AN ANALYSIS OF THE EFFECTS OF FEED INGREDIENT PRICE RISK ON THE SELECTION OF MINIMUM COST BACKGROUNDING FEED RATIONS

The traditional minimum cost feed ration linear programming model is expanded to permit risk management responses to price variability associated with feeding a particular ration across time. The cost minimizing objective function also considers feed cost in a mean-variance (E-V) framework. The model is specified using NRC nutrient requirements and an historic Feedstuffs price series. A decision-maker can choose his/her optimal ration by making tradeoffs between price risk and net income. The results should provide a basis for decision tools that allow livestock producers to manage the net income risk involved in the selection of a feed ration.Marketing,

NONPARAMETRIC ESTIMATION OF MULTIPRODUCT AND PRODUCT-SPECIFIC ECONOMIES OF SCALE

Numerous studies have utilized nonparametric estimation of production efficiency but no such study focuses on multiproduct or product-specific economies of scale. A mathematical program is specified to nonparametrically estimate these measures for crops and livestock for Kansas farms. Results show that many farms would realize benefits from expansion.Industrial Organization,

NEW INPUT AND OUTPUT RISK MANAGEMENT STRATEGIES FOR LIVESTOCK PRODUCERS

Backgounding beef cattle is an inherently risky venture. Producers faceproduction risks as well as marketing risks. If a backgrounding operation is to be viable,these risks should be addressed and effectively managed. While some effective riskmanagement tools are currently available to livestock producers, some other potentiallyuseful risk management tools, for various reasons, have been previously unavailable.Two such tools which could help livestock producers achieve the overall goal ofmanaging net income risk are a program for managing feed ingredient nutrient and pricevariability in the selection of minimum cost feed rations and government subsidizedlivestock price insurance.Due to lack of data and limited computational power of solvers, risk has seldombeen introduced into the feed ration selection process. Presently, both feed ingredientnutritional data and appropriate solvers are available, allowing for risk to be fullyconsidered in this decision-making process. Only recently has there been policy effortsto establish subsidized price or revenue insurance for livestock producers. Theintroduction of such insurance to livestock producers offers potential risk managementbenefit but also has the potential to introduce improper incentives to livestock producers.This study will evaluate both of the aforementioned livestock risk managementtools. In addition to evaluating their effectiveness, the policy concerns of subsidizedlivestock insurance will also be addressed. Results will be relevant to a broad range ofentities. In addition to livestock producers wishing to manage the risks associated withtheir operations, agribusinesses that provide service to these producers such as feed salesor financial lending will benefit from knowing how these risk management strategiesperform. Furthermore, policy makers who will structure livestock insurance products canhopefully do so more efficiently based on the results of the livestock insurance analysis

SPATIAL ANALYSIS OF FEEDER CATTLE HEDGING RISK

Optimal hedge ratios are estimated for various weights of feeder cattle in four cash markets based on CME data from 1992 to 1999. Three-month uniform hedges are simulated for every weight, contract, and cash market combination. Hedging effectiveness is compared empirically across locations to identify spatial differences in hedging risk.feeder cattle, hedging risk, hedge ratios, Livestock Production/Industries, Risk and Uncertainty,

ESTIMATING THE EFFECTS OF FACTORS INFLUENCING GRID PRICING REVENUE

Beef carcasses, carcass premiums, carcass discounts, and grain prices are simulated. Random carcasses are priced according to random sets of market conditions defining a distribution of total and net revenues. Sensitivity analysis is performed to determine the total effect on revenue and net revenue of managing any of the interrelated carcass traits. Keywords: grid pricing, risk, simulationgrid pricing, risk, simulation, Livestock Production/Industries,

OPTIMAL HEDGING RATIOS AND HEDGING RISK FOR GRAIN BY-PRODUCTS

Optimal cross hedge ratios are estimated for a number of grain by-products used as livestock feed. Risk associated with these cross hedge ratios is measured to determine if cross hedging reduces grain by-product price risk. Results provide useful risk management guidelines for livestock and dairy producers.Marketing,

POTENTIAL EFFECTS OF SUBSIDIZED LIVESTOCK INSURANCE ON LIVESTOCK PRODUCTION

Recent legislation has cleared the way for subsidized livestock price insurance. Such programs could increase production. Expected feeder cattle prices with and without subsidized insurance will be analyzed using E-V and Stochastic Dominance. Results will highlight the potential effects of the program on marketing risk and production decisions.Livestock Production/Industries, Risk and Uncertainty,

The Response to BSE in the United States

Food Consumption/Nutrition/Food Safety,

Ozone depletion events observed in the high latitude surface layer during the TOPSE aircraft program

During the Tropospheric Ozone Production about the Spring Equinox (TOPSE) aircraft program, ozone depletion events (ODEs) in the high latitude surface layer were investigated using lidar and in situ instruments. Flight legs of 100 km or longer distance were flown 32 times at 30 m altitude over a variety of regions north of 58° between early February and late May 2000. ODEs were found on each flight over the Arctic Ocean but their occurrence was rare at more southern latitudes. However, large area events with depletion to over 2 km altitude in one case were found as far south as Baffin Bay and Hudson Bay and as late as 22 May. There is good evidence that these more southern events did not form in situ but were the result of export of ozone-depleted air from the surface layer of the Arctic Ocean. Surprisingly, relatively intact transport of ODEs occurred over distances of 900–2000 km and in some cases over rough terrain. Accumulation of constituents in the frozen surface over the dark winter period cannot be a strong prerequisite of ozone depletion since latitudes south of the Arctic Ocean would also experience a long dark period. Some process unique to the Arctic Ocean surface or its coastal regions remains unidentified for the release of ozone-depleting halogens. There was no correspondence between coarse surface features such as solid ice/snow, open leads, or polynyas with the occurrence of or intensity of ozone depletion over the Arctic or subarctic regions. Depletion events also occurred in the absence of long-range transport of relatively fresh “pollution” within the high latitude surface layer, at least in spring 2000. Direct measurements of halogen radicals were not made. However, the flights do provide detailed information on the vertical structure of the surface layer and, during the constant 30 m altitude legs, measurements of a variety of constituents including hydroxyl and peroxy radicals. A summary of the behavior of these constituents is made. The measurements were consistent with a source of formaldehyde from the snow/ice surface. Median NOx in the surface layer was 15 pptv or less, suggesting that surface emissions were substantially converted to reservoir constituents by 30 m altitude and that ozone production rates were small (0.15–1.5 ppbv/d) at this altitude. Peroxyacetylnitrate (PAN) was by far the major constituent of NOy in the surface layer independent of the ozone mixing ratio