Master of Science / Agricultural Economics / John A. Fox / Hard Red Winter Wheat is an extremely important part of the Kansas agricultural industry. In Kansas, this type of wheat is planted in the fall and harvested in mid-June. After harvest, producers have the option to either store or sell their wheat. If they decide to store, the wheat can be stored on-farm or in a commercial facility. Another storage decision is whether to store the wheat hedged or unhedged (speculative) storage. Hedging is a technique to limit the price risk associated with selling or buying commodities. This study compared hedged and speculative decisions for both on-farm and commercial storage scenarios for 108 locations geographically dispersed across Kansas. Wednesday prices were gathered for each location during the 10-year time period from 2004 to 2013. All monthly storage period possibilities from July to May were examined to determine the storage returns potential. All results are displayed as the profit or loss achieved compared to selling in June at harvest. Averages for Kansas were negative or slightly positive for all storage scenarios, but hedged returns showed much less variability in results compared to speculative returns. Regional differences showed that North Central Kansas displayed the highest level of basis improvement over the 10-year period followed by South Central Kansas. A regression analysis using nearby basis in June, harvest price, and futures contract spreads as independent variables and storage returns as a dependent variable showed emphasis on the futures spread having the biggest influence on storage profits.

Master of Agribusiness / Department of Agricultural Economics / David Barton / The main objective of this thesis is to aid Ag Valley Cooperative’s board of directors in the construction of a superior income distribution and equity redemption strategy. The key information provided is a detailed financial analysis and pro forma financial projections. Ultimately, this study focuses on increasing patron value by returning retained patronage refunds in an equitable and timely manner. This paper examines the benefits of eliminating Ag Valley Cooperative’s current equity redemption program, age of patron, and replacing it with a revolving fund. Chapter 1 introduces Ag Valley Cooperative and gives a brief description of the cooperative’s business model. The chapter concludes with the study’s methodology. Chapter 2 briefly examines cooperatives and people who use them. This chapter introduces Cooperative Performance Profile, the financial analysis used in the study. The chapter concludes with a look at cooperative finance theory and equity management. Chapter 3 describes key points of the Cooperative Performance Profile and separates it into five groupings: profitability, liquidity, solvency, efficiency, and size. Analyses are conducted in each category on Ag Valley Cooperative’s historic trends and comparisons to other Nebraska cooperatives. In Chapter 4 Ag Valley Cooperative’s current equity redemption strategy is defined along with four pro forma analyses. The first strategy, S0, assumes the cooperative continues business as normal with estate and age of patron redemption methods. Strategies S1 and S2 interject balance sheet management constraints and revolving fund redemption into the projection. In S1, revolving fund equity redemption is added to distribute any excess equity redemption budget, in S2 the revolving fund method is phased in. Strategy S3 builds upon S2 with a look at the effects and tax consequences of distributing non-qualified equity or retained patronage refunds instead of qualified retained patronage refunds.

Master of Agribusiness / Department of Agricultural Economics / Jason Bergtold / Efficiency and technology are increasingly important selling points for combine harvesters. Diesel-electric hybrid drives have taken hold in the construction equipment industry, and are providing marketable efficiency benefits for some heavy equipment customers. This thesis explores the technical and economic feasibility of utilizing diesel-electric hybrid drives on AGCO combine harvesters. To determine the technical feasibility of utilizing diesel-electric hybrid drives on AGCO combine harvesters, a search was conducted for prior literature relating to the use of electric drives on other heavy, off-highway equipment. This information, coupled with data provided by experts in the field, was used to determine if electric drives could fulfill the unique requirements of combine harvesters, and be practically utilized for this application. To determine the economic feasibility of utilizing diesel-electric hybrid drives on AGCO combine harvesters, an optimization model was constructed to seek out the most economically viable configuration of electric drives for this application. The model takes in to consideration the different use-cases in which this equipment is expected to perform, as well as the component costs and operating efficiencies of both the drives in place currently and the proposed electric drives. The outcome of the model was then utilized to compare the best-case configuration to the minimum requirement for economic feasibility. The technical feasibility assessment conducted for this thesis led to the conclusion that it would be technically feasible to utilize electric drives on a combine harvester. There are commercially available electric drive components which are suitable for use in the environment that this equipment is expected to operate in, and a prototype combine harvester having electric drives has previously been constructed. The economic feasibility assessment conducted for this thesis revealed that it is not economically feasible to utilize electric drives on AGCO combine harvesters at this time. Under the current circumstances, the most economically viable configuration would take nearly twice the machine’s usable operating life to provide a benefit to a customer from fuel savings. Sensitivity analysis revealed that significant changes in the price of fuel or electric drive components would be necessary to change the outcome of this study.

