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

Interest is high in Argentina as an emerging economic power in the Americas. This paper analyzes issues pertinent to the relative advantages and disadvantages between the United States and Argentina for producing, transporting, processing, and marketing major agricultural commodities in the context of distribution to significant global markets. Designed as a tool for agribusiness students and prospective investment and trade partners, it provides a side-by-side analysis of major U.S. and Argentine agricultural commodities. All facts and figures are in U.S. currency and common U.S. (avoirdupois) weights and measures. Also from a comparative perspective, it defines the differences in technologies between the countries and examines in detail the marketing...

Joint Estimation of Risk Preferences and Technology: Flexible Utility of Futility?

Palavras-chave: Agricultural commodities; Agricultural markets; Argentina versus United States; Commercialization; Comparative economic analysis; Grains; Livestock; Marketing channels; Production technology; Marketing.

Ano: 2000

URL: http://purl.umn.edu/18684

The present study sets up a thought experiment calibrated to represent risks of a high-risk production activity (farming), and investigating whether the structure of risk aversion (i.e., the changes in absolute or relative risk aversion associated with changes in wealth) can be estimated with reasonable precision. Findings strongly suggest that typical production data are unlikely to allow identification of the structure of risk aversion. A flexible utility parameterization is found to worsen technology parameter estimates. Findings also indicate that even under a restricted utility specification, the quality of utility parameters estimated from small samples is very poor.

Systemic Risk in U.S. Crop and Revenue Insurance Programs

Palavras-chave: Expected utility; Risk preferences; Production analysis; Risk attitudes.; Risk and Uncertainty; C13; D24; D81; Q12..

Ano: 2007

URL: http://purl.umn.edu/9980

Mason, Chuck; Hayes, Dermot J.; Lence, Sergio H..

The present study estimates the probability density function of the Federal Risk Management Agency's (RMA) net income from reinsuring crop insurance for corn, wheat, and soybeans. Based on 1997 data, it is estimated that there is a 5 percent probability that RMA will need to reimburse at least $1 billion to insurance companies, and that the fair value of RMA's reinsurance services to insurance firms equals $78.7 million. In addition, various hedging strategies are examined for their potential to reduce RMA's reinsurance risk. The risk reduction achievable by hedging is appreciable, but use of derivative contracts alone is clearly no panacea.

Palavras-chave: Crop Production/Industries; Risk and Uncertainty.

Ano: 2001

URL: http://purl.umn.edu/18481

Singerman, Ariel; Lence, Sergio H..

Option Pricing on Renewable Commodity Markets

Palavras-chave: Cointegration; Organic corn prices; Organic farming; Organic production; Agricultural and Food Policy; Q18.

Ano: 2010

URL: http://purl.umn.edu/61151

Jin, Na; Lence, Sergio H.; Hart, Chad E.; Hayes, Dermot J..

Options markets on agricultural commodities with maturities that exceed 13 months seldom trade. Our hypothesis is that this market failure is due to the absence of an accurate option pricing model for commodities where mean reversion can be expected. Standard option pricing models assume proportionality between price variance and time to maturity. This proportionality is not a valid assumption for commodities where supply response works to bring prices back to production costs. The model suggests that traditional option pricing models will overprice long-term options on these markets.

What Can the United States Learn from Spain's Pork Sector? Implications from a Comparative Economic Analysis

Palavras-chave: Commodity futures and option; Price mean reverting; Seasonality; Agricultural Finance; Financial Economics.

Ano: 2010

URL: http://purl.umn.edu/60955

This study provides a comparative economic analysis of the primary production of pork and its marketing channel in Spain and the United States. The focus on Spain is due to the profound growth and transformation of its pork sector over the last 20 years, compared with other major players in the world market for pig meat. The analysis reveals a number of similar characteristics but also important differences between the two countries. The significant expansion of Spain's pork production sector stemmed from a number of factors that apply, to a relatively large extent, to some U.S. states (in particular, North Carolina) but do not apply to the U.S. pork production sector as a whole. This implies that it is unlikely that the U.S. pork production sector as a...

ASSESSING THE FEASIBILITY OF PROCESSING AND MARKETING NICHE SOY OIL

Palavras-chave: Comparative analysis; Hog marketing channel; Spain pork industry; U.S. pork industry; Industrial Organization; Marketing.

Ano: 2005

URL: http://purl.umn.edu/18683

Lence, Sergio H.; Agarwal, Sanjeev.

