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

Agri-food business: Global challenges – Innovative solutions

Hirschauer, Norbert.

Food risks may be caused by moral hazard, i.e. by opportunistic behaviour of upstream sellers who exploit the fact that many food product qualities remain uncertain to downstream buyers in the course of conventional market transactions (credence qualities). Due to this lack of market transparency buyers run the risk to pay premium prices for inferior products (quality risks); furthermore, they run the risk to use or consume substances which are harmful (health risks). Therefore, they will want to design optimal contracts and controls preventing opportunistic behaviour. Usually, however, buyers cannot contract contingent on the actions of upstream sellers because they cannot observe them directly (information asymmetry). Motivated by the obviously...

Tipo: Journal Article

Palavras-chave: Food risk; Information asymmetry; Moral hazard; Opportunistic behaviour; Prevention; Principal-agent-model; Traceability; Agribusiness; Farm Management; Research Methods/ Statistical Methods; Risk and Uncertainty.

Ano: 2004

URL: http://purl.umn.edu/97448

Swinnen, Johan F.M.; Vandemartele, Thijs; Hirschauer, Norbert; Gaetano, Martino; Nijhoff-Savvaki, Rannia; Trienekens, Jacques H.; Omta, S.W.F. (Onno); Bachev, Hrabrin Ianouchev; Bezat-Jarzębowska, Agnieszka; Jarzebowski, Sebastian; Paus, Marguerite; Singh, Dheeraj; Prahalad, V.C.; Wangshu, Lobsang; Bakucs, Lajos Zoltan; Ferto, Imre; Havas, Attila; Ehlers, Melf-Hinrich; Bojnec, Stefan; Ferto, Imre; Levkovych, Inna; Toth, Aniko; Forgacs, Csaba.

The rise of a western-style middle class in many successful emerging economies like China currently is inducing deep structural changes on agricultural world markets and within the global agri-food business. As a result of both higher incomes and concerns over product safety and quality the global demand for high-quality and safe food products is increasing significantly. In order to meet the new required quality, globally minimum quality standards are rising and private standards emerging. All over the world these developments cause adjustments at the enterprise, chain and market levels. At the same time, the tremendously increasing demand for renewable energy has led to the emergence of a highly promising market for biomass production. This has...

Tipo: Book

Palavras-chave: Agribusiness; Agricultural and Food Policy; Agricultural Finance; Community/Rural/Urban Development; Industrial Organization; Institutional and Behavioral Economics; International Development; Marketing; Political Economy.

Ano: 2008

URL: http://purl.umn.edu/92317

An Interdisciplinary Approach to White-collar Crime in the Food Sector

Hirschauer, Norbert; Musshoff, Oliver; Scheerer, Sebastian.

The probability that buyers are deceived with regard to the quality or safety of purchased products (moral hazard) increases with the profits which suppliers can earn through opportunistic behaviour. It decreases with the probability and level of losses that result from disclosure of malpractice. It also decreases with protective factors rooted in the suppliers' social contexts - such as values, emotional bonds etc. - that shield them from yielding to economic temptations. This paper describes how a systematic analysis of economic incentives and social context factors can be provided through an interdisciplinary approach which combines the analytical powers of microeconomics (game theory) and criminology (control theories). The approach is discussed with...

Bounded Recursive Stochastic Simulation - A Simple and Efficient Method for Pricing Complex American Type Options

Palavras-chave: Asymmetric information; Behavioural food risks; Control theories; Game theory; Moral hazard; Opportunistic malpractice; Agribusiness; Institutional and Behavioral Economics; A13; K32; K42.

Ano: 2006

URL: http://purl.umn.edu/25688

Musshoff, Oliver; Hirschauer, Norbert; Palmer, Ken.

This paper gives an overview of simulation based procedures, which have proved to be efficient in valuing American options and therefore real options. Many of them integrate sequential stochastic simulations in the backward recursive programming approach to determine the early-exercise frontier. They subsequently value the option by initiating a Monte-Carlo simulation from the valuation date of the option. It turns out that one approach (Grant et al., 1997) is especially simple. We are able to enhance its efficiency by stripping it of some time consuming but unnecessary simulation steps. Our simplified approach could be called "Bounded Recursive Stochastic Simulation".

Tipo: Working or Discussion Paper

Palavras-chave: Research Methods/ Statistical Methods.

Ano: 2002

URL: http://purl.umn.edu/18823

Die Berücksichtigung von Unsicherheit und Flexibilität in der Investitionsplanung – dargestellt am Beispiel einer Vertragsinvestition für Roggen

Hedging von Mengenrisiken in der Landwirtschaft – Wie teuer dürfen „ineffektive“ Wetterderivate sein?