Doctor of Philosophy / Department of Agricultural Economics / Hikaru H. Peterson / The U.S. wool demand has declined since 1950s due to the increasing demand for synthetic fibers. This research aims to study U.S. consumers' preferences for wool attributes to help the wool industry developing marketing strategies targeting certain groups of consumers. This research can be divided into two parts: 1) examining consumers' willingness-to-pay for wool attributes including country-of-origin, organic, animal-friendly, environment-friendly, and 2) investigating whether or not the consumer segments can be identified from consumers' demographic and psychographic characteristics on product purchasing behavior with respect to the wool attributes. In order to achieve the purpose of this research, the choice experiment was applied to examine consumers' preferences for wool attributes. Both mail and on-line surveys were conducted. The mail survey included three versions: basic version, version with definitions of attributes, and version with both definitions and information about wool attributes, with ## responses received (a 29 percent response rate). The on-line survey contained the basic version and the version with both definitions and information about wool attributes, with 514 responses received. Conditional logit and multinomial logit models were used to examine willingness-to-pay for wool attributes and consumer segments, respectively. Results indicated that a certain portion of U.S. consumers preferred wool over acrylic products. Findings also suggested that it is likely beneficial for wool producers to differentiate their products by promoting products' attributes, such as organic, animal-friendly, and environment-friendly. Further, brief information on product attributes provided with labels could increase consumers' WTPs. Results here revealed that to increase wool producers' revenues effectively, it is necessary to advertise their value-added wool products to different consumer segments.

Master of Science / Department of Agricultural Economics / Ted C. Schroeder / Hedonic pricing models have long been used to evaluate prices in high-end segments of the equine industry. However, the lower end markets, including most of the recreational and pleasure horses, have yet to be studied in the economic literature. This study evaluates characteristics affecting the price of recreational horses advertised online, and provides a framework for future market studies on various segments of the equine industry. Data were collected in both the spring and fall of 2008, in addition to a survey being conducted in the fall to collect more accurate pricing information. Three different functional forms were used and their outcomes discussed to determine which one best fit the data. Results show that the semi-log functional form appeared to best fit the data. Characteristics that consistently showed statistical significance included the horse being advertised using a photo ad, the age of the horse, and whether or not the horse was registered. Gender variables and the state which the horse was sold from showed statistical significance in most of the models; although the variables denoting breed were statistically significant as a group, no model consistently found statistical significance in any of the variables individually. Color characteristics did not demonstrate statistical significance consistently in any model. Finally, suggestions for future research are discussed. Data issues could be avoided with larger or more specific data sets; various data sources could be examined or created such as live equine auctions; regions could be examined by show or rodeo circuit instead of by state. There are political issues in the industry that need to be addressed, but a lack of available data needs to be examined and corrected before many issues can be thoroughly examined. The equine industry is often overlooked in economic literature and is a multi-billion dollar agricultural industry which deals with legislative and taxation issues just like the rest of the agricultural world and is deserving of attention.

Masters of Science / Department of Agricultural Economics / Hikaru H. Peterson / Concerns about environmental degradation due to agriculture have gained importance as it is associated with soil erosion, health hazards, and ground water pollution. Environment-friendly land use practices have been developed to gain a wide range of environmental benefits including reduced soil erosion, reduced nutrient runoff from crop and livestock facilities, increased biodiversity preservation efforts, and restoration of wetlands and other native ecosystems. No-till is one such practice where soil erosion, nutrient runoff and environmental degradation can be reduced to a certain extent. This study evaluated the factors affecting the adoption of tillage systems in Kansas. A survey was conducted with a total of 135 participants from four different locations in the state of Kansas between August 2006 and January 2007. The adoption process was modeled as a two-step econometric models consisting of perception and adoption equations to estimate the impacts of demographic variables and farmers’ familiarity with and participation in certain conservation programs. The results for the perception models showed that the farm operators’ perceptions regarding whether BPM installation and management is unfair to producers or not and whether environmental legislation is often unfair to producers do not vary systematically across farm size, producers’ familiarity and participation in conservation programs, or other demographics considered in the study. On the other hand, their perceptions regarding how polluted their water supplies varied by their thoughts on relative profitability across various tillage practices, their primary occupation, and their familiarity with conservation programs. Specifically, the results suggested that those who regarded no-till practices to be more profitable than other tillage practices or whose primary occupation was farming-related tended to believe that ground water was not polluted, and those who were less familiar with available conservation programs tended to believe that surface waters were not polluted. The adoption model results suggested that farmers with greater operating acreage, those who perceived that no-till was more profitable than other tillage systems, and those with greater familiarity with and participation in existing conservation programs were more likely to adopt more conservation tillage systems, all else equal. Further, perceptions of fairness of environmental regulations or the level of pollution did not impact the tillage choices.

