Stephen E. Miller

Confidence Intervals for Elasticities and Flexibilities from Linear Equations

Information regarding the precision of elasticity and flexibility estimates from equations linear in original variables is typically missing from empirical studies. A result due to Fieller which allows construction of exact confidence intervals for elasticities and flexibilities from such equations is demonstrated. Exact confidence intervals are not necessarily narrowest at mean levels nor are they symmetric about the point estimates of the elasticities and flexibilities. Empirical examples indicate that exact 95 percent confidence intervals for price flexibilities for food items can be quite wide.

Revenue Insurance for Georgia and South Carolina Peaches

We estimate actuarially fair premium rates for yield and revenue insurance for Georgia and South Carolina peaches. The premium rates for both products decrease at a decreasing rate as the mean farm-level yield increases. In general, the premium rate for revenue insurance exceeds the premium rate for yield insurance for a given coverage level and expected yield. Although the revenue and yield insurance rates differ in a statistical sense, they do not appear to differ in an economic sense except at high coverage levels for growers with very high yields.

Forward Contracting Versus Hedging Under Price and Yield Uncertainty

Although apparently preferred by farmers to direct hedging as a forward pricing mechanism, forward contracting has received little attention in the literature dealing with optimal forward pricing levels. An often-cited reason for producer preference for forward contracting is the absence of basis risks under that forward pricing alternative. This paper presents models of optimal forward contracting and hedging under price and yield uncertainty within a mean-variance framework. The results indicate that basis certainty does not explain preferences for forward contracting.

Teaching Net Present Value Analysis: Returns-to-Assets versus Returns-to-Equity

We surveytextbooks from agricultural economics and other subject matter areas to determine their treatments of the returns-to-assets versus returns-to-equitymethods for determining the net present value of investment projects. Textbook authors disagree about the appropriate method, often give conflicting advice as to how a given method should be applied, and do not show how the results of the two methods can be reconciled. We provide a consolidated discussion of the circumstances under which the two methods produce the same net present value.

Simple And Multiple Cross-Hedging Of Rice Bran

Feasibility of forward pricing sales of rice bran via cross-hedging was investigated. Corn, oats, wheat, and soybean meal futures were considered as simple and multiple cross-hedging media. Simulation results indicated that simple cross-hedging using corn futures would be most effective in reducing price risks.

A Model of Dairy Product Inventory Behavior

This article tests the hypothesis that inventory behavior for American cheese, butter, and nonfat dry milk is consistent with dynamic cost minimization by dairy manufacturers. Results indicate that firms choose their dairy product inventories so as to minimize quadratic output and inventory carrying costs, subject to autoregressive cost shocks. There appears to be relatively rapid adjustment of commercial dairy product stocks to desired levels, with 95 percent of that adjustment taking place within six months.

The production structure of food retailing in the United States: An initial inquiry

A translog cost function is fitted to aggregate data in order to examine substitution patterns among labor, capital, and energy as inputs in US food retailing. The results indicate that labor, capital, and energy are substitutes in the provision of retail food services, with capital and energy being closer substitutions than the other input combinations. The substitution possibilities for labor are limited. Own-price elasticity estimates for labor, capital, and energy are all inelastic, with only the estimate for energy being significantly different from zero.

Seasonality and Stock-Adjustment Models of Retail Food Store Inventory Behavior

In this paper I apply competing specifications of the stock-adjustment process for retail inventories to both seasonal and seasonally adjusted retail food store data. My objective is to determine whether the contradictory evidence from previous research regarding the adequacy of stock-adjustment models can be explained by differences in model specification and the treatment of seasonality. The results indicate that seasonally adjusted data obscure important aspects of retail inventory behavior. A stock-adjustment model which allows for the role of ending inventories in meeting expected future sales performs better than a competing model.