Jeffery R. Williams

Modeling Farm-Level Crop Insurance Demand with Panel Data

A random-effects, binomial probit model is applied to data for a panel of Kansas wheat farms to examine Multiple Peril Crop Insurance demand. A theoretical model is developed which suggests inclusion of the moments of both market return and the return to insurance. Empirical results indicate that the first and second moments of both market return and the returns to insurance are significant. The price elasticity of demand is estimated to be −0.65. Preseason weather variables when included in the models were not found to be significant, failing to support the hypothesis of intertemporal adverse selection. Copyright 1996, Oxford University Press.

An Expected-Indemnity Approach to the Measurement of Moral Hazard in Crop Insurance

A definition of moral hazard in multiple peril crop insurance is proposed that focuses on expected indemnities rather than input use. Five years of production and insurance data for a panel of Kansas wheat farms is used to empirically test for this type of moral hazard. Results suggest that moral hazard affects multiple peril crop insurance indemnities in poor production years but that no significant moral hazard occurs in years when growing conditions are favorable. Copyright 1997, Oxford University Press.

Nonparametric analysis of technical, pure technical, and scale efficiencies for food crop production in East Java, Indonesia

Non parametric analysis of technical efficiency for irrigated farms in the Madiun regency in the west-central part of East Java, Indonesia is conducted using linear programming techniques. This procedure allows the relative technical efficiency for each farm to be determined and for inefficiencies to be decomposed into pure technical inefficiency and scale inefficiency and does not require restrictions or assumptions regarding functional form to be placed on the data. Farmers in Madiun generally are efficient relative to each other. Farmers operating inefficiently do so more often because of scale inefficiencies rather than pure technical inefficiencies. A rna jority of the farms operate in the region of decreasing returns to scale rather than increasing returns to scale. Farmer age, the level of diversification of cropping activities, and high school education were found to be related to technical efficiency in the rainy season under irrigated conditions. Other socioeconomic factors were not statistically significant. The results imply that inefficient farms use excessive levels of inputs, particularly nitrogen fertilizer. This is perhaps due to the lingering effects of past input subsidization policies, particularly of fertilizers, in Indonesia, or to risk-reducing behavior. The results also imply that current government policies to encourage diversification of cropping practices in Java may lead to greater technical inefficiencies in production. In addition, extension education targeted to younger farmers with low levels of formal education would improve efficiency.

A Stochastic Dominance Analysis of Tillage and Crop Insurance Practices in a Semiarid Region

Stochastic dominance analysis for tillage systems in the semiarid conditions of the central Great Plains indicates that risk-averse managers would prefer conservation tillage systems for wheat and grain sorghum with and without the use of crop insurance instead of the traditional conventional dryland wheat-fallow cropping system. Higher yields in conjunction with reduced fuel, labor, and repair costs more than offset increased chemical costs of the conservation systems. Increased yields generally are attributed to the soil moisture conservation characteristic of the conservation tillage systems.

Risk Analysis of Tillage Alternatives with Government Programs

Stochastic dominance analysis of two tillage systems, conventional tillage and no-tillage, for five crop rotations, wheat-fallow, grain sorghum-fallow, continuous wheat, continuous grain sorghum, and wheat-grain sorghum-fallow, shows that risk-averse managers prefer a conventional tillage wheat-sorghum-fallow system. Small changes in production costs or yields lead to indifference between this system and the no-tillage wheat-sorghum-fallow and no-till and conventional wheat-fallow systems. Participation in the basic government commodity program generally increases average net returns and lowers variation of returns. Government commodity program payments calculated under a variety of scenarios do not generally encourage the use of no-till practices for grain sorghum and wheat in the central Great Plains.

Crop Insurance and Disaster Assistance Designs for Wheat and Grain Sorghum

This study compares the effectiveness of two crop insurance and two disaster assistance program designs used in conjunction with a government commodity program and a linked crop insurance/government commodity program design. Stochastic dominance analysis of farm-level net return distributions is used to select the preferred design(s). The results indicate that the disaster assistance programs are preferred over the alternatives. The results also suggest that individual crop insurance is preferred to area crop insurance. A subsidy is required for risk-averse managers to prefer area crop insurance to individual crop insurance.

Farmers’ Willingness to Produce Alternative Cellulosic Biofuel Feedstocks Under Contract in Kansas Using Stated Choice Experiments

Many studies have assessed the technical feasibility of producing bioenergy crops on agricultural lands. However, while it is possible to produce large quantities of agricultural biomass for bioenergy from lignocellulosic feedstocks, very few of these studies have assessed farmers’ willingness to produce these crops under different contracting arrangements. The purpose of this paper is to examine farmers’ willingness to produce alternative cellulosic biofuel feedstocks under different contractual, market, and harvesting arrangements. This is accomplished by using enumerated field surveys in Kansas with stated choice experiments eliciting farmers’ willingness to produce corn stover, sweet sorghum, and switchgrass under different contractual conditions. Using a random utility framework to model the farmers’ decisions, the paper examines the contractual attributes that will most likely increase the likelihood of feedstock enterprise adoption. Results indicate that net returns above the next best alternative use of the land, contract length, cost share, financial incentives, insurance, and custom harvest options are all important contract attributes. Farmers’ willingness to adopt and their willingness-to-pay for alternative contract attributes vary by region and choice of feedstock.

An Economic Comparison of Conventional and Alternative Cropping Systems for a Representative Northeast Kansas Farm

The 1990 Food, Agriculture, Conservation, and Trade Act (FACTA) prescribes a vigorous agenda for environmentally-compatible farmingsystems research. This type of system has been labeled alternative agriculture and can be defined as a system of food production that includes a plan for profitable production with concern for reduction in off-farm inputs; use of natural or biological processes; and improved management and conservation of soil, water, and other biological resources (National Research Council). Alternative agriculture studies are important to producers who are developing production plans that must meet the increasing demands of agricultural and environmental soil conservation policies, water quality legislation, and uncertainty in the marketplace. Studies in Nebraska and South Dakota

PER UNIT COSTS TO OWN AND OPERATE FARM MACHINERY

With increasingly thin margins and new technologies, it is important that farm managers know their cost of field operations on a per unit basis (e.g., acre, ton, bale). Accurate per unit costs give confidence when constructing enterprise budgets and evaluating new technologies, such as no-till. Custom rates are often used as a proxy for per unit costs; however, this research, using entropy and jackknife estimation procedures, found that custom rates understate total ownership and operating costs by approximately 25% for an average Kansas farm. Estimates from these models are then used to benchmark actual costs against expected cost.

Risk Analysis of Tillage and Crop Rotation Alternatives with Winter Wheat

The economic feasibility of soybeans, grain sorghum, and corn in annual rotation with winter wheat using reduced tillage and no-tillage systems in the Central Great Plains was evaluated, with continuous wheat and grain sorghum also analyzed. Net returns were calculated using simulated yield and price distributions based on historical yields, two historical annual price series, and 2011 costs. Stochastic Efficiency with Respect to a Function was used to determine the preferred strategies under various risk preferences. The no-till wheat-soybean and reduced-till wheatsoybean systems are the first and second most preferred, regardless of the level of risk aversion.