Investment decisions are, as a rule, characterized by uncertainty, irreversibility and flexibility. Simple net present value calculations will not account for these features. In many situations even flexible investment planning with decision trees, which represents the most advanced method of traditional investment appraisal, does not have the capacity to solve practical decision problems adequately. One handicap is a realistic and manageable representation of stochastic variables. It has long been known that stochastic simulation procedures offer a nearly unlimited capacity to represent distributions and stochastic processes. However, a standard simulation will not allow for the consideration of flexibility. The problem is that with a simple forward...

Tipo: Journal Article

Palavras-chave: Investment; Uncertainty; Flexibility; Stochastic simulation; Dynamic programming; Sales contracts with fixed prices; Farm Management; Research Methods/ Statistical Methods; Risk and Uncertainty.

Ano: 2004

URL: http://purl.umn.edu/97437

Improved Program Planning Approaches Generates Large Benefits in High Risk Crop Farming

Since the mid-nineties, agricultural economists discuss the suitability of “weather derivatives” as hedging instruments for volumetric risks in agriculture. Contrary to traditional insurance contracts, the payoffs of such derivatives are linked to weather indices (e.g. accumulated rainfall or temperature over a certain period) that are measured objectively at a defined meteorological station. While weather derivatives thus circumvent the problem of moral hazard and adverse selection, weather derivative markets for the agricultural sector are still in their infancy all-over the world. Some economists attribute this to theoretical valuation problems and the lack of a pricing method which is accepted by all market participants. Others think that the low...

Tipo: Journal Article

Palavras-chave: Weather derivatives; Rainfall risk; Willingness-to-pay; Portfolio optimization; Hedging of volumetric risk; Farm Management; Financial Economics; Risk and Uncertainty.

Ano: 2008

URL: http://purl.umn.edu/97605

This paper examines whether there is room for the improvement of farm program decisions through the incorporation of mathematical optimization in the practical planning process. Probing the potential for improvement, we investigate the cases of four German cash crop farms over the last six years. The formal planning approach includes a systematic time series analysis of farmspecific single gross margins and a stochastic optimization model. In order to avoid solutions that simply exceed the farmer's risk tolerance, the apparently accepted variance of the observed program's total gross margin which represents an observable reflection of the individual farmer's risk attitude is used as an upper bound in the optimization. For each of the 24 planning...

Improved Program Planning Generates Large Benefits in High Risk Crop Farming – A Profitable Application of Time Series Models and Stochastic Optimization

Palavras-chave: Production program planning; Optimization; Uncertainty; Static distributions; Stochastic processes; Crop Production/Industries; C1; C61; M11; Q12.

Ano: 2007

URL: http://purl.umn.edu/10442

Agricultural production relies to a great extent on biological processes in natural environments. In addition to volatile prices, it is thus heavily exposed to risks caused by the variability of natural conditions such as rainfall, temperature and pests. With a view to the apparently lacking support of risky farm production program decisions through formal planning models, the objective of this paper is to examine whether, and eventually by how much, farmers’ “intuitive” program decisions can be improved through formal statistical analyses and stochastic optimization models. In this performance comparison, we use the results of the formal planning approach that are generated in a quasi ex-ante analysis as a normative benchmark for the empirically observed...

Investment planning under uncertainty and flexibility: the case of a purchasable sales contract

Palavras-chave: Stochastic optimization; Program planning; Time series analysis; Crop Production/Industries.

Ano: 2008

URL: http://purl.umn.edu/44174

Naive Deckungsbeitragsvergleiche führen bei Vorverträgen in die Irre - Lieferung von Industrierüben zur Bioethanolherstellung

Investment decisions are not only characterised by irreversibility and uncertainty but also by flexibility with regard to the timing of the investment. This paper describes how stochastic simulation can be successfully integrated into a backward recursive programming approach in the context of flexible investment planning. We apply this hybrid approach to a marketing question from primary production which can be viewed as an investment problem: should grain farmers purchase sales contracts which guarantee fixed product prices over the next 10 years? The model results support the conclusion from dynamic investment theory that it is essential to take simultaneously account of uncertainty and flexibility.

Tipo: Journal Article

Palavras-chave: Dynamic programming; Flexibility; Investment; Sales contract; Stochastic simulation; Uncertainty; Agricultural Finance; Risk and Uncertainty.

