Mykel R. Taylor

Probabilistic Models of Yield, Price, and Revenue Risks for Fed Cattle Production

Cattle feeding enterprises operate amid variability originating in prices and production. This research explicitly models yield risks related to cattle feeding by relating the mean and variance of yield performance factors to observable conditioning variables. The results demonstrate that pen characteristics, such as entry weight, gender, placement season, and location influence the mean and variability of yield factors, defined as dry matter feed conversion, average daily gain, mortality, and animal health costs. Ex ante profit distributions, conditional on cattle placement characteristics, are derived through simulation methods to evaluate the effects of price or yield shocks on the distributional characteristics of expected profits.

Is it Good to Have Options? The 2014 Farm Bill Program Decisions

The 2014 Farm Bill continued the trend towards more risk management-based support for U.S. farmers. However, it also represents a major departure from previous legislation by introducing multiple program options among which producers had the ability to choose. While allowing producers to have choices creates flexibility, the design of the program required producers to consider potential outcomes for crop prices and production levels in future periods when making their decisions. Experience over the first two years of program implementation suggests that while programs are working as designed, not all producers are fully satisfied with their enrollment decisions. This will lead to proposals for further modification to programs, and to questions about whether program choice should be a component of the next Farm Bill.

A Cost Comparison of Organic and Conventional Apple Production in the State of Washington

Organic apple production expanded rapidly during the past decade due to strong demand, new technology, and price premiums, which suggests it is profitable for growers. No rigorous analysis of cost of production has been done to help project profitability in the face of continued increase in supply. The data presented here compare two methods of estimating cost of production and find that production of organic apples in Washington State, the leading producer, is approximately 5 to 10% more costly than conventional production on a per-acre basis. Introduction Organic apple production expanded rapidly during the past decade, reflecting increased consumer demand and new technology to control chronic pests and problems (3,5). Organic apple acres in the United States nearly doubled from 9,270 certified acres in 2000 to 17,626 acres in 2008 (9). As organic apples have moved from a niche product to a commodity, there is concern among growers and the industry about retaining a premium price that can help cover the perceived additional costs and reduced yields with organic production (4). The apple industry compiles detailed sales and price information for organic and conventional apples (e.g., Washington Growers Clearinghouse), but rigorous estimates of the cost of production are lacking. A question facing the apple industry is just how profitable organic production will be in the long run. What if price premiums shrink or disappear? Will organic production continue or will it revert to conventional production? Economic theory suggests that a price premium decline could result from an increased supply of organic apples through either expanded production acres or greater yields on existing acres. Price premiums attract more growers such that in the long run the supply of organic apples will reach a level where economic profits are driven to zero by declining prices. Table 1 displays projected prices for Washington organic apples based on increased sales volume (6). The price premium is estimated to drop to zero once organic apple sales reach 12% of total Washington sales volume. During the 2009-2010 marketing year, organic apples sales were 6% of total apple sales for Washington. The average price received that year for all apples was

Forecasting Kansas land values using net farm income

19.05 per 40 lb box (FOB) and

Noncash Income Transfers and Agricultural Land Values

24.89 per box for all organic apples. These prices and corresponding volumes are very close to the values predicted by O’Rourke. 29 April 2013 Crop Management Published June 13, 2014

Revealed Demand for Country-of-Origin Labeling of Meat in the United States

Purpose - With the decline of US net farm income from

Forecasting Crop Basis Using Historical Averages Supplemented with Current Market Information

123.8 billion in 2013 to

Hard White Wheat and Gold Medal Flour: General Mills' Contracting Program

71.5 billion forecasted for 2016, concern has developed regarding the future path of agricultural land values. The purpose of this paper is to examine the relationship between net farm income, cash rents and land values in the state of Kansas and provides insight regarding future land values. Design/methodology/approach - This study estimates partial adjustment models for cash rent and land values and uses those results to infer long-run capitalization rates and earnings multipliers. These models are used to forecast Kansas land values through 2018 and also the long-run price of farmland given 2016 expectations. Findings - Land adjusts to changes in Kansas net farm income slowly with a one-year elasticity of 6.7 percent. The long-run elasticity is 96.9 percent which is very close to the 100 percent suggested by the theoretical income capitalization model. The long-run multiplier for income in Kansas is 21.71 which implies a capitalization rate of 4.61 percent. The estimated results suggest that Kansas land values would peak in 2016 and begin to slowly decline. If market conditions were to remain the same, land values would ultimately decrease to

Preferences of locavores favoring community supported agriculture in the United States and France

1,171 per acre, a 28 percent decline from current levels. Originality/value - Declines of the magnitude in estimated land values could negatively affect the financial condition of the sector. Factors such as a change in the long-run capitalization rate or unexpected supply or demand shocks for agricultural commodities globally could certainly alter the long-term prospects. However, current expectations as of March 2016 suggest that farmers will face difficult conditions over the next few years.