Master of Science / Department of Agricultural Economics / Michael A. Boland / The purpose of this research was to analyze the impact of supply control variables such as market share; DO/PGI cheese hedonic quality attributes such as country of origin, type of milk, and age; and the price of a substitute artesian or farmstead cheese on the price of imported cheeses. The literature review found that the EU has been a leader in developing a process for verifying foods produced in a local geographic area. It also revealed that the ability to control supply of a differentiated product transferred consumer surplus to producer surplus. The economic theory suggests that PDO/PGI certification results in the ability of the group of producers and / or processor to control supply by effectively causing a vertical kink in the supply curve and sufficiently differentiated products have a relatively inelastic demand curve. Data was collected on 83 PDO cheeses manufactured in the EU and sold in the US. This data included market share defined as the total tons of that PDO cheese produced in that geographic region divided by the total hectares of land. Hedonic variables characterize the PDO cheeses based on aging time, type of input and country of production. The price of a competing artisan cheese similar to the PDO cheese was identified. All of these variables were used in an ordinary least squares regression model to explain the variation in the price of the imported cheese. The regression results founded that market share, country of origin (Italy and Spain), and the price of a substitute were significant in explaining the variability in imported PDO cheese prices. Market share had a greater magnitude of change suggesting that, at the margin, a small change in supply can cause a larger change in supply which was not surprising given an inelastic demand curve and a fixed supply curve. Substitutes were actually complements which at first glance appears surprising. Finally, as one might suspect, a cheese that is more mature, like wine, has a greater value.

Doctor of Philosophy / Department of Agricultural Economics / Jeffrey M. Peterson / This study focused on the economic efficiency of Kansas farms. The goal was to investigate factors and how they might affect farms and their economic and production performance. Kansas was selected as the region of study for its large agricultural production and distinctive type of multiple-operation farms. Farms in the sample could produce three outputs, crops, livestock and custom work. Inputs for the farms included measures of capital, labor, land and purchased inputs. Production outputs were measured in bushels and tons; input quantities were computed from input expenditures applying an input price index taken from the US Department of Agriculture in real US dollars. The dataset consisted of a 10-year (1998-2007) panel of 456 multi-output farms belonging to the Kansas Farm Management Association (KFMA). Data Envelopment Analysis (DEA) techniques were used to construct a non-parametric efficiency frontier and calculate technical efficiency (TE), allocative efficiency (AE), scale efficiency (SE), and overall or economic efficiency (OE) for each farm and each year. A discretionary input oriented DEA technique was used to assess the effect of capital availability as a farm input and its impact on farms' efficiencies. Efficiency scores in this problem were compared to the farms' scores when the level of debt was accounted for as a farm input. Panel data Tobit analysis was applied to the farms' inefficiency scores to investigate the causality of selected farm characteristics on technical, allocative, scale and overall inefficiencies. For the sampled farms and period, results confirmed that larger farms were more efficient than smaller ones. Farms specializing in livestock products, such as dairy and beef, were reported to be slightly more overall efficient than crop or mixed farms. Some economies of scope were found between custom work operations and crops. Financial structure of the farms was measured using the ratio of total debt to total assets for each farm. According to the results, larger leverage ratios increased all farm efficiencies. The positive effect of debt or capital availability in Kansas farms efficiencies was confirmed. The results of the technical efficiency discretionary DEA model agreed with this finding.

Master of Agribusiness / Department of Agricultural Economics / Vincent R. Amanor-Boadu / The purpose of the thesis is to assess the level of strategic planning that farm managers utilize within their business and determine if it is a factor of performance. Through the use of an interview questionnaire, combined with current financial data, the study was conducted on an established client base from a banking institution. All of the participants are actively involved in primary production agriculture in Ontario, Canada. Significant variation identified through the development of a planning index, confirmed that manager’s use planning in their farm businesses. The primary goal of determining the relationship between planning and farm profits, measured through Net Income, is positive. Further to this, farmers seek profit maximization and efficiency through planning. Factors affecting planning most notably include the manager’s age—indicating the role of experience in influencing planning—and the number of people involved in the operation. The results of this research provide input into increasing bankers’ understanding of how farmers plan and how to help them make stronger connections between their production planning effort and their financial planning efforts.

Master of Agribusiness / Department of Agricultural Economics / Jeffery R. Williams / The objective of this thesis is to conduct a net present value analysis of installing a solar power generation system on company owned turkey grow out ranches. This research project provides information regarding the systems power production capacity, investment cost, maintenance requirements, amount of energy saved, useful life of the equipment, marginal state and federal tax brackets for the company. The investment cost of the system includes the price of the equipment and installation service. Many of the system costs may be offset by rebates, tax credits and grants from various government agencies. These must also be included in the financial analysis as they can greatly affect the financial viability of the project. The system is projected to have a useful life of 30 years with an inverter replacement planned for year 15. Four scenarios were evaluated using two levels of rebates and two electrical rate inflation levels. The evaluations conducted showed positive after tax NPV evaluations on three of four scenarios reviewed with the most financially attractive options available when the rebates, tax credits and grants were maximized. This was the case at both electrical rate inflation scenarios. These same scenarios produced favorable results when looking at reduction of live production ranch costs. The system effectively locked in electrical rates below current rates for the 30 year life of the system. This reduced ranch live production cost by as much as 11.73 percent. It also gives the company an advantage over the competition when used as a marketing tool due to the use of green technology in company production practices.