SABIIA - Sistema Aberto e Integrado de Informação em Agricultura (Sabiia)

Zhao, Huan; Du, Xiaodong; Hennessy, David A..

Feeder cattle are fattened to become fed live cattle six months later. The U.S. feeder cattle industry is intensively competitive, so that market efficiency suggests feeder cattle prices should fully reflect feed prices and information on future fed cattle prices. Employing a long time series (1979-2004) of feeder cattle futures, live cattle futures, and local corn prices, we test whether complete pass-through occurs. The results indicate that an increase of a dollar per hundred pounds in the live cattle price leads to an increase of approximately $1.48 per hundred pounds in the feeder cattle price in one month, about 93% of complete pass-through. The corresponding negative effect of a corn price increase is about 87% of complete pass-through. By contrast...

Where Are the Veterinarian Shortage Areas Anyway?

Palavras-chave: Feeder cattle; Futures market efficiency; Live cattle; Structural change.; Institutional and Behavioral Economics; Livestock Production/Industries; Marketing; Production Economics.

Ano: 2009

URL: http://purl.umn.edu/52085

Wang, Tong; Hennessy, David A.; O'Connor, Annette M..

This paper describes an econometric model to evaluate factors associated with a county’s likelihood of being designated as a private practice shortage area under the United States’ Veterinary Medicine Loan Repayment Program (VMLRP). Study determinants of equilibrium food animal veterinarian location choices were also evaluated and used as a benchmark to assess the shortage designation process. On the whole the program appears to perform quite well. For several states, however, VMLRP shortage designations are inconsistent with the model of food animal veterinarian shortages. Comparative shortage is generally more severe in states that have no VMLRP designated private practice shortage counties than in states that do.

Determinants of Iowa Cropland Cash Rental Rates: Testing Ricardian Rent Theory

Palavras-chave: Economic externalities; Food animal veterinarians; Loan repayment program.; Agricultural and Food Policy; Health Economics and Policy; Livestock Production/Industries.

Ano: 2010

URL: http://purl.umn.edu/93817

Du, Xiaodong; Hennessy, David A.; Edwards, William M..

Based on the Ricardian rent theory, this study employs the variable profit function to analyze the determinants of Iowa cropland cash rental rates using county-level panel data from 1987 to 2005. Accounting for spatial and temporal autocorrelations, responses of local cash rental rates to changes in output prices and other exogenous variables are estimated. We find that Iowa cash rental rates are largely determined by output/input prices, soil quality, relative location, and other county-specific factors. Cash rents go up by $79 for a $1 increase in corn price in the short run. The marginal value of cropland quality, as represented by row-crop corn suitability rating index, is about $1.05. Ethanol plants are not found to have a significant local effect on...

Local Geography of Row-Crop Quality Land and Cropland Cash Rental Rates

Palavras-chave: Bargaining; Basis; Ethanol; Land quality shadow price; Rate of adjustment; Spatial autocorrelation; Land Economics/Use.

Ano: 2007

URL: http://purl.umn.edu/7700

Du, Xiaodong; Hennessy, David A..

While farmland rental markets are likely to be spatially differentiated, the fine spatial structure of row-crop quality land should have a significant effect on cash rent determination. This study provides a rigorous empirical understanding of the effect of land spatial heterogeneity on cash rental rates. The lacunarity index is employed to measure spatial heterogeneity of land quality, which is built directly upon a soil quality measure, the land parcel’s corn suitability rating index (CSR). A panel data random effect model is applied on annual survey data of farmland cash rental rates of Iowa for 1987-2009. As expected, land spatial heterogeneity has a statistically significant and negative effect on local cash rent rates. The effect’s origin warrants...

CONSUMERS' VALUATION OF INSECTICIDE USE RESTRICTIONS: AN APPLICATION TO APPLES

Palavras-chave: Land spatial heterogeneity; Rental market; Agricultural Finance; C5; G1; Q1.

