Hikaru Hanawa Peterson

Wheat Variety Selection to Maximize Returns and Minimize Risk: An Application of Portfolio Theory

This research shows that a portfolio of wheat varieties could enhance profitability and reduce risk over the selection of a single variety for Kansas wheat producers. Many Kansas wheat farmers select varieties solely based on published average yields. This study uses portfolio theory from business investment analysis to find the optimal, yield-maximizing and risk-minimizing combination of wheat varieties in Kansas.

Is Expected Utility Theory Applicable? A Revealed Preference Test

We proffer a method to assess the adequacy of expected utility theory (EUT) in empirical studies involving discrete and continuous choices. The method calibrates a utility function to revealed choices and rejects EUT for absurd degrees of implied concavity over the wealth at risk. We find EUT rejections in cases where risk-averse choices are made between gambles with similar stakes, regardless of their absolute sizes. EUT is shown to be applicable only when expected payoffs of gambles are similar, or when more than half of wealth is at risk. We illustrate our method with an application to agricultural production.

On the Measurement of Food Waste

According to the Food and Agriculture Organization of the United Nations, one-quarter to one-third of all the food produced worldwide is wasted. We develop a simple framework to systematically think about food waste based on the life cycle of a typical food item. Based on our framework, we identify problems with extant measures of food waste and propose a more consistent and practical approach. In so doing, we first show that the widely cited, extant measures of the quantity and value of food waste are inconsistent with one another and overstate the problem of food waste. By misdirecting and misallocating some of the resources that are currently put into food waste reduction efforts, this overstatement of the problem could have severe consequences for public policy. Our framework then allows documenting the points of intervention for policies aimed at reducing the extent of food waste in the life cycle of food and the identification of interdependencies between potential policy levers.

The Motivation for Organic Grain Farming in the United States: Profits, Lifestyle, or the Environment?

The objective of this research is to identify and quantify the motivations for organic grain farming in the United States. Survey data of US organic grain producers were used in regression models to find the statistical determinants of three motivations for organic grain production, including profit maximization, environmental stewardship, and an organic lifestyle. Results provide evidence that many organic grain producers had more than a single motivation and that younger farmers are more likely to be motivated by environmental and lifestyle goals than older farmers. Organic grain producers exhibited a diversity of motivations, including profit and stewardship.

Quality Perceptions and Willingness-to-Pay for Imported Rice in Japan

Attitudes of Japanese consumers toward domestic and foreign varieties of rice were analyzed on the basis of a survey. We found that the current retail prices for imported rice are higher than the average consumers’ willingness-to-pay (WTP), whereas most domestic rice was priced below the average WTP. Unfamiliarity or negative perceptions of the safety and flavor of foreign rice lowered WTP substantially. The WTP for U.S. rice was limited more by negative perceptions of flavor than from concerns about food safety.

Consumer Preferences for Sustainable Wool Products in the United States

Leading wool suppliers such as Australia began marketing organic wool to counter a decades-long decline in the world wool market. Given the challenge of adopting certified organic practices for wool production in certain parts of the world including the United States, consumer demand for organic wool products relative to alternative production attributes is assessed to explore the feasibility of certifying these attributes. An Internet survey found that most US consumers preferred wool to acrylic; distinguished wool products by origin; valued organic certification less than combined environmental sustainability and animal welfare claims; and lowered their valuation for wool products in response to the information provided on wool attributes.

A Simple Test of Oligopsony Behavior with an Application to Rice Milling

While the development of empirical models of seller conduct abound, arguably less attention has been paid to the development of empirical models of buyer conduct. This is especially problematic in studies of food and agricultural industries where high buyer concentration along the supply chain is the norm. The purpose of this paper is to provide one more tool in the toolkit of econometric estimation of oligopsony behavior, in particular for those cases where researchers may have rather limited data sets. We derive a set of equations to estimate buyer market power with fewer equations and less formal functional specifications than are typically used in such studies. We apply the model to the U.S. rice industry finding a degree of oligopsony behavior consistent with that found in studies of other agricultural markets.

Alfalfa Hay Quality and Alternative Pricing Systems

Price-quality relationships for alfalfa hay were analyzed by hedonic pricing models using 1996-2001 Wisconsin auction data. Individual nutrients included in the analysis all affected alfalfa price, with acid detergent fiber accounting for the largest impact. Alternative pricing models, based on an aggregate quality index or detailed quality information, were similar in their ability to predict price. However, disaggregating price predictions to account for differences in relative feed value (RFV) and crude protein (CP) indicate that both RFV and CP are important determinants of price and that aggregating the two into a quality index is not warranted.

Risks Perceived by Organic Grain Farmers in the Central USA

ABSTRACT To understand risk issues of U.S. organic grain farmers, six listening sessions were conducted in parts of the major grain producing regions in spring 2004. The views expressed at these sessions suggested the importance and uniqueness of risks in organic grain farming. Regional differences were observed, but many problems were common, including the limited availability of market information, shortfall of crop insurance policies, and revenue losses from on-farm storage, emergent marketing channels, and potential contamination. Our findings clearly imply a role for public and private institutions to collect and offer information on the organic markets and to educate the sectors supporting organic producers.

Marketing with More: An In-depth Look at Relationship Marketing with New Media in the Green Industry

Garden-center businesses have unique challenges related to the marketing of products. New and social media offer a way for garden-center operators to connect with customers and market products online in an effort to compete with box stores. The purpose of this qualitative case study was to explore how some garden-center businesses use social media and email marketing to build relationships with customers. Findings from eight in-depth interviews indicate garden-center stakeholders believe they are practicing relationship marketing through their e-newsletter and Facebook accounts. However, strategic planning is limited to an e-newsletter, marketing efforts show characteristics of one-way communication, and strategic measurement is absent. Lack of measurement could hinder the formation of profitable relationships. Owners, employees, and customers place high importance on educational content shared via social networks, but view advertising through new media differently. It is recommended garden-center owners and employees implement relationship-marketing techniques based on strategic measurement and planning to produce loyal brand advocates.