Kenneth H. Burdine

Livestock Gross Margin-Dairy Insurance: An Assessment of Risk Management and Potential Supply Impacts

Public risk management policies for dairy producers have the potential to induce expansion in milk supplies, which might lower farm-level prices and offset risk-reduction benefits. An evaluation of USDA’s Livestock Gross Margin-Dairy (LGM-Dairy) insurance program finds economic downside risk significantly reduced, with potential to induce modest supply expansion (0 to 3 percent) if widely adopted. Supply impacts are likely limited due to relatively low participation levels and a minimal (“inelastic”) supply response to risk. LGM-Dairy is more flexible and convenient than other risk management tools, such as hedging directly in futures or options markets, especially for small farms.

Livestock Gross Margin-Dairy: An Assessment of Its Effectiveness as a Risk Management Tool and Its Potential to Induce Supply Expansion

An evaluation of the risk-reducing effectiveness of the Livestock Gross Margin–Dairy (LGM-Dairy) insurance program, using historical futures price data, predicts economically significant reductions in downside margin risk (24–41%) across multiple regions. Supply analysis based on the estimated risk reduction shows a small supply response, assuming minimal subsidization. A decomposition of the simulated indemnities into milk price and feed price components shows comovements in futures prices moderating the frequency and levels of indemnities.

Changing market dynamics and value-added premiums in southeastern feeder cattle markets

ABSTRACT The southeast region from Kentucky and Virginia south to Florida is home to more than 5 million beef cows, representing a significant source of farm income. Because very little feedlot capacity exists in the region, feeder cattle sales represent the majority of beef cattle receipts. This work examined numerous factors that affect feeder cattle prices including the effect of changes in corn price, the dynamics of BW uncertainty in video auctions, and price premiums associated with age and source verification and cattle selling certified natural. Sale data from Internet sales and preconditioned feeder cattle sales were made available by a large cattle marketing firm in the region from 2008 to 2011. A hedonic model was used to examine the effect of cattle characteristics and market factors on the selling price of feeder cattle. Evidence was found that corn price negatively affected feeder cattle prices, but the magnitude was found to be smaller than in previous research. Premiums for age and source verification were found to be moderate at

Market Potential for Locally Produced Meat Products

15.00 per animal, which was largely consistent with estimates from other regions of the United States. Premiums for cattle selling certified natural were estimated to be around

Understanding the Market for Holstein Steers

17.00 per animal. Finally, in contrast to previous research, results suggest that market incentives with respect to existing price–BW relationships have changed such that incentives to underestimate BW in video auctions may not have existed during this time period.