SOME IMPACTS OF INFLATION ON FARM FIRM GROWTH

Agricultural Finance,

FORWARD MARKETING BEHAVIOR OF SOYBEAN PRODUCERS

Indiana, Mississippi, and Nebraska producers' forward pricing behavior was analyzed with Tobit models. Percent debt, percent soybean acres, risk aversion, market consultants, comfort level with futures and options, lenders' opinions, written marketing plans, crop insurance, and geographic location were significant in explaining the percentage of expected soybean production forward priced.Demand and Price Analysis, Marketing,

MAGNITUDE ESTIMATION: AN APPLICATION TO FARMERS' RISK-INCOME PREFERENCES

Magnitude estimation, a technique developed by psychology for obtaining ratio scaled values, was used to derive risk-income preferences of ninety-one central Indiana farmers. Both variability-income and bankruptcy-income measures were developed and related to farmers' socio-economic attributes. Wealth and education had limited effects compared with off-farm employment, percent debt and expected levels of income, percent debt and net worth growth. Magnitude estimation provided reliable estimates of preferences. Farmers gave greater importance to the bankruptcy-income measure of risk-income preferences, but only a small portion of the variation of either measure could be explained.Farm Management, Risk and Uncertainty,

Average Crop Revenue Election (ACRE) Program or Traditional Government Payment Programs: What Factors Matter?

Rankings of different risk management portfolios including Average Crop Revenue Election (ACRE), traditional government payment programs, crop insurance and hedging in futures; and optimal choices of insurance coverage levels and hedge ratios are evaluated for a representative central Indiana corn farm, using Monte Carlo simulation and optimization of expected utilities. The changes of preference between ACRE and traditional government programs under comprehensive scenarios of price and yield risks are studied. Also, Interactions between ACRE and other risk management instruments are examined, and government costs and risk management efficiencies between ACRE and traditional government programs are compared. The results show a strong preference of ACRE for the representative central Indiana corn farm in 2009, due to high ACRE guarantee price and expected drop in corn price from 2008 level. Even if the farm faces weak dependence between farm and aggregate yield, the risk could not offset the addition value ACRE could provide for this year. Also, it is found that there are synergistic effects between ACRE and two individual crop insurance plans but antagonistic effects between ACRE and group insurance plans. ACRE is more efficient than traditional government programs in terms of expected program costs.ACRE, Farm Bill, crop insurance, willingness to pay, government expenditure, government programs, Agricultural and Food Policy, Agricultural Finance, Risk and Uncertainty,

THE EFFECTS OF RISK MANAGEMENT STRATEGIES WITH DIVERSIFIED HOG/CROP PRODUCTION

Risk management strategies were compared using a corn/soybean farm, a hog farm, and a diversified hog/crop farm. Results suggest risk management tools are more effective in combinations, hog/crop diversification shows limited risk reducing benefits, and the effects of choosing among risk management tools may be overemphasized.Agribusiness, Risk and Uncertainty,

Choice Dilemmas and Risk Management Education

Differences in attitudes toward risk may result in individuals making different, yet correct, decisions. This article illustrates how choice dilemmas, hypothetical life decision situations, can be used in Extension workshops to help individuals identify their own willingness to assume risk and demonstrate differences among individuals. The agriculturally adapted choice dilemmas also illustrate fundamental risk-return trade-offs and the diversity of risks faced by producers. The willingness to assume risk scale is useful in assisting producers to understand their own risk attitudes and provides a means of incorporating risk attitudes into risk management education programs

THE ECONOMIC FACTORS INFLUENCING PRODUCERS' DEMAND FOR FARM MANAGERS

Results from a Tobit model showed a complementary relationship between marketing inputs and the decision to hire farm managers. According to the results, as farmers increase expenditure on marketing consultants and information systems, their expenditure on farm managers increase as well.Farm Management,