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

Roucan-Kane, Maud; Boehlje, Michael; Gray, Allan W.; Akridge, Jay T..

The objective of this paper is to present the teaching note of a case study. The case study outlines the strategic issues facing Excel Cooperative as a result of the rapid expansion of biofuel production capacity in the Midwestern U.S. Excel Cooperative is a mid-sized, ‘local’, farmer-owned cooperative serving farmers in north central Indiana. Excel is composed of four divisions: agronomy, energy, grain, and feed/livestock. With the Excel case, the reader must think strategically about the broad impacts of the biofuel “boom”, apply strategic management tools and decision-making under uncertainty concepts to better understand the impacts, and frame a response. The methodology proposed in the teaching note is composed of a SWOT analysis, scorecarding and...

TOOLS AND ANALYTICAL FRAMEWORK TO MAKE DECISIONS IN TURBULENT TIMES

Palavras-chave: Uncertainty; Risk; Heat mapping; Scorecarding; Scenario analysis; Payoff matrix; Decision tree; Real option; Traps; Agribusiness; D81.

Ano: 2009

URL: http://purl.umn.edu/53584

Roucan-Kane, Maud; Boehlje, Michael; Gray, Allan W.; Akridge, Jay T..

The dramatic changes occurring throughout the agriculture industry are creating an increasingly turbulent business climate for the sector. The objective of this paper is to present a methodology to understand, assess, evaluate, and manage uncertainty. Five methods are discussed: scenario analysis, scorecarding and heat mapping, payoff matrix, decision tree, and options portfolio mapping. Scenario analysis can help identify the alternative futures that may unfold. Scorecarding and heat mapping assessment tools can be used to assess and map the uncertainties, and decide which uncertainties the company should capitalize on and which projects could be pursued to exploit those uncertainties. Payoff matrices and decision trees (using real option valuation)...

The Planting Real Option in Cash Rent Valuation

Palavras-chave: Uncertainty; Risk; Heat mapping; Scorecarding; Scenario analysis; Payoff matrix; Decision tree; Real option; Traps; Agribusiness; D81.

Ano: 2009

URL: http://purl.umn.edu/55465

Du, Xiaodong; Hennessy, David A..

After entering into farmland rental contracts in the fall, a tenant farmer has the planting flexibility to choose between corn and soybeans. Failure to account for this switching option will bias estimates of what farmers should pay to rent land. Applying contingent claims analysis methods, this study explicitly derives the real option value function. Comparative statics with respect to the volatilities of underlying state variables and their correlations are derived and discussed. Dynamic hedging deltas in this real option context are also developed. Monte Carlo simulation results show that the average cash rent valuation for the real option approach is 11% higher than that for the conventional net present value (NPV) method. The simulated dynamic hedging...

Strategic Decision Making Under Uncertainty: Innovation and New Technology Introduction during Volatile Times1

Palavras-chave: Cash rent; Delta hedging; Monte Carlo simulation; Multivariate GARCH; Real option; Ricardian rent; Farm Management; Research Methods/ Statistical Methods.

Ano: 2008

URL: http://purl.umn.edu/6307

Boehlje, Michael; Roucan-Kane, Maud.

www.ifama.org

Tipo: Journal Article

Palavras-chave: Deere and Company; Uncertainty; Real option; Organizational structure; Option; Risk; Innovation; Industrial Organization; Risk and Uncertainty; Q1.

Ano: 2009

URL: http://purl.umn.edu/92576

ON THE DEMAND FOR A STATE-CONTINGENT, COST-SAVING SEED TRAIT

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

Biotechnology has enriched the strategy set available to crop managers. Suppose a manager faces a decision between applying a pre-emergence pesticide or applying nothing at all. The advent of pesticide tolerance traits in plants admits the possibility of a state-contingent post-emergence application of pesticide. The innovation adds value in large part because it provides the manager with the option to wait for more information. For heterogeneous acre types, the determinants of trait royalties and of crop management strategies in equilibrium are studied. Pest resistance traits have different implications for crop management. Whereas a tolerance trait likely complements information technologies, the addition of a resistance trait may substitute for them.

