Factors Affecting Hay Supply and Demand in Tennessee

Understanding the interactions between supply and demand for hay is important because of hay’s significance to the agricultural sector and economy, and because hay is an important crop on highly erodible soils. As an example, Tennessee has the most erodible cultivated cropland in the United States (Denton, 2000), nearly half of the state’s current CRP acreage contracts are set to expire in 2007 (U.S. Department of Agriculture, 2006), and hay is one of the most economically important crops produced in the state (U.S. Department of Agriculture, 2004). Cross (1999) attributed the upward trend in Tennessee hay acreage since 1980 to an increasing number of farmers who were searching for alternative production activities, such as hay, pasture and livestock, to replace row crops on erodible soils (U.S. Congress, House of Representatives and Senate, 2002). Hay ranked tenth in value of receipts in Tennessee at $49.25 million in 2006 and cattle and calf production ranked first at$500 million. Hay ranked second in value of production at $262 million in 2003 and averaged$248 million over a five period from 2002 – 2006. Underscoring the importance of hay in Tennessee was the state’s national ranking of fourth in the production of other hay (excluding alfalfa) at 4.25 million tons in 2006 (U.S. Department of Agriculture, 2007). To quantify these supply and demand relationships, one must understand the characteristics of hay markets. Markets are usually localized because of the weight and bulky physical characteristics of hay. Although hay species are not identical, in many livestock production situations most are close substitutes, with the possible exception of alfalfa hay. In Tennessee, alfalfa is a differentiated hay product used mostly by dairy and equine producers. Nevertheless, alfalfa constituted only 2.5% of all hay produced in Tennessee in 2003 (U.S. Department of Agriculture, 2004) and its price tends to move proportionally with other hay prices; thus, for modeling purposes alfalfa and other hay can be aggregated as in Shumway’s (1983) study of Texas field crops and treated as a composite commodity (Nicholson, 2005) called hay. In 2002, 47,000 operations within the state produced forage, while on the demand side, 50,000 operations were involved in beef and dairy production with another 24,000 equine operations (U.S. Department of Agriculture, 2004). Despite the lack of national and state central markets for hay (Cross, 1999), buyers and sellers seem to be aware of the current prices in their area. Word of mouth, a hay directory website (Tennessee Farm Bureau Federation, 2005), and the Farm Facts bulletin (Tennessee Agricultural Statistics Service, 2004) are among the primary outlets for price discovery (Rawls, September 2004). Hay producers are typically assumed to be price takers (Shumway, 1983) because of the large numbers of sellers and buyers; nevertheless, search costs and price differentials can result from the lack of a central market. Even though hay and livestock producers have avenues for price determination in the short run, they have little information about what causes supply and demand for hay to change from year to year. The overall objective of this research was to illustrate how the understanding of hay markets can provide valuable information to hay and livestock producers and agricultural policymakers. Using the Tennessee hay market as an example, the specific objectives were to: 1) determine the factors that influence Tennessee hay supply and quantify their effects, 2) determine the factors that influence Tennessee hay demand and quantify their effects, and 3) briefly illustrate the importance of hay supply and demand information to policymakers. Estimating factors that influence hay supply and demand can help to provide hay and livestock producers with valuable information for making more informed business decisions and policymakers with insight into how proposed agricultural policies might affect hay and livestock producers. To accomplish the objectives, Tennessee hay supply and demand were modeled econometrically, and the coefficients of the models were used to quantify hay acreage, yield, and price responses to the factors that influence the Tennessee hay market. The results were then used to briefly illustrate the potential impacts on the 2008 Tennessee hay price from the retirement of Conservation Reserve Program (CRP) acreage in 2007. Hay acreage proved to be fairly unresponsive to output and input prices in both the short and long runs. The weak response of hay acreage to own and substitute crop prices may result from many hay producers also being cattle producers that harvest their own hay in an effort to guarantee a reliable supply of roughage to feed their herds throughout the winter months. They might be willing to give up potentially higher profits from a production alternative to avert the risk of feed shortages for their cattle. The hay price appeared to be responsive to real per capita income with a price flexibility of 1.55. This finding is reasonable because an increase in real per capita income results in more purchasing power for a typical household. As purchasing power increases, one would expect beef consumption to increase because beef is a normal good (Schroeder and Mark, 1999). Increased beef consumption would positively influence the derived demand for beef production inputs; hence, increased demand for hay. A weak response of hay price to the quantity of hay produced (HPRODt) could be explained by the hay market structure. First, some livestock farmers may produce large amounts of hay for their own livestock, much of which is not sold on the market. These farmers may be able to produce hay at a lower cost than market price, or they may be willing to forgo the potential cost savings from buying hay from an off-farm source to avert the risk of feed shortages for their cattle. Additionally, unlike the market for corn or cattle, the hay market is much less organized and structured. Farmers producing hay for the cash market have no nearby and convenient grain elevator or auction market at which to sell their product. Weak response to changes in hay quantity and price suggests that hay farmers may not be driven solely by the profit motive. Instead, other motives may also enter into their objective functions as utility maximizers.acreage response, derived demand, elasticities, hay, inverse demand function, price flexibilities, yield response, Crop Production/Industries, Demand and Price Analysis, D,

