A BLUEPRINT FOR DESIGNING A SUCCESSFUL EXTENSION PROGRAM: ADVICE FROM SOME MASTER BUILDERS

Teaching/Communication/Extension/Profession,

AGRICULTURAL ECONOMICS RESEARCH AND EXTENSION MARKETING PROGRAMS: HOW WELL ARE THEY INTEGRATED?

Extension marketing economists were surveyed to determine whether they are using available research results and whether research is being conducted on topics relevant to extension marketing economists. In some cases, the beliefs of extension marketing economists differ from recent research results. The research topics recommended by extension economists and the topics of papers presented at the 1994-97 annual NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management are well matched. While relevant research is being done, many extension economists desire marketing strategies that both reduce risk and increase income. Research, however, has not produced such strategies.efficient markets, extension, farmer marketing, outlook, research, risk, Teaching/Communication/Extension/Profession,

Implications of Behavioral Finance for Farmer Marketing Strategy Recommendation

Behavioral finance is a relatively new field of inquiry that may help better understand farmer marketing. The theory argues that people tend to make certain psychological biases that cause them to not be fully rational in an economic sense. For example, people tend to be about twice as upset about a loss as they would be happy about a gain of the same size. The theory can help explain why producers would pay a marketing consultant even when markets are efficient. Extension programs need to consider the psychology of marketing. The theory suggests that decisions need to be framed in terms of their effect on the whole farm operation and in terms of profits over a series of years.Agricultural Finance, Marketing,

ACTUAL FARMER MARKET TIMING

One maxim that has been circulating among farmers is that most farmers sell in the lower third of the market. This maxim is soundly rejected using data from Oklahoma elevators. In fact, roughly half of producers sell in the upper third of the market. Thus, there does not seem to be a great need for producers to hire a market advisor to do their marketing for them. But, some farmers do store longer than is optimal and they could be encouraged to sell sooner after harvest. In the short run, farmers sold after price increases and held after price decreases. Price movements in the days after a large number of sales were no different than price movements after few sales. While farmers are noise traders in the short run, it does appear that they are responding to long-run market signals. Even though there may be room for improvement, it appears that farmers are doing a good job of deciding when to sell their wheat.Marketing,

WHOLE FARM RISK-RATING MICROCOMPUTER MODEL

The Risk-Rating Model is designed to give extension specialists, teachers, and producers a method to analyze production, marketing, and financial risks. These risks may be analyzed either individually or simultaneously. The risk associated with each enterprise, for all combinations of enterprises, and for any combination of marketing strategies is estimated. Optimistic, expected, and pessimistic returns above variable cost and/or total cost are presented in the results. The probability that total return will be equal to or greater than variable cost and/or total cost is also estimated.Farm Management, Risk and Uncertainty,

A DRY MATTER QUALITY APPROACH TO PLANNING FORAGE-BEEF SYSTEMS

Livestock Production/Industries,

Liquidity Costs in Futures Options Markets

The major finding is that liquidity costs in futures options market are two to three times higher than liquidity costs in the futures market. Liquidity cost is one potential factor to consider when choosing between hedging with a futures contract or with an option contract. While there is considerable research that estimates liquidity costs of futures trading, there is little comparable research about options markets. This study, for the first time, attempts to determine and compare liquidity costs in options and futures markets. The study uses July 2007 wheat futures and options contracts traded on Kansas City Board of Trade. Two measures of liquidity costs were used for both options and futures markets. One measure of liquidity costs in options markets is the average bid-ask spread that is calculated from the available bidask quotes. A new measure of liquidity costs in options markets is derived based on the Black model and it uses trade prices instead of observed bid-ask quotes. The liquidity costs in the options market was estimated to be 1.60 cents per bushel using observed bid-ask spreads and it was 1.37 cents per bushel when the new measure was used. Liquidity costs in the futures markets are estimated using Roll’s measure and average absolute price changes. The estimates were 0.45 and 0.49 cents per bushel, respectively for futures contracts. A positive relation was found between option liquidity costs and moneyness of the option. Days to expiration of the contracts was not statistically significant in explaining the liquidity cost of the option.Bid-ask spread, Black model, KCBT, liquidity costs, options, Agribusiness, Agricultural Finance, Financial Economics, Risk and Uncertainty,

The Preference for Round Number Prices

This study determines if a preference for round prices exists in the wheat market and how wheat sales react to price movements around whole dollar amounts. The results show round prices are slightly more prevalent than non-round prices and that transactions increase when price moves above a whole dollar amount.Demand and Price Analysis,

Determining Returns to Storage: USDA Data versus Micro Level Data

USDA data are commonly used to determine producers' returns to storage. Aggregating data may result in a loss of information, leading to underestimated returns. This study compares USDA and elevator data from Oklahoma to determine how much USDA data underestimates returns. Results indicate USDA data only slightly underestimate returns to storage.Research Methods/ Statistical Methods,