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| Seo, Sangtaek; Mitchell, Paul D.; Leatham, David J.. |
| We develop a principal agent model to examine how the optimal contract between a farmer and an external equity investor is altered by the presence of crop insurance. The contract uses both fixed compensation and variable compensation varying with realized revenue to induce high farmer effort. All remaining surplus is divided between the farmer and investor. The optimal contract with crop insurance relies more on the variable compensation and less on the fixed compensation than when crop insurance is unavailable. This compensation scheme requires the investor to share more risk with the farmer to induce higher effort while still enticing the farmer’s participation in the contract. Empirical analysis finds that the variable compensation increase is not... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Agribusiness. |
| Ano: 2008 |
URL: http://purl.umn.edu/92204 |
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| Seo, Sangtaek; Mitchell, Paul D.; Leatham, David J.. |
| We analyze the effects of crop insurance and the Marketing Loan Program on optimal nitrogen use and acreage allocation for a case cotton-sorghum farm in Texas. A mathematical programming model is used to solve for the optimal nitrogen fertilizer rate, crop acreage allocation, coverage level, and price election factor, along with participation in the crop insurance and the Marketing Loan Program for both crops. Results show that depending on the crop and farmer risk aversion, these federal risk management programs increase or decrease optimal fertilizer rates-6% to 3%, increase optimal cotton acreage 94% to 144%, and decrease sorghum acres up to 50%. |
| Tipo: Journal Article |
Palavras-chave: Crop insurance; Extensive margin; Intensive margin; Loan deficiency payments; Revenue insurance; Q12; Q18. |
| Ano: 2005 |
URL: http://purl.umn.edu/43503 |
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| Seo, Sangtaek; Salin, Victoria; Mitchell, Paul D.; Leatham, David J.. |
| This study determines the entry and exit thresholds of table grape farming with irreversible investment under uncertainty. Real option approach is adopted to consider the investment and management flexibility. Also revenue insurance is introduced to consider the effect of the risk management programs on the entry and exit thresholds. Results show that revenue insurance increases the entry and exit thresholds by 1% and 4%, respectively, thus discouraging new investment and current farming, as long as the revenue guarantee is less than the exit threshold. Revenue insurance increases the entry threshold by 3% and decreases the exit threshold by 13% as long as the revenue guarantee is greater than the exit threshold. In this case, revenue insurance... |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Risk and Uncertainty. |
| Ano: 2004 |
URL: http://purl.umn.edu/20229 |
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| Seo, Sangtaek; Segarra, Eduardo; Mitchell, Paul D.; Leatham, David J.. |
| Water scarcity has been a significant issue for several decades in the Texas High Plains, with agriculture identified as the main activity contributing to this scarcity. To address this issue, much effort has been devoted to developing and encouraging adoption of sophisticated irrigation systems with high levels of water application efficiency, such as the low energy precision application (LEPA) system, subsurface drip irrigation (SDI), and variable rate irrigation (VRI). In this study, the economic feasibility of these irrigation systems is evaluated in cotton farming in the Texas High Plains using a real options approach. Results find that only the LEPA system is profitable under current conditions. The VRI system is profitable with high cotton... |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Resource /Energy Economics and Policy. |
| Ano: 2006 |
URL: http://purl.umn.edu/21427 |
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| Seo, Sangtaek; Mitchell, Paul D.; Leatham, David J.. |
| We analyze the effects of crop insurance and the Marketing Loan Program on optimal nitrogen use and acreage allocation for a case cotton-sorghum farm in Texas. A mathematical programming model is used to simulate the optimal nitrogen fertilizer rate, crop acreage allocation, coverage level, and price election factor, along with participation in the crop insurance (APH and CRC) and the Marketing Loan Program for both crops. Results show that current insurance programs increase the optimal fertilizer rate 1-3% and increase the optimal cotton acreage 16-129%. The Marketing Loan Program slightly changes optimal fertilizer rates and increases optimal cotton acreage an additional 1-9%. |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Agricultural and Food Policy; Risk and Uncertainty. |
| Ano: 2004 |
URL: http://purl.umn.edu/20160 |
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