Assisting Whole-Farm Decision-Making Through Stochastic Budgeting

Palavras-chave: Genetic trait; Information inputs; Patent value; Real option; Crop Production/Industries.

Ano: 2002

URL: http://purl.umn.edu/18515

Lien, Gudbrand D..

Stochastic budgeting is used to simulate the business and financial risk and the performance over a six-year planning horizon on a Norwegian dairy farm. A major difficulty with stochastic whole-farm budgeting lies in identifying and measuring dependency relationships between stochastic variables. Some methods to account for these stochastic dependencies are illustrated. The financial feasibility of different investment and management strategies is evaluated. In contrast with earlier studies with stochastic farm budgeting, the option aspect is included in the analysis.

The analysis of irreversibility, uncertainty and dynamic technical inefficiency on the investment decision in Spanish olive sector

Palavras-chave: Decision analysis; Whole-farm stochastic budgeting; Monte Carlo simulation; Real option; Farm Management.

Ano: 2002

URL: http://purl.umn.edu/24903

Lambarraa, Fatima; Stefanou, Spiro E.; Gil, Jose Maria.

The purpose of this paper is the evaluation of the investment decision under uncertainty and irreversibility allowing for long run inefficiency. The analysis has been applied to a 158 Spanish olive farms using FADN data set. A real option approach has been used to analyse the decision to invest under uncertainty and irreversibility, and a dynamic stochastic frontier model has been developed to estimate the long run technical efficiency and it persistence. The results show that the technical inefficiency persistence parameter is fairly low to unity, which means that small technical inefficiency is transmitted to the next time period. The olive groves investment is irreversible and characterized by uncertainty on price and discount rate. An increase of...

Introducing a Genetically Modified Banana in Uganda: Social Benefits, Costs, and Consumer Perceptions

Palavras-chave: Olive; Dynamic efficiency; Real option; Production Economics; Q12.

Ano: 2009

URL: http://purl.umn.edu/51397

Kikulwe, Enoch M.; Wesseler, Justus; Falck-Zepeda, Jose Benjamin.

Banana is a staple crop consumed by Ugandan households. The Uganda National Agricultural Research Organization has implemented conventional and biotechnology programs that seek improving bananas and address the crop’s most important pest and disease problems. A major thrust is the development of genetically modified (GM) bananas. The purpose of this paper is to examine potential social welfare impacts of adopting a GM banana in Uganda. The study has three objectives. First, suggest and apply an approach to calculate reversible and irreversible benefits and costs of introducing a GM banana. The study applies a real option approach to estimate, ex ante, the maximum incremental social tolerable irreversible costs (MISTICs) that would justify immediate...

New Precision Agriculture Technology Adoption for Dealers under Imperfect Market

Palavras-chave: GM banana; Real option; Choice experiment; Biosafety; MISTICs; Uganda; Crop Production/Industries; Research and Development/Tech Change/Emerging Technologies.

Ano: 2008

URL: http://purl.umn.edu/42323

Jia, Haili.

Replaced with revised version of paper 02/23/07.

State-Contingent Demand for Herbicide-Tolerance Seed Trait

Palavras-chave: Precision agriculture; Real option; Demand uncertainty; New technique uncertainty; Noise; Research and Development/Tech Change/Emerging Technologies.

Ano: 2007

URL: http://purl.umn.edu/34951

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

Irreversibility, Uncertainty and the Adoption of Transgenic Crops: the Case of BT-Maize in France

Scatasta, Sara; Wesseler, Justus; Demont, Matty.

This study applies a real option approach to quantify, ex-ante, the maximum incremental social tolerable irreversible costs that would justify immediate adoption of Bt maize in France. Based on field trials, we find that incremental private reversible benefits in the agricultural sector are -18 million euro yearly for maize for animal feed and 1 million euro yearly for maize for human consumption. Incremental social irreversible benefits from reduced insecticide use are negligible. The maximum incremental social tolerable irreversible costs are -28 million euro yearly for maize for animal feed and 0.4 million Euro yearly for maize for human consumption.