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| Lai, Jing-Yi; Myers, Robert J.; Hanson, Steven D.. |
| Most previous research on post-harvest grain storage by farmers has assumed risk-neutral behavior and/or made restrictive assumptions about underlying price probability distributions. In this study, we solve the optimal on-farm storage problem for a risk-averse farmer under more general assumptions about underlying price distributions. The resulting model is applied to Michigan corn farmers and findings show, contrary to the "sell all or nothing" risk-neutral rule, risk-averse farmers will spread sales out over the storage season. As farmers become more risk averse, the optimal strategy is to sell more grain at harvest and spread sales over the storage season, even though this practice reduces expected return. This result is more consistent with observed... |
| Tipo: Journal Article |
Palavras-chave: Grain storage; Risk aversion; Stochastic dynamic programming; Agribusiness. |
| Ano: 2003 |
URL: http://purl.umn.edu/31063 |
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| Lai, Jing-Yi; Myers, Robert J.; Hanson, Steven D.. |
| Most previous research on post-harvest grain storage by farmers has assumed risk-neutral behavior and/or made restrictive assumptions about underlying price probability distributions. In this study we solve the optimal post-harvest storage problem for a risk averse farmer under more general assumptions about underlying price distributions. The resulting model is applied to Michigan corn farmers and results show that, contrary to the sell all-or-nothing risk-neutral rule, risk averse farmers will spread sales out over the storage season. The optimal pattern for sales by Michigan corn farmers is to sell approximately 50% of corn at harvest in November (a risk-reduction strategy) and approximately 40% in May (a return-enhancing strategy). |
| Tipo: Working or Discussion Paper |
Palavras-chave: Crop Production/Industries. |
| Ano: 2001 |
URL: http://purl.umn.edu/11739 |
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