Master of Agribusiness / Department of Agricultural Economics / Jason Bergtold / The dramatic changes that have taken place in the production agriculture industry in the last
decade have the Long Family Partnership wanting to reassess their farm land management
strategy. As land owners, they feel as though they might be missing out on profit
opportunity by continuing their current lease agreements as status quo. The objective of this
research is to determine the optimal land management strategy for the Partnership farm that
maximizes net returns for crop production, but also taking into account input costs and risk.
Three scenarios were built: (1) a Base Case of the current share-crop and cash lease
Agreements; (2) the possibility of farming their own irrigated farm land and continuing to
cash lease land used to produce dryland wheat; and (3) deciding to farm all the irrigated
and dry land farm acreage themselves. In order to do this, a whole-farm budget spreadsheet
model was generated to assess alternative land management scenarios. The difference in
net returns between alternative land rental scenarios were then compared and followed by a
sensitivity analysis and stochastic analysis using @RISK software. The findings concluded
that there was greater potential to increase net farm income while still conservatively
managing risk by investing into their own farm land, as not only owners but also as
operators. The stochastic and sensitivity analysis confirmed that farming their own land
was more sensitive to changes in yields, prices and input expenses. However, even in
consideration of the additional risk, the probability of increasing net farm income was
greater for the scenarios in which they farmed their own land.
| Identifer | oai:union.ndltd.org:KSU/oai:krex.k-state.edu:2097/19756 |
| Date | January 1900 |
| Creators | Long, Sally |
| Publisher | Kansas State University |
| Source Sets | K-State Research Exchange |
| Language | en_US |
| Detected Language | English |
| Type | Thesis |
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