Demand in the marketplace for foods with "natural" attributes, such as organic produce, continues to grow. Similarly, interest has developed in creating a technology that allows "physical" rather than chemical refinement of soybean oil to create a "natural" soy oil product. The physical refinement of non-genetically modified (non-GM) soybeans greatly strengthens the marketing claim to natural properties for that product. The oil derived in this manner, designated here as "niche soy oil," and its related inputs (non-GM soybeans) and by-products (high-energy non-GM soy meal) are the objects of our analysis. We find premiums of $0.03 to $0.43 per pound for niche soy oil compared to commodity soy oil. However, our price analysis suggests that only...

DO FUTURES BENEFIT FARMERS WHO ADOPT THEM?

Palavras-chave: High-energy non-GM soy meal; Natural soy oil; Niche soy oil; Non-genetically modified soybeans; Marketing; Agribusiness.

Ano: 2003

URL: http://purl.umn.edu/18685

Simulations are used to quantify the effects of making a futures market available on adopting farmer's behavior and welfare, and on market variables (e.g., spot prices). Explicitly modeled are aggregate market effects associated with futures' adoption by many farmers, and relevant constraints (e.g., credit restrictions) often faced by commodity producers.

Cointegration Analysis of Commodity Prices: Much Ado about the Wrong Thing?

Palavras-chave: Marketing.

Ano: 2002

URL: http://purl.umn.edu/19768

Mallory, Mindy L.; Lence, Sergio H..

This study highlights some problems with using the Johansen cointegration statistics on data containing a negative moving average (NMA) in the error term of the data generating process. We use a Monte Carlo experiment to demonstrate that the asymptotic distribution of the Johansen cointegration statistics is sensitive to the NMA parameters and that using the stated 5% critical values results in severe size distortion. In our experiment, using the asymptotic critical values resulted in empirical size of 76% in the worst case. To date a NMA in the error term was known to cause poor small sample performance of the Johansen cointegration statistics; however our study demonstrates that problems associated with a NMA in the error term do not improve as sample...

U.S. Farm Policy and the Variability of Commodity Prices and Farm Revenues

Palavras-chave: Cointegration; Johansen cointegration test; Moving average; Agricultural Finance; Financial Economics; C32; C15.

Ano: 2010

URL: http://purl.umn.edu/61721

A dynamic, three-commodity rational-expectations storage model is used to compare the impact of the Federal Agricultural Improvement and Reform (FAIR) Act of 1996 with a freemarket policy and with the agricultural policies that preceded the FAIR Act. Results support the hypothesis that the changes made when FAIR was enacted did not lead to permanent significant increases in the volatility of farm prices or revenues. An important finding is that the main economic impacts of the Pre-FAIR scenario, relative to the free-market regime were to transfer income to farmers and to substitute government storage for private storage in a way that did little to support prices or to stabilize farm incomes.

An Empirical Investigation of Farm Loan Determinants (PowerPoint)

Palavras-chave: FAIR Act; Farm prices; Free-market policy; Rational-expectations storage model; Revenue; Agricultural and Food Policy.

Ano: 2000

URL: http://purl.umn.edu/18371

Mishra, Ashok K.; Lence, Sergio H..

Tipo: Journal Article

Palavras-chave: Agricultural Finance.

Ano: 2008

URL: http://purl.umn.edu/48136

Response to an Asymmetric Demand for Attributes: An Application to the Market for Genetically Modified Crops

A framework is developed for examining the price and welfare effects of the introduction of genetically modified (GM) crops. In the short run, non-GM grain generally becomes another niche product. However, more profound market effects are observed under some reasonable parameterizations. In the long run, consumer and producer welfare are usually greater after the introduction of GM technology. Nevertheless, in all instances some consumers and some producers lose. When identity preservation is expensive and cost savings are relatively small, both producer and consumer welfare are lower after introducing GM technology. Interestingly, this outcome is obtained even though all agents are individually rational.

Collective Marketing Arrangements for Geographically Differentiated Agricultural Products: Welfare Impacts and Policy Implications

Palavras-chave: Asymmetric demand; Consumer response; Genetically modified (GM) crops; Market response; Non-GM crops; Price signals; Welfare analysis; Marketing; Research and Development/Tech Change/Emerging Technologies.

Ano: 2001

URL: http://purl.umn.edu/18699

Lence, Sergio H.; Marette, Stephan; Hayes, Dermot J.; Foster, William E..

This paper examines the incentive of atomistic agricultural producers within a specific geographical region to differentiate and collectively market products. We develop a model that allows us to analyze the market and welfare effects of the main types of real-world producer organizations, using it to derive economic insights regarding the circumstances under which these organizations will evolve, and describing implications of the results obtained in the context of an ongoing debate between the European Union and United States. As the anticipated fixed costs of development and marketing increase and the anticipated size of the market falls, it becomes essential to increase the ability of the producer organization to control supply in order to ensure the...