Assessing the Effects of Road Pricing on an Industry: The Grain Handling and Transportation System in Saskatchewan

This research evaluates the merits of road pricing scenarios affecting a single industry almost exclusively – grain movement on the rural road network in the west central region of the Canadian province of Saskatchewan. Policies in the Canadian grain handling and transportation industry have led to increased use of rural roads, accelerating road deterioration in the region. Using a simulated optimization framework to compare road pricing schemes, we find that a policy of differential road pricing based on known road maintenance costs generates the lowest total social costs. The differences between the simulated social costs in the pricing scenarios are surprisingly small

Estimating the Impacts of Storage Dry Matter Losses on Switchgrass Production

This poster estimates dry matter losses as a function of harvest method, storage treatment, and time in storage. We then calculate the cost to store switchgrass bales under alternate harvest method and storage treatment scenarios; and determine the breakeven harvest method and storage treatment as a function of biomass price and time in storage.Biomass, bioenergy crops, function form, sustainable systems, Farm Management, Production Economics, Q10, Q42,

Economics of the Variable Rate Technology Investment Decision for Agricultural Sprayers

Producers lack information about the profitability of variable rate technology (VRT) for agricultural sprayers. An economic framework was developed to evaluate the returns required to pay for VRT investments. Payback variables included input savings, yield gains, and reduced application costs. We illustrate the framework with two example investment scenarios.capital budgeting, decision aid, farm management, precision agriculture, map-based, sensor-based, site-specific management, variable rate technology, Farm Management, Q10, Q16,

Is Switchgrass Yield Response to Nitrogen Fertilizer Dynamic? Implications for Profitability and Sustainability at the Farm Level

Revised version of the paper submitted 2/11/2010Biomass, Energy Crops, Sequential Inputs, West Tennessee, Crop Production/Industries, Farm Management, Production Economics, Resource /Energy Economics and Policy,

Switchgrass Production in Marginal Environments: A Comparative Economic Analysis across Four West Tennessee Landscapes

Switchgrass (Panicum virgatum L.) has been identified as a model feedstock for the emerging biofuels industry. Its selection was based, in part, upon the observation that switchgrass can produce high yields in marginal production environments. This trait may become particularly valuable in coming years, as renewable fuel mandates begin to take effect and concerns over the food-versus-fuel debate increase. Relatively little research information exists about how management practices and production costs vary across different production environments. The objectives of this research were (a) to compare switchgrass yields as influenced by seeding rate and nitrogen fertilization rates in low-, intermediate-, and high-yielding switchgrass production environments, (b) to determine the economically optimal seeding rate and nitrogen fertilization rate for each environment, and (c) to calculate per-ton production costs. Experimental yield data from four locations were utilized for this study. Plots were seeded in 2004 with treatments of 2.5, 5.0, 7.5, 10.0, and 12.5 lbs/acre. Nitrogen was applied in subsequent intervals at 0, 60, 120 and 180 lbs/acre. For an expected stand lifespan of 10 years, production costs ranged from $45 per ton in a well drained level upland environment ideal for the production of row crops to$70 per ton in a marginal, poorly drained flood plain in which the switchgrass stand was slow to establish and which demonstrated lower overall yields.Crop Production/Industries, International Relations/Trade,

