Hedging in Presence of Market Access Risk

Existing literature predominantly assumes perfect knowledge of production methods when deriving optimal futures position hedging rules. This paper relaxes this assumption and recognizes situations where producers interested in hedging may not know the exact input mix that will subsequently be used in their physical operations. This uncertainty is built into a conceptual model subsequently used to demonstrate the impacts of this risk on optimal hedging behavior.distiller grains, hedging, market access risk, risk management, Agricultural Finance,

Consumer Food Safety Perceptions: Do they Differ across Products, Species, and Specific Risks?

No known research has directly evaluated the relationship between perceived risk on a particular food safety issue and perceptions of other risks (e.g., H1N1 perceptions and E-Coli O157:H7 perceptions). Similarly, no known study has evaluated the appropriateness of assuming perceived food safety risks are equivalent for all products of a given species (i.e., perceived risk of E-Coli O157:H7 in ground beef and beef steak). The focus of this working paper is to shed new light on these previously unevaluated issues and draw implications for future mitigation strategies regarding meat food safety risks.beef, consumer perceptions, food safety, pork, risk perceptions, Food Consumption/Nutrition/Food Safety,

The Impact of Ethanol Production on Spatial Grain Market Relationships

cointegration, ethanol, grain markets, spatial relationships, Agribusiness, Agricultural and Food Policy, Agricultural Finance, Demand and Price Analysis, Land Economics/Use, Production Economics, Productivity Analysis,

Comparing Heterogeneous Consumption in US and Japanese Meat and Fish Demand

This article uses national, quarterly data to conduct an empirical analysis of pre-committed meat and fish demand by US and Japanese households using the Generalized Almost Ideal Demand System (GAIDS). US consumers are found to hold pre-committed demand for beef and pork, while Japanese consumers appear to possess significant pre-committed demand for beef and fish. This provides evidence to partly explain observed differences in Japanese and US consumer reactions to non-price and non-income effects in beef, pork, poultry, and fish. In addition, the first known empirical comparison of how the GAIDS and more traditional AIDS models assess meat and fish demand is offered with both in- and out-of-sample evaluations.US/Japanese meat demand, demand forecasting, food safety, Generalized Almost Ideal Demand System, pre-committed consumption, Demand and Price Analysis,

How Much Do Starting Values Really Matter? An Empirical Comparison of Genetic Algorithm and Traditional Approaches

This research evaluates the impact of using different starting conditions in estimating meat demand systems. Results suggest that as the econometric task becomes increasingly nonlinear, specification of starting conditions becomes increasingly important. This work demonstrates implications of failing to use the best available starting value conditions and how these implications vary with the complexity of the underlying econometric model of interest. Furthermore, this piece proposes a universal approach to be used by all applied econometric practioners to developing appropriate starting values for use in subsequent model estimation.Demand and Price Analysis,

Cow-Calf Producer Perceptions Regarding Individual Animal Traceability

This study provides valuable insights into cow-calf producer voluntary participation in the National Animal Identification System and producers’ perceptions of several issues critically impacting the success of voluntary traceability systems. Cow-calf producers believe that the most important issues to the U.S. beef industry in designing a national, individual animal traceability system are monitoring/managing disease, maintaining current foreign markets, accessing foreign markets, and increasing consumer confidence. Furthermore, producers are concerned with cost, liability, reliability of technology, failure of system to meet stated goals, and confidentiality of information associated with these systems.animal traceability, cow-calf, National Animal Identification System, voluntary adoption, Agribusiness, Community/Rural/Urban Development, Crop Production/Industries, Farm Management, Labor and Human Capital, Land Economics/Use, Livestock Production/Industries, Production Economics, Research and Development/Tech Change/Emerging Technologies, Q12, Q18, R38,

Drivers of Resident Support for Animal Care Oriented Ballot Initiatives

Recent high profile incidents and public debates in the United States have highlighted the increasing interest residents have regarding animal rearing and handling practices. This paper examines resident support for national legislation that mirrors Proposition 2, which in November 2008 passed in California. Results suggest perceptions regarding animal welfare information accuracy of livestock industry and consumer groups are particularly influential determinants of voting behavior and demand. The analysis also suggests residents may not fully appreciate price or tax implications when supporting additional animal welfare legislation. Implications for livestock industry and policy makers are provided along with suggestions for additional research.animal handling and welfare, ballot initiatives, information accuracy, legislation, Proposition 2, voting behavior, willingness to pay, Agribusiness, Agricultural and Food Policy, Farm Management, Livestock Production/Industries, Q18, Q13, Q11,

Valuations of ‘Sustainably Produced’ Labels on Beef, Tomato, and Apple Products

This study evaluates consumer perceptions of what “sustainably produced†food labels imply and estimates corresponding demand for products carrying these labels. Results suggest that the typical U.S. consumer is not willing to pay a positive premium for beef, tomatoes, or apple products labeled as “sustainably produced.†Demand is particularly sensitive to inferences consumers make regarding what a “sustainably produced†food label implies. Suggestions for future work and implications of standardizing the definition of sustainability are provided.consumer perceptions, credence labeling, production practices, sustainable, U.S. consumer demand, willingness to pay, Marketing,

CALENDAR VS. WEEKS TO EXPIRATION LIVESTOCK BASIS FORECASTS: WHICH IS BETTER?

The ability to accurately forecast basis is crucial to risk management strategies employed by many agribusiness firms. Previous research has examined how to effectively use basis forecasts and what factors affect basis, but literature focusing on forecasting basis is sparse. This research evaluates the impact of adopting a time-to-expiration approach, as compared to the more common calendar approach, when forecasting feeder cattle, live cattle, and hog basis. Furthermore, the optimal number of past year's basis levels to include in making basis predictions is evaluated in an out-of-sample framework. Absolute basis forecasts errors are generated for all three commodities and evaluated to determine the signifcance of the two issues mentioned above. Results indicate that basis forecasters should consider using three-year historical averages for feeder cattle and four-year historical averages for live cattle and lean hogs when making basis forecasts. Furthermore, the use of a time-to-expiration method of calculating historical average basis results in very little improvement in basis prediction accuracy compared to the calendar approach.livestock prices, basis, hedging, basis forecasts, Livestock Production/Industries, Marketing,

LIVESTOCK BASIS FORECASTS: HOW BENEFICIAL IS THE INCLUSION OF CURRENT INFORMATION?

Successful risk management strategies for agribusiness firms are contingent on the ability to accurately forecast basis. There has been substantial research on the actual use of basis forecasts, yet little research has been conducted on actually forecasting basis. This study evaluates the effect incorporating current basis information into a historical-average-based-forecast has on forecasting accuracy when forecasting live cattle and feeder cattle basis. Furthermore, the optimal weight to place on this current information is evaluated in an out-of-sample framework. Root mean squared errors are generated for both commodities and evaluated to determine the significance of these issues. Results suggest that livestock basis forecasters should consider incorporating a proportion of the difference in current basis and the historical average of the current week when making their projections. The optimal amount of current information to include declines as the time interval between the week the forecast is being made and the week being forecasted increases.livestock prices, hedging, basis forecasts, current information, Livestock Production/Industries, Marketing,