Ano: 2011

URL: http://purl.umn.edu/103450

Roosen, Jutta; Fox, John A.; Hennessy, David A.; Schreiber, Alan.

Economic assessments of pesticide regulations typically focus on producer impacts and generally ignore possible changes in product demand. These changes may be nonnegligible if real and/or perceived product attributes change. We measure consumers' willingness to pay (WTP) for the elimination of one insecticide and also a whole group of insecticides in apple production using a multiple-round Vickrey auction. The data are analyzed using nonparametric statistical tests and a double-hurdle model. Our findings show that consumer perceptions of product attributes change if pesticides are removed from production, and this is reflected in WTP changes. WTP is shown to be income elastic.

Tipo: Journal Article

Palavras-chave: Consumer/Household Economics; Crop Production/Industries.

Ano: 1998

URL: http://purl.umn.edu/31196

State-Contingent Demand for Herbicide-Tolerance Seed Trait

Hennessy, David A.; Saak, Alexander E..

Suppose a farmer had to apply a herbicide pre-emergence or not at all. The advent of a herbicide-tolerance trait innovation then provides the option to wait for more information before making a state-contingent post-emergence application. This option to wait can increase or decrease average herbicide use. For heterogeneous acre types, trait royalties increase with the level of uncertainty about the extent of weed damage. Royalties are largest when acre infestation susceptibility types are bunched around the type indifferent to applying the herbicide in the absence of the trait. The trait complements (substitutes for) information technologies that facilitate informed post-emergence (pre-emergence) decisions.

Tipo: Journal Article

Palavras-chave: Genetics; Information inputs; Patent value; Post-emergence; Real option; Crop Production/Industries.

Ano: 2003

URL: http://purl.umn.edu/30723

Effects of Site-Specific Management on the Application of Agricultural Inputs

Hennessy, David A.; Babcock, Bruce A.; Fiez, Timothy E..

Site-specific management of inputs in agricultural production is receiving increasing attention because of new technologies and concerns about excessive input use. This paper provides a microeconomic analysis of its implications. It shows that profit decreases with an increase in the variability of input requirements, but that the input and production effects can be quite complicated. The effects of moving from uncertainty about input requirements to variable requirements are also identified. An empirical study of nitrogen fertilization suggests that sitespecific management may reduce input use substantially, but the production and profitability impacts may not be large.

A COST-BASED MODEL OF SEASONAL PRODUCTION, WITH APPLICATION TO MILK POLICY

Palavras-chave: Negative externality; Site-specific management; Uncertainty; Variability; Crop Production/Industries.

Ano: 1996

URL: http://purl.umn.edu/18521

Hennessy, David A.; Roosen, Jutta.

Milk production is seasonal in many European countries. While quantity seasonality poses capacity management problems for dairy processors, a European Union policy goal is to reduce price seasonality. After developing a model of endogenous seasonality, we study the effects of three E.U. policies on production decisions. These are private storage subsidies, production removals, and production quotas. When cost functions are seasonal in a specified way, then arbitrage opportunities interact with storage subsidies to reduce both price and consumption seasonality. But production seasonality likely increases because storage subsidies promote temporal market integration. Conditions are identified under which product market interventions increase quantity...

Crop Yield Skewness and the Normal Distribution

Palavras-chave: Efficiency; Market intervention; Quota; Stabilization; Storage subsidies; Livestock Production/Industries.

Ano: 2003

URL: http://purl.umn.edu/18587

FAIR VALUE OF WHOLE-FARM AND CROP-SPECIFIC REVENUE INSURANCE

Hennessy, David A..

Empirical studies point to negative crop yield skewness, but the literature provides few clear insights as to why. This paper formalizes three points on the matter. Statistical laws on aggregates do not imply a normal distribution. Whenever the weather-conditioned mean yield has diminishing marginal product with respect to a weather-conditioning index, then there is a disposition toward negative yield skewness. This is because high marginal product in bad weather stretches out the yield distribution's left tail relative to that for weather. For disaggregated yields, unconditional skewness is decomposed into weather-conditioned skewness plus two other terms and each is studied in turn.