A High Resolution Study of the Slowly Contracting, Starless Core L1544

We present interferometric observations of N2H+(1--0) in the starless, dense core L1544 in Taurus. Red-shifted self-absorption, indicative of inward motions, is found toward the center of an elongated core. The data are fit by a non-spherical model consisting of two isothermal, rotating, centrally condensed layers. Through a hybrid global-individual fit to the spectra, we map the variation of infall speed at scales ~1400AU and find values ~0.08 km/s around the core center. The inward motions are small in comparison to thermal, rotational, and gravitational speeds but are large enough to suggest that L1544 is very close to forming a star.Comment: 11 pages, 2 figures Accepted for publication in Astrophysical Journal Letter

Potential Site Productivity Influences the Rate of Forest Structural Development

Development and maintenance of structurally complex forests in landscapes formerly managed for timber production is an increasingly common management objective. It has been postulated that the rate of forest structural development increases with site productivity. We tested this hypothesis for Douglas-fir (Pseudotsuga menziesii (Mirb.) Franco) forests using a network of permanent study plots established following complete timber harvest of the original old-growth forests. Forest structural development was assessed by comparing empirical measures of live tree structure to published values for Douglas-fir forests spanning a range of ages and structural conditions. The rate of forest structural development—resilience—exhibited a positive relationship with site index, a measure of potential site productivity. Density of shade-intolerant conifers declined in all study stands from an initial range of 336–4068 trees/ha to a range of 168–642 trees/ha at the most recent measurement. Angiosperm tree species declined from an initial range of 40–371 trees/ha to zero in seven of the nine plots in which they were present. Trends in shade-tolerant tree density were complex: density ranged from 0 to 575 trees/ha at the first measurement and was still highly variable (25–389 trees/ha) at the most recent measurement. Multivariate analysis identified the abundance of hardwood tree species as the strongest compositional trend apparent over the study period. However, structural variables showed a strong positive association with increasing shade-tolerant basal area and little or no association with abundance of hardwood species. Thus, while tree species succession and forest structural development occur contemporaneously, they are not equivalent processes, and their respective rates are not necessarily linearly related. The results of this study support the idea that silvicultural treatments to accelerate forest structural development should be concentrated on lower productivity sites when the management objective is reserve-wide coverage of structurally complex forests. Alternatively, high-productivity sites should be prioritized for restoration treatments when the management objective is to develop structurally complex forests on a portion of the landscape

Density, Velocity, and Magnetic Field Structure in Turbulent Molecular Cloud Models

We use 3D numerical MHD simulations to follow the evolution of cold, turbulent, gaseous systems with parameters representing GMC conditions. We study three cloud simulations with varying mean magnetic fields, but identical initial velocity fields. We show that turbulent energy is reduced by a factor two after 0.4-0.8 flow crossing times (2-4 Myr), and that the magnetically supercritical cloud models collapse after ~6 Myr, while the subcritical cloud does not collapse. We compare density, velocity, and magnetic field structure in three sets of snapshots with matched Mach numbers. The volume and column densities are both log-normally distributed, with mean volume density a factor 3-6 times the unperturbed value, but mean column density only a factor 1.1-1.4 times the unperturbed value. We use a binning algorithm to investigate the dependence of kinetic quantities on spatial scale for regions of column density contrast (ROCs). The average velocity dispersion for the ROCs is only weakly correlated with scale, similar to the mean size-linewidth relation for clumps within GMCs. ROCs are often superpositions of spatially unconnected regions that cannot easily be separated using velocity information; the same difficulty may affect observed GMC clumps. We analyze magnetic field structure, and show that in the high density regime, total magnetic field strengths increase with density with logarithmic slope 1/3 -2/3. Mean line-of-sight magnetic field strengths vary widely across a projected cloud, and do not correlate with column density. We compute simulated interstellar polarization maps at varying orientations, and determine that the Chandrasekhar-Fermi formula multiplied by a factor ~0.5 yields a good estimate of the plane-of sky magnetic field strength provided the dispersion in polarization angles is < 25 degrees.Comment: 56 pages, 25 figures; Ap.J., accepte