Palavras-chave: Agricultural products; Collective promotion; Geographic indications; Supply control; Quality; Marketing.

Ano: 2006

URL: http://purl.umn.edu/18704

FARMER-OWNED BRANDS?

Hayes, Dermot J.; Lence, Sergio H.; Stoppa, Andrea.

The paper lays out the economic arguments in favor of the establishment of farmer-owned brands in midwestern agriculture and presents four case studies based on successful efforts in this area in the United States and European Union. The case studies involve Parma Ham, Brunello di Montalcino wine, Vidalia onions, and a third-party verification organization. The studies show that these brands can be profitable for farmers and emphasize the importance of restricting the supply of any successful brand. One of the case studies shows that this type of supply control can conflict with antitrust regulations.

LAND ALLOCATION IN THE PRESENCE OF ESTIMATION RISK

Palavras-chave: Antitrust; Brands; Farm profitability; Farmer-owned brands; Origin control; Value-added agriculture; Marketing.

Ano: 2003

URL: http://purl.umn.edu/18287

OPTION PRICING ON RENEWABLE COMMODITY MARKETS

Estimation risk occurs when parameters relevant for decision making are uncertain. Bayes' criterion is consistent with expected-utility maximization in the presence of estimation risk. This article examines optimal (Bayes') land allocations and land allocations obtained using the traditional plug-in approach and two alternative decision rules. Bayes' allocations are much better economically than the other allocations when there are few sample observations relative to activities. Calculation of certainty equivalent returns (CERs) with estimation risk is also discussed and illustrated. CERs are typically (and incorrectly) calculated with the plug-in approach. Plug-in CERs may be extremely misleading.

Tipo: Journal Article

Palavras-chave: Land Economics/Use.

Ano: 1995

URL: http://purl.umn.edu/30929

The paper motivates and proposes a closed-form option-pricing model for markets such as grains or livestock where the price level can be expected to revert to expected production costs. The model suggests that traditional option pricing models will overprice long-term options on these markets.

Revenue Protection for Organic Producers: Too Much or Too Little

Palavras-chave: Marketing.

Ano: 2002

URL: http://purl.umn.edu/18457

Singerman, Ariel; Hart, Chad E.; Lence, Sergio H..

A framework is developed to examine organic crop insurance established by the Risk Management Agency (RMA). Given that RMA links organic and conventional crop prices, the model is calibrated to reflect both markets to illustrate the impacts that pricing has on insurance coverage. Findings indicate that at the 75% coverage level, RMA's fixed price factor implies an effective coverage ranging from 45% to 106% depending on the ratio of planting-time organic to conventional market prices. Results suggest RMA's program is likely to induce adverse selection, because the nominal coverage level is likely to substantially deviate from the effective coverage.

Tipo: Presentation

Palavras-chave: Crop insurance; Organic agriculture; Agricultural and Food Policy; Q18.

Ano: 2012

URL: http://purl.umn.edu/124370

Empirical Analysis of the Determinants of Marketing Contract Structures

Paulson, Nicholas D.; Katchova, Ani L.; Lence, Sergio H..

Initial draft replaced by updated/revised version. This is an electronic version of a journal article, please cite as: Paulson, N.D., A.L. Katchova, and S.H. Lence. “An Empirical Analysis of the Determinants of Marketing Contract Structures for Corn and Soybeans.” Journal of Agricultural and Food Industrial Organization 8(2010), 4: 1-23.

Does Duality Theory Hold in Practice? A Monte Carlo Analysis for U.S. Agriculture

Palavras-chave: Marketing.

Ano: 2008

URL: http://purl.umn.edu/6080

Rosas, Francisco; Lence, Sergio H..

The Neoclassical theory of production establishes a dual relationship between the profit value function of a competitive firm and its underlying production technology. This relationship, usually referred to as the duality theory, has been widely used in empirical work to estimate production parameters without the requirement of explicitly specifying the technology. We analyze the ability of this approach to recover the underlying production parameters and its effects on estimated elasticities and scale economies measurements, when data available for estimation features typical realistic problems. We design alternative scenarios and compute the data generating process by Monte Carlo simulations, so as to know the true technology parameters as well as to...

The Transformation of Spain's Pork Sector: Can it Continue?

Palavras-chave: Duality theory; Firm’s heterogeneity; Measurement error; Data aggregation; Omitted variables; Endogeneity; Uncertainty; Monte Carlo simulations.; Crop Production/Industries; Production Economics; Risk and Uncertainty; Q12; D22; D81.

Ano: 2011

URL: http://purl.umn.edu/103911