Tipo: Journal Article

Palavras-chave: Conditional distribution; Crop insurance; Negative skewness; Normal distribution; Statistical laws; Crop Production/Industries; Risk and Uncertainty.

Ano: 2009

URL: http://purl.umn.edu/50084

Hennessy, David A.; Saak, Alexander E.; Babcock, Bruce A..

The U.S. market in subsidized commodity revenue insurance contracts has expanded rapidly since 1996. By far the most prevalent contract forms are crop-specific, rather than the whole-farm design which has a better claim to being optimal. For an arbitrary acre allocation vector, this paper inquires into absolute and relative determinants of the actuarial costs of these forms. The actuarial value of whole-farm insurance increases under a particular characterization of >more systematic= risk, whereas the actuarial value of insurance through crop-specific contracts need not change. Upon fixing stochastic revenue interactions, we identify conditions such that the expected cost of revenue insurance via crop-specific contracts is increasing under a more...

Have Biotech Seeds Increased Maize Yields?

Palavras-chave: Risk and Uncertainty.

Ano: 2003

URL: http://purl.umn.edu/21988

Xu, Zheng; Hennessy, David A.; Moschini, GianCarlo.

Corn yield is determined by soils, weather, seed used and other technology choices. Global population and per capita income growth trends as well as demand from the energy sector have placed great stress on cropland use. Global cropland acres and/or yield per acre will need to increase. Whether new seed technologies have enhanced corn yield is a controversial issue. We study U.S. county corn yields 1964-2008, controlling for location effects, fertilization technologies and weather. We find evidence that trend yield growth has been fastest in the Central Corn Belt, genetic modification technologies have increased trend yield, and this increase has been largest in the Central Corn Belt.

Contract and Exit Decisions in Finisher Hog Production

Palavras-chave: Biotechnology; Corn Yield; Trend; Regional Effects; Weather; Fertilization.; Crop Production/Industries; Industrial Organization; Research and Development/Tech Change/Emerging Technologies; L65; Q16.

Ano: 2010

URL: http://purl.umn.edu/61303

Dong, Fengxia; Hennessy, David A.; Jensen, Helen H..

Finisher hog production in North America has seen a shift toward larger production units and contract-organized production since around 1990. Given the efficiency gains and conversion costs associated with contract production, growers may have to choose between long-term commitment through investments and atrophy with intent to exit in the intermediate term. A model is developed to show that growers with any of three efficiency attributes (lower innate hazard of exit, variable costs, or fixed contract adoption costs) are not only more likely to contract but will also produce more and expend more on lowering business survival risks. Using the 2004 U.S. Agricultural Resource Management Survey for hogs, a recursive bivariate probit model is estimated in which...

The Impact of Biofuels Policy on Agribusiness Stock Prices

Palavras-chave: Agricultural industrialization; Hog production; Occupation choice; Production contracts; Recursive bivariate probit; Relationship-specific investments; Sector dynamics..

Ano: 2008

URL: http://purl.umn.edu/37331

Tepe, Fatma Sine; Du, Xiaodong; Hennessy, David A..

Corn markets are important for many industries. These include the seed, fertilizer, meat production/processing and agricultural machinery sectors, all of which are highly concentrated. Oligopoly theory suggests that corn input and field equipment suppliers likely benefit from policies that support corn markets, such as U.S. biofuels policy, while meat companies likely lose. This study investigates the impact of biofuels policy on U.S. agribusiness stock prices. Corn futures prices are found to have a structural change in November 2006, consistent with the expansion of U.S. biofuels policy support. A linear two-factor (S&P500 and corn prices) equilibrium asset pricing model is estimated on two subsamples, one before and one after the estimated change...