Ano: 2008

URL: http://purl.umn.edu/117741

Bislang ist wenig über das Verhalten von Landwirten bei Vertragsangeboten für die Lieferung nachwachsender Rohstoffe bekannt. In der vorliegenden Untersuchung wird deshalb die Akzeptanz von Landwirten für Industrierübenlieferverträge untersucht. Dabei zeigt sich, dass das Antwortverhalten der Landwirte nicht den Prognosen entspricht, die sich auf der Grundlage gängiger Deckungsbeitragsvergleiche ergeben. Zudem wird deutlich, dass die Nachbesserung eines Vertrags, die nach einem erfolglosen ersten Vertragsangebot vorgenommen wird, eine geringere Akzeptanz bewirkt als ein sofortiges höheres Vertragsangebot.Little is known about the actual behavior of farmers who are offered forward contracts for renewable resources. The present survey therefore investigates...

Optimierung unter Unsicherheit mit Hilfe stochastischer Simulation und Genetischer Algorithmen – dargestellt anhand der Optimierung des Produktionsprogramms eines Brandenburger Marktfruchtbetriebes

Palavras-chave: Vertragsdesign; Vertragsakzeptanz; Lieferverträge; Industrierüben; Contract design; Contract acceptance; Forward contracts; Sugar beet as a renewable resource; Agribusiness; Agricultural and Food Policy; Land Economics/Use.

Ano: 2011

URL: http://purl.umn.edu/114488

Reduction of Behavioural Food Risks: An Analysis of Economic Incentives and Social Context Factors in the German Poultry Chains

Optimization has been recognized as a powerful tool in teaching and research for a long time. In spite of its well known problem solving capacity, some methodological obstacles have persisted over the years. The main problem is that stochastic variables and their correlations cannot be adequately accounted for within traditional optimization procedures. In this paper, we develop a methodological mix of stochastic simulation and a heuristic optimization procedure which has become known as genetic algorithms. The simulation part of the mix allows for the consideration of complex information such as stochastic processes; the genetic algorithms-part ensures that the method remains manageable in terms of required time and resources. We demonstrate the decision...

Tipo: Journal Article

Palavras-chave: Optimization; Optimal production program; Stochastic simulation; Genetic algorithms; Uncertainty; Stochastic processes; Farm Management; Risk and Uncertainty.

Ano: 2004

URL: http://purl.umn.edu/97454

Zwoll, Stefan; Hirschauer, Norbert.

This paper describes an interdisciplinary research project carried out on behalf of the Federal Ministry of Consumer Protection, Food and Agriculture. The project combines the knowledge of food experts with decision-orientated approaches from microeconomics and the social sciences. It examines what it is that makes food business operators (from the feed industry to the retail trade) break (or not break) rules. Through the analysis of both economic incentives and social context factors, the project aims at contributing to an adequate design of prevention measures. Four offence-prone regulations identified in the course of the ongoing project are exemplarily examined with regard to the present incentive situation.

RISIKOMANAGEMENTINSTRUMENTE IM VERGLEICH: SOLLTE MAN LANDWIRTSCHAFTLICHE ERNTEVERSICHERUNGEN SUBVENTIONIEREN? – GUTE ALTE ARGUMENTE IN EINEM NEUEN STREIT

Palavras-chave: Asymmetric information; Moral hazard; Opportunistic malpractice; Poultry; Agribusiness; Food Consumption/Nutrition/Food Safety.

Ano: 2006

URL: http://purl.umn.edu/7730

Hirschauer, Norbert; Musshoff, Oliver.

Sowohl Ernteversicherungen als auch „Wetterderivate“ sind neuartige Risikomanagementinstrumente, die eine Absicherung gegen Schäden aus nichtkatastrophalen Wetterereignissen ermöglichen, in Deutschland aber bisher nicht verbreitet sind. Im vorliegenden Beitrag wird mit Hilfe eines gesamtbetrieblichen Risikoprogrammierungsansatzes untersucht, welchen Nutzen neuartige Hedginginstrumente für Landwirte haben. Das Besondere des verwendeten Ansatzes besteht darin, dass sowohl das betriebsspezifische Risikoreduzierungspotenzial des jeweiligen Instruments als auch die individuelle Risikoakzeptanz des Landwirts berücksichtigt wird. Seine exemplarische Anwendung auf einen nordostdeutschen Marktfruchtbetrieb zeigt, dass standardisierte Wetterderivate einen...

Sind landwirtschaftliche Unternehmer bei Zinssätzen zahlenblind? – Erste empirische Ergebnisse –

Palavras-chave: Risikomanagement; Ernteversicherungen; Wetterderivate; Zahlungsbereitschaftsanalyse; Production Economics; Productivity Analysis; Risk and Uncertainty.

