NON-PARAMETRIC AND SEMI-PARAMETRIC TECHNIQUES FOR MODELING AND SIMULATING CORRELATED, NON-NORMAL PRICE AND YIELD DISTRIBUTIONS: APPLICATIONS TO RISK ANALYSIS IN KANSAS AGRICULTURE

Parametric, non-parametric, and semi-parametric approaches are commonly used for modeling correlated distributions. Semi-parametric and non-parametric approaches are used to examine the risk situation for Kansas agriculture. Results from the model indicate that 2000 will be another difficult year for Kansas farmers, although crop income will increase slightly from 1999. However, unless another supplemental infusion of government payments occurs, crop income is expected to be the lowest since 1992.correlated distributions, non-parametric modeling, semi-parametric modeling, Kansas agriculture, Research Methods/ Statistical Methods,

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,

Expectations of Cattle Feeding Investors in Feeder Cattle Placements

Cattle feeders appear irrational when they place cattle on feed when projected profits are negative. Long futures positions appear to offer superior returns to cattle feeding investment. Cattle feeder behavior suggests that they believe a downward bias in live cattle futures persists and that cattle feeders use different information than the live cattle futures market price when making placement decisions. This paper examines feeder cattle placement determinants and compares performance of expected hedgeable profits with past actual profits in explaining feeder cattle' placements. Past actual profits are found to be more important placement determinants than expected profits based upon the live cattle futures market, even though hedgeable profits provide superior forecasts of future profits.Livestock Production/Industries,

POST-HARVEST GRAIN STORING AND HEDGING WITH EFFICIENT FUTURES

This study simulates whether Kansas wheat, soybean, corn, and milo producers could have profitably used deferred futures plus historical basis cash price expectations for post-harvest unhedged and hedged grain storage decisions from 1985-97. The signaled storage decision is compared to a representative Kansas producer whose crop sales mimic average Kansas marketings each year. Using 23 grain price locations, the simulations resulted in an 11 cents per bushel annual increase in grain storage profits for wheat, 27 cents for soybeans, -17 cents for corn, and –20 cents for milo; however, storage profit differences varied substantially across locations. Hedging tended to decrease risk, but not impact profitability.Agribusiness,

CATTLE FEEDER BEHAVIOR AND FEEDER CATTLE PLACEMENTS

Cattle feeders appear irrational when they place cattle on feed when projected profit is negative. Long futures positions appear to offer superior returns to cattle feeding investment. Cattle feeder behavior suggests that they believe a downward bias in live cattle futures persists and that cattle feeders use different expectations than the live cattle futures market price when making placement decisions. This study examines feeder cattle placement determinants, comparing performance of expected hedgeable profit with past actual profit in explaining feeder cattle placements. Past actual profit is a more important placement determinant than expected profit based upon the live cattle futures market, even though hedgeable profit provides a superior forecast of future profit. In addition, potential deterrents to cattle feeders'Â’ use of futures as a substitute for cattle ownership are discussed.Livestock Production/Industries,

AN ECONOMIC ANALYSIS OF THE DAIRY ENVIRONMENTAL COOPERATIVE IN NORTHEAST KANSAS

In 1997, the Black Vermillion Dairy Environmental Cooperative (DEC) was started with an EPA 319A grant. Ten Kansas dairies located in the Kansas Black Vermillion Watershed were studied to evaluate the on-farm manure structures cost-shared by the DEC. Net present value (NPV) analysis was used to evaluate the profitability associated with the manure structures. The NPV analysis showed that in most cases, investing in a manure storage structure is a worthwhile venture and can be profitable for the dairy. However, cost-share assistance often will be needed in order to have positive pre-tax and after-tax NPVs.Dairy Environmental Cooperative (DEC), manure management, Net Present Value (NPV) analysis, cost-share, concrete manure storage, Environmental Economics and Policy,

PREDICTING FEEDING COST OF GAIN WITH MORE PRECISION

Costs during the feeding period, commonly summarized as "feeding cost of gain", are primary determinants of cattle feeding profits. This study provides a method of generalizing information available at placement time into a suitable feeding cost of gain prediction, so that feeders and ranchers can make more informed placement decisions.Cattle-Feeding, Feeding-Cost-Of-Gain, Industrial Organization, Livestock Production/Industries,

Determining What's Really Important to Lenders: Factors Affecting the Agricultural Loan Decision-Making Process

Agricultural lenders in today’s environment face many challenges when evaluating the creditworthiness of farm borrowers. To address these challenges, a survey was conducted with financial institutions in Kansas and Indiana where agricultural lenders were asked for their response to hypothetical agricultural loan requests. Each loan request differed by the borrower’s character, financial record keeping, productive standing, Fair Isaac credit bureau score, and credit risk. Lenders provided information about themselves and their financial institutions. The survey data obtained determine the relative importance of financial and non-financial information when analyzing agricultural loan applications. Tobit models are estimated to identify the borrower and lender characteristics that are important in determining loan approval while OLS models are used to investigate the factors that affect interest rates offered to farm borrowers. The results provide a comparison of agricultural lending between two important agricultural states. The results from this analysis also provide lenders with insight on the factors that influence the decision making process of other agricultural lenders.Agricultural loans, Credit bureau score, Credit evaluation, Interest rates

PAYOFFS TO FARM MANAGEMENT: HOW IMPORTANT IS CROP MARKETING?

In production agriculture, good management is demonstrated by profits that are persistenly greater than those of similar neighboring farms. This research examined the effects of management practices on risk-adjusted profit per acre for Kansas farms over 1990-1999. The management practices were price, cost, yield, planting intensity, and technology adoption (less-tillage). Cost management, planting intensity, and technology adoption had the greatest effect on profit per acre, and cash price management was found to have the smallest impact. If producers wish to have continuously high profits, their efforts are best spent in management practices over which they have the most control.farm management, marketing, risk, technology adoption, Farm Management, Marketing,

USING SATELLITE IMAGERY IN KANSAS CROP YIELD AND NET FARM INCOME FORECASTS

Remotely sensed data have been used in the past to predict crop yields. This research attempts to incorporate remotely sensed data into a net farm income projection model. Using in-sample regressions, satellite imagery appears to increase prediction accuracy in the time periods prior to USDA's first crop production estimate for wheat and corn. Remotely sensed data improved model performance more in the western regions of the state than in the eastern regions. However, in a jackknife out-of-sample framework, the satellite imagery appeared to statistically improve only 8 of the 81 models (9 crop reporting districts by 9 forecasting horizons) estimated. Moreover, 41 of the 81 models were statistically better without the satellite imagery data. This indicates that perhaps the functional form of net farm income has not been well-specified since additional information should generally not cause a model to deteriorate.net farm income, remote sensing, satellite imagery, Crop Production/Industries,