The Effects of Hurricane Katrina on Corn, Wheat and Soybean Futures Prices and Basis

Hurricane Katrina caused considerable damage to transportation infrastructure, grain export facilities, and to some crop areas in 2005. Assuming that financial market participants considered the disruption of the grain transportation system by Katrina as having an important impact on fundamental supply and demand factors, futures and/or national basis would subsequently adjust. The objective of this research was to determine the reaction in corn, wheat, and soybean futures and basis due to Katrina using an event study methodology. One parametric (Constant mean return) and one nonparametric procedure (Corrado's rank test) were used to define whether there were statistically significant abnormal returns. During Katrina abnormal returns were larger on the wheat futures market than on the corn and soybean futures markets, which could be partially explained by the timing of the Katrina's landfall with the grain export activities. However, there were only a few statistically significant daily abnormal returns in the futures prices due to the hurricane. There was some evidence of significant cumulative abnormal returns in the corn and wheat futures markets prior to and surrounding the Katrina's landfall. In conclusion, the majority of the corn market reaction to Katrina's damage occurred in the basis and not in the futures market. For the soybean market there was weak evidence of significant reaction in both basis and futures prices. In the case of wheat, the basis was not evaluated and wheat futures prices reacted to the disruption caused by Katrina. The reaction in the corn, wheat and soybean futures prices due to Katrina could have being moderated by the presence of large stocks and large expected production levels of these grains in 2005 or simply by the fact that the damage caused by the hurricane did not affect fundamental supply and demand factors; rather, they only affected transportation logistics.Marketing,

Dynamic Diffusion with Disadoption: The Case of Crop Biotechnology in the USA

Controversy over the use of genetically engineered (GE) crops may have induced some farmers to disadopt these seeds, making a traditional diffusion model inappropriate. In this study, we develop and estimate a dynamic diffusion model, examine the diffusion paths of GE corn, soybeans, and cotton, predict the adoption of those crops over the next two years, and explore the main determinants of the diffusion rate. Our estimates indicate that future growth of Bt crops will be slower or negative, depending mainly on the infestation levels of the target pests. Adoption of herbicide-tolerant soybeans and cotton will continue to increase, unless consumer sentiment in the United States changes radically.Crop Production/Industries,

Effects of the GM Controversy on Iowa Corn-Soybean Farmers' Acreage Allocation Decisions

Prior to the 2000 planting season, some industry observers predicted acreage of genetically modified crops would decline dramatically. However, actual 2000 plantings presented a puzzle. Farmers reduced their acreage of genetically modified corn, but concurrently increased their acreage of genetically modified soybeans. We demonstrate that it may be theoretically optimal for risk-averse farmers to reduce their corn acreage but not their soybean acreage. However, past experience, attitudes, and farm size explained planting decisions to a larger degree than did risk preferences.expected utility, genetically modified crops, two-limit tobit model, Crop Production/Industries,

DO QUALITY INCENTIVES MATTER?

We utilize an unusual data set, involving fifteen tomato growers over four years, to analyze the impact of incentive contracts on behavior. Each grower delivers processing tomatoes under a price incentives contract and for a fixed price per ton. Our comparison of the quality of the tomatoes delivered under the two arrangements confirms that growers do respond to incentive contracts by improving tomato quality, as predicted by economic theory. The comparison is not confounded by the usual contract endogeneity and simultaneity problems, due to characteristics of the processing tomato industry and our data set.Tomatoes, marketing, quality incentives, purchasing contracts, Marketing,

Farmers Adoption of Genetically Modified Varieties with Input Traits

Crop Production/Industries, Research and Development/Tech Change/Emerging Technologies,

DESIGNING EXPERIMENTAL AUCTIONS FOR MARKETING RESEARCH: EFFECT OF VALUES, DISTRIBUTIONS, AND MECHANISMS ON INCENTIVES FOR TRUTHFUL BIDDING

Accurately estimating consumer demand for new products is an arduous task made even more difficult by the fact that individuals tend to overstate the amount they are willing to pay for new goods when asked hypothetical questions. Despite their appeal in eliminating hypothetical bias, marketers have been slow to adopt experimental auctions as a standard tool in pre-test market research. One issue that has slowed adoption of the methodology is the proliferation of auction mechanisms and the lack of clear guidance in choosing between mechanisms. In this paper, we provide insight into the theoretical properties of two incentive compatible value elicitation mechanisms, the BDM and Vickrey 2nd price auction, such that practitioners can make more informed decisions in designing experimental auctions to determine consumer willingness-to-pay. In particular, we draw attention to the shapes of the payoff functions and show in a simulation that the two mechanisms differ with respect to the expected cost of deviating from truthful bidding. We show that incentives for truthful bidding depend on the distribution of competing bidders' values and/or prices and individuals' true values for a good. The simulation indicates the 2nd price auction punishes deviations from truthful bidding more severely for high value individuals than the BDM mechanism. These results are confirmed by an experimental study, where we find more accurate bidding for high-value individuals in the 2nd price auction as compared to the BDM. Our results also indicate that when implementing the BDM mechanism, the greatest incentives for truthful value revelation are created when the random price generator is based on a normal distribution centered on an individual's expected true value.Institutional and Behavioral Economics,

Sustainability Strategies in U.S. Agribusiness: Understanding Key Drivers, Objectives, and Actions

sustainability, triple bottom line, strategy, stakeholders, supply chain, Agribusiness, Demand and Price Analysis, Environmental Economics and Policy, Production Economics, Productivity Analysis, Risk and Uncertainty,

An Economic Analysis of Control of the Western Corn Rootworm Variant across Indiana

A variant of the western corn rootworm (CRW) has adapted to the widely used cultural practice of crop rotation. This study analyzed the economic value of control options controlling the western CRW variant across Indiana. The options analyzed are soil insecticides, seed-applied insecticides, the recently commercialized genetically modified corn to resist CRW (CRW corn), or not controlling the western CRW variant. The results suggest that the economic value of CRW corn may exceed that of the alternative options for corn producers with high western CRW variant pressure, irrespective of producers' risk aversion levels and have the highest economic value for risk-averse producers in the moderate western CRW variant pressure region of Indiana.Crop Production/Industries,

The Effectiveness of Facilitated Business-to-Business Word-of Mouth Marketing Strategies on Target Participants’ Information Sharing Behavior

This study examines the impact of facilitated business-to-business (B2B) word-of-mouth (WOM) on participants' information transmission decisions. We also examine characteristics of WOM participants and determine the types of participants who spread information. Understanding WOM participants' information sharing decisions is extremely important to agribusinesses using WOM in their marketing mix. For an expendable crop input, the most important factor in determining whether producers share WOM initiative information with peers is how often they are asked for advice by their peers. In contrast, for an expendable companion animal product the most important factor in determining whether veterinarians share WOM initiative information with peers is whether they had a satisfactory experience in the WOM initiative.facilitated B2B WOM, effectiveness of facilitated B2B WOM, indirect impact of facilitated B2B WOM, agribusiness firms’ information sharing decisions, Agribusiness, Industrial Organization, Marketing, Teaching/Communication/Extension/Profession, Q10, Q13,

Marketing Organic Milk in the United States: Findings from the Agricultural Resource Management Survey of 2005

Marketing,