Ano: 2008

URL: http://purl.umn.edu/52657

Musshoff, Oliver; Hirschauer, Norbert; Wassmuss, Harm.

Landwirte wechseln oft nicht von ihrer Hausbank zu einer anderen Bank, auch wenn diese bessere Konditionen bietet. Diese „Wechselträgheit“ kann zum einen in den Transaktionskosten des Wechsels begründet sein. Zum anderen kann sie aber auch das Ergebnis begrenzt rationalen Entscheidungsverhaltens sein. Die Analyse der Befragungsergebnisse einer Gruppe norddeutscher Landwirte zeigt, dass diese tatsächlich begrenzt rational sind. Sie unterschätzen den geldwerten Nachteil, der ihnen durch höhere Darlehenszinsen der Hausbank entsteht. Anders ausgedrückt: Sie wechseln nicht die Bank, auch wenn die von ihnen subjektiv wahrgenommenen Wechselkosten schon längst durch den geringeren Effektivzins eines Alternativangebotes „gedeckt“ sind. Damit lässt sich...

Sophisticated Program Planning Approaches Generate Large Benefits in High Risk Crop Farming

Palavras-chave: Finanzierungsverhalten; Begrenzte Rationalität; Wechselkosten; Agricultural Finance.

Ano: 2009

URL: http://purl.umn.edu/53256

The Role of Bounded Rationality in Farm Financing Decisions – First Empirical Evidence –

Palavras-chave: Stochastic optimization; Stochastic processes; Production risk; Program planning; Time series analysis; C1; C61; M11; Q12.

Ano: 2008

URL: http://purl.umn.edu/36865

Musshoff, Oliver; Hirschauer, Norbert; Wassmuss, Harm.

Farmers do not often change from their house bank to another bank, even if the competing banks offer better conditions. This “reluctance to switch” can be explained, on the one hand, by the transaction costs resulting from such a change of business relation. On the other hand, it may be the result of bounded rationality. The results of a survey of North German farmers show that they are indeed bounded rational borrowers. They greatly underestimate the monetary disadvantages which are caused by the higher interest rates for loans from their house bank. In other words: They do not switch bank even if their individually perceived transaction costs are already “covered” by the lower interest rates of the alternative loan offer.

Trust and the Profitability of Rule-Breaking in Grain Production

Palavras-chave: Financing behavior; Bounded rationality; Switching costs; Agricultural Finance; Farm Management; Financial Economics; Institutional and Behavioral Economics; Q12; G32; C91.

Ano: 2009

URL: http://purl.umn.edu/51545

Hirschauer, Norbert; Musshoff, Oliver.

Malpractice in food production entails unacceptable procedures and undesirable product qualities and other negative material outcomes. Despite their physical implications, behavioural sources of risk have become known as moral hazards. The probability of malpractice increases with attached profits. It decreases with the probability of disclosure and resulting losses. It also decreases with social values, emotional bonds etc. which prevent food producers from yielding to economic temptations. Trust can be generated both by reducing the profitability of malpractice and by enhancing social trust factors. Referring to Hennessy et al. (2003), who conclude that misdirected incentives are a major source of food risk, we focus on the former and analyse the...

Understanding and Managing Behavioural Risks -The Case of Food Risks Caused by Malpractice in Poultry Production

Palavras-chave: Behavioural risk; Moral hazard; Incentive-compatibility; Trust; Crop Production/Industries.

Ano: 2006

URL: http://purl.umn.edu/7754

Hirschauer, Norbert; Zwoll, Stefan.

The probability that actors in economic relationships break rules increases with the profits they thus expect to earn. It decreases with the probability and level of short- and long-term losses resulting from disclosure. It also decreases with the level of social context factors and intrinsic values which shield actors from yielding to economic temptations. This paper assesses the relative merits of various scientific approaches concerned with risks in economic relationships and outlines their contribution to the study of opportunistic rule-breaking. Since the identification of (misdirected) economic incentives faced by firms and individuals represents the starting point for a systematic analysis of opportunism in any field, we also outline a microeconomic...

Tipo: Working or Discussion Paper

Palavras-chave: Asymmetric information; Control theories; Economic misconduct; Game theory; Moral hazard; Principal-agent model; Opportunism; Protective factors; Relational risks; Food Consumption/Nutrition/Food Safety; A13; K32; K42.

Ano: 2006

URL: http://purl.umn.edu/10287

Wie viel bringt eine verbesserte Produktionsprogrammplanung auf der Grundlage einer systematischen Auswertung empirischer Zeitreihen? – Die Bedeutung von Prognosemodellen bei der Optimierung unter Unsicherheit