecast horizon (how many weeks forward in pricing) and forecasting accuracy of these products. The challenge required the data collection of the advertising pricing quotes for the sale price in comparison to the forecasted price. Several different forecasting combinations were examined to determine the ideal combination. The focus of this research was to determine which forecast or combination of forecasts was preferable for Hormel Foods. Findings include that each commodity and weeks out front have a different preferred forecast or combination of forecasts when analyzing root mean square errors. Four forecasts (three forecast companies and the United States Department of Agriculture actual markets at the time of forecasts) were observed with one forecast company rarely utilized in the preferred forecasting combinations and therefore the potential exists for a cost savings that affect the bottom line profitability of the division. In addition, economic models presented in this study explain the errors (both raw and percentage based) in relation to the forecast companies, weeks out front forecasted, and specific commodity differences.

Doctor of Philosophy / Department of Agricultural Economics / Michael A. Boland / The strategic decision a firm makes in determining where to set its vertical and horizontal boundaries is a widely discussed topic in the literature. This strategic decision can include vertical integration, horizontal integration and diversification outside of the food economy. These activities can impact a firm in different ways. The objective of this research is to determine whether food economy firms pursuing diversification or integration are valued lower or higher as a whole than the sum of their individual segments. This is commonly referred to as a premium or discount. The hypothesis is that a premium exists for food economy firms that pursue integration activities and a discount exists for food economy firms that pursue diversification activities. Four separate food economy sectors are used in the analysis: food processing, wholesale grocery, retail supermarkets, and restaurants. To determine whether a premium or discount exists for integration or diversification, an excess value calculation method is used which compares the actual value of a firm to the imputed value of all of the segments of a firm. This excess value is then used in a seemingly unrelated regression (SUR) framework to determine how certain firm characteristics influence firm value. But, these firm effects may both lead a firm to diversify or integrate and affect firm value. This would incorrectly attribute a premium or discount to the diversification or integration itself and not the underlying firm characteristics that caused the firm to pursue such a strategy. To account for these underlying firm and industry characteristics, Heckman’s two-stage procedure is used to control for the self-selection of firms that diversify. The SUR results indicate that the hypothesis that integration leads to a premium for food economy firms cannot be rejected for the restaurant sector and for the processing sector except in the case of vertical integration into retail. The endogeneity tests indicate that, in most cases, the diversification or integration decisions are endogenous meaning that the firm effects that cause firms to diversify or integrate are positively or negatively correlated with firm value. In the cases of vertical integration into wholesale in the processing and restaurant sectors and unrelated diversification in the restaurant sector, including a self selection parameter makes the premiums found using SUR become discounts.

Doctor of Philosophy / Department of Agricultural Economics / Jeffrey M. Peterson / Technological changes have always been subject to numerous debates and studies to establish if and how much they benefit society. Glyphosate resistant soybean can be seen as such a technological improvement that has generated numerous studies attempting to measure the welfare gains. There are obvious gains from adopting the technology from a production efficiency standpoint, as it significantly decreases production cost and simplifies weed control management. However, with some consumers being reluctant to embrace such a change, especially in Europe, it is not obvious that overall welfare gains are positive. This study attempts to address some shortcomings perceived in recent economic literature, namely the disregard of consumers’ demand responses and the lack of analysis over time. A partial equilibrium model is created where supply and demand functions are estimated based on observed prices and quantities, the adoption rate of the new technology, and production information such as yield and harvested areas. The model developed considers 6 different regions, namely the U.S., Europe, China, Argentina, Brazil and the rest of the world, and develops for each one of them a supply function and three demand functions for soybean grain, meal and oil. Once those are calibrated, the gains for the different players in the industry are computed. The findings are that the gains are proportionally allocated to the different consumers based on the share of the demand for the specific country. Price supports in the U.S. in the early years provide, proportionally to the adoption rate, more gains to the consumers. Producers gain or lose from the technology depending on whether they have adopted it or not. Countries like the U.S. or Argentina, who were the earlier adopters, definitely see an increase in their producer surplus from the adoption of the technology. Countries such as Brazil, which have delayed adopting the technology for political reasons, have faced a significant loss due to lower prices without the benefits of enjoying a cost-saving production technology. The innovator’s gain increases over time as the adoption rate rises. From a country perspective, the U.S. is without doubt the country that has benefited the most from the technology. The main reasons are that the U.S. has the largest acreage of soybean that is grown using the Glyphosate resistant technology. The U.S. consumer base for soybean products is the largest and the monopoly is a U.S.-based company. Therefore some of the gain captured abroad by the monopoly funnels into the U.S. This study finds that, from 2002 to 2005, even if the European consumer completely stopped purchasing soybean, the U.S. as a whole would still benefit from the technology. For the earlier period 1998-2005, the study finds that if Europe had decreased its demand from 35% to 48%, there would have been a possibility for the U.S. as a whole to have been made worse off by the technology.