Oscar R. Burt

Econometric Modeling of the Capitalization Formula for Farmland Prices

An econometric model is formulated to explain the dynamic behavior in farmland prices. A second-order rational distributed lag on net crop-share rents received by landlords captures the dynamic movements of prices and performs well in conditional post-sample forecasts. The adjustment path of land prices in response to a perturbation in rents is a protracted dampened cycle. The implicitly estimated tax-free capitalization rate on rent associated with equilibrium land price is 4.0%. Neither the expected rate of inflation nor an exponential trend on rent expectations has a significant effect on land prices.

Farm Level Economics of Soil Conservation in the Palouse Area of the Northwest

Control theory is applied to the farm level economics of soil conservation in a model which uses depth of topsoil and percentage of organic matter therein as the two state variables. An approximately optimal decision rule was tested against the optimal rule and found to be excellent; errors in the decision rule were less than one percent within the region in state space of practical consideration. Results suggest that intensive wheat production under modem farming practices and heavy fertilization is the most economic cropping system in both the short and long run in the Palouse Area except under low wheat prices.

An Econometric Model of Cattle Inventories

Dynamic regression equations are estimated for each beef cattle breeding herd and beef cattle inventories at two levels of aggregation, the U.S. and Montana. The analysis for Montana was utilized as a guide for specification of the national equation to reduce the inference problem associated with letting the sample data help specify the model. Rational lags on average price received by farmers for calves and the ratio of fed beef to corn prices at Omaha constitute the primary explanatory variables. The equations perform exceedingly well over the sample period (1950–80) and in post-sample forecasts with the sample truncated back to 1970.

Economic Analysis of Irrigation in Subhumid Climate

An economic model is developed for analysis of investments in irrigation. The model encompasses the associated problem of temporal allocation of limited irrigation water within the growing season of a single crop. The problem is placed in the framework of stochastic dynamic programming, and it is shown how the algebraic form of the production function for the crop determines the appropriate state variables of the decision process. An application of the model is made to conditions prevalent in Central Missouri with com the irrigated crop.

Near-Optimal Management Strategies for Controlling Wild Oats in Spring Wheat

Near-optimal multiperiod decision rules for controlling wild oats in spring wheat in north central Montana are presented in this paper. Decision alternatives are fallow, use of a preemergent or postemergent herbicide, and crop without use of a herbicide. The near-optimal decision rules, which were obtained from a partially decomposed stochastic dynamic programming model, depend on density of wild oats seed in the plow layer, whether the land was previously cropped or fallow, soil moisture level, price of spring wheat, and post-planting density of wild oats.

Natural Resource Management, the Steady State, and Approximately Optimal Decision Rules

A dynamic optimatization model incorporating interrelationships among soil loss, topsoil depth, net farm income, and technological progress is developed. The model provides optimal values of soil loss and soil depth which maximize the stream of net farm ...

An Economic Evaluation of Nitrogen Fertilization of Grasses When Carry-over is Significant

An economic model is developed to determine optimal nitrogen fertilization policies for seeded grasses in semiarid regions where nitrogen carry-over is significant. The problem is cast in the framework of stochastic dynamic programming and an application of the model is made at two sites in the Nothern Great Plains. A new statistical method was used to estimate carry-over nitrogen and the forage yield-response function simultaneously. Nitrogen carry-over was estimated implicitly through yield response without direct measurements of nitrogen.

Optimal Policies for Marketing Cull Beef Cows

Feeding and marketing strategies for cull beef cows were analyzed by formulating a stochastic dynamic programming model which allowed simultaneous determination of optimal selling time and feeding levels until sale. The state variables were cow weight and monthly price; the latter was estimated statistically as a first-order autoregressive process with parameters changing monthly. Results for Montana cow prices at Billings suggested substantial gains to feeding healthy cows through the winter instead of immediate sale after fall culling.

Optimal Stochastic Control of U.S. Wheat Stocks and Exports

A stochastic dynamic programming model was developed to estimate optimal strategies for U.S. wheat reserves policy using the results of an econometric model which reflects the complex dynamics of supply response. Empirical results indicated that U.S. producers are the beneficiaries of a wheat storage program, while domestic and foreign consumers are relatively small and large losers, respectively. Another result is that wheat storage capacity in excess of 2 billion bushels is difficult to justify economically.

A Dynamic Economic Model of Pasture and Range Investments

The traditional economic replacement problem is extended to accommodate a situation where quasi-rents of future replacements are influenced by replacement age of the currently held asset. This generalized replacement model is applied to optimal timing of the clearing of brush and scrub timber from pasture and range. Dynamic programming is applied to the problem and the structure of the decision role analyzed. An approximately optimal decision rule is deduced by an analysis of the limiting behavior of the optimal policy. An illustrative example is given for pinyon-juniper control in southwestern United States.