Robert O. Burton

Nearly Optimal Linear Programming Solutions: Some Conceptual Issues and a Farm Management Application

Nearly optimal solutions in linear programming provide useful information to decision makers. Modeling to generate alternatives may be used to generate a set of nearly optimal solutions from which a decision maker may select the desired solution by considering criteria not quantified in the model. The mathematical problem is to find vertices of a convex polytope. A pivoting method of vertex enumeration is used to generate all extreme-point nearly optimal solutions of an example problem involving selection of a marketing strategy for beef calves. Compared to the optimal solution, nearly optimal solutions have more diversity or use less cash or hired labor.

Risk/Return Analysis of Double-Cropping and Alternative Crop Rotations with and Without Government Programs

If growing season length and other factors necessary for crop production are adequate, double-cropping could enhance and stabilize net farm returns. Use of double-cropping could spread fixed costs over a larger volume of output. Lower average fixed costs and revenues from the second crop could enhance net income. Double-cropping also could improve profitability and cash flow by providing an additional source of cash. The benefits of enhanced income and diversification from double-cropping could provide more stable net income in a one-year period than single-cropping. These potential advantages of doublecropping could be outweighed by disadvantages. Climatic and weather factors may result in inadequate soil moisture and limited time available for harvesting and planting. Such factors may have greater impacts on yields from double-cropping than on yields from singlecropping. Thus, average net income with double-cropping will not necessarily be greater than that of single-cropping. Even if average net income is greater with double-cropping, income variability might also be greater, because yields are more variable.

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.

Predicting Farm Tractor Values through Alternative Depreciation Methods

This study compares a variety of farm tractor depreciation methods to determine which most accurately estimates farm tractor values. These alternative depreciation methods consider different factors for estimating remaining value and vary in difficulty of use. Pairwise comparisons of mean absolute percentage error and forecast accuracy regression models were used to evaluate the accuracy of the depreciation methods, which depend on age, intensity of use, and manufacturer. Based on the results of this study, the Cross and Perry method was generally the most accurate. Copyright 2003, Oxford University Press.

Costs and Benefits of Increasing Access to a Traditional Agricultural Economics Course

Favorable press and impressive statistics about the recent growth of higher education by means of distance learning put pressure on universities to offer distance learning courses (e.g., Cox, Gubernick and Ebeling). If university faculty can package existing on-campus courses to offer via distance learning, fixed costs of faculty and university facilities might be spread over larger numbers of students, thereby increasing university revenues. However, little is known about the costs and benefits of repackaging existing courses for distance learning. Schurle noted the large time requirements associated with using technology for distance education and suggested that, in some cases, incurring these costs might damage faculty careers. The purpose of this paper is to analyze the costs and benefits associated with offering an existing on-campus undergraduate university course via distance learning. The analysis is focused on benefits, costs, and implications for two types of decision makers: individual university faculty and university administrators. The partial empirical analysis is a case study of AGEC 308, an undergraduate Farm and Ranch Management course taught at Kansas State University (KSU). Information about this course is available from Burton et al., Burton and Kurdieh, and the web page http:/ /www.dce.ksu.edu/dce/as/farm.html.

Effect of Risk Preferences on Incorporation of Double-Crop Soybeans into Traditional Rotations

Six enterprise combinations, four including a double-crop sequence of wheat followed immediately after harvest by soybeans, were evaluated for southeastern Kansas given the requirements for participation in the government commodity program. Stochastic dominance analysis was used to select the preferred combination under six different classes of risk preferences. A two-year sequence of wheat double-cropped with soybeans followed by full-season soybeans was the preferred combination for all classes of risk preferences analyzed. Sensitivity analysis indicated that if labor, machinery, or field time constraints limit the number of acres of double-cropped soybeans and/or if farm yields are sufficiently less than those included in the data set, results would either favor rotations that do not double-crop or those that double-crop less than the maximum number of acres each year.

A RISK PROGRAMMING ANALYSIS OF CROP ROTATIONS INCLUDING DOUBLE-CROPPING

This study examines the economic potential of double-cropping on a representative dryland farm. Crop simulation, market simulation, and quadratic programming are used to determine optimal combinations of crop rotations. Simulated data are an alternative to historical data, which may not reflect current conditions. A risk-neutral operator double-crops soybeans on all wheat acres; whereas, more risk-averse operators do not double-crop. Procedures used in this study provide a means of incorporating changes in both crop production potential and market conditions (e.g., new farm bills) into analyses that will generate optimal solutions for farmers with diverse preferences for returns and risk.

ALLOCATION OF FARM FINANCIAL STRESS AMONG INCOME, LEVERAGE, AND INTEREST RATE COMPONENETS: A KANSAS EXAMPLE

Suggested methods to reduce farm financial stress have included interest rate buy-downs and debt forgiveness. This study develops a method to estimate the proportion of individual farm financial stress attributable to an income problem, a leverage problem, and an interest rate problem. Of the Kansas Farm Management Association farms with a financial problem, 30 percent of the total financial problem is caused by an interest rate problem, 28 percent by a leverage problem, and 42 percent by an income problem. A reduction of leverage or interest rate to the level attained by the average nonstressed farms would make 31 percent and 32 percent of the stressed farms profitable, respectively. Therefore, in the short run, an interest rate buy-down or a debt reduction would be equally effective.