Stephen W. Fuller

Comparing the value of Southern Oscillation Index-based climate forecast methods for Canadian and US wheat producers

Southern Oscillation Index (SOI) based forecasting methods are compared to determine which method is more valuable to Canadian and US wheat producers. Using decision theory approach to valuing information, the more commonly used three-phase method of El Nino, La Nina, and other is compared to a five-phase system. Because of differences in growing season and yearly SOI classification schemes, two different three-phase methods are used. The five-phase system is based on the level and rate of change of the SOI over a 2 month period. Phases are consistently negative, consistently positive, rapidly falling, rapidly rising, and near zero. As expected, results vary by the method used. Winter wheat producers in Illinois place no value on either of the SOI-based forecasting systems. Producers at seven of the 13 sites prefer the five-phase method over either of the three-phase method (spring wheat producers in Manitoba, Alberta, North Dakota and South Dakota, along with winter wheat producers in Oklahoma, Texas, and Washington). The value of the five-phase approach is up to 70 times more valuable than the three-phase approach. Producers growing spring wheat in Saskatchewan and Montana, along with winter wheat producers in Ohio and Kansas value the three-phase approach more than the five-phase. In this case, the value of the three-phase system is up to two times more valuable than the five-phase system. Depending on expected price and region, the values of the SOI-based forecasts range from 0 to 22% of the value of perfect forecasts. In both absolute and percentage of perfect forecasts, producers in Oklahoma, Texas, Manitoba, Saskatchewan, and South Dakota value either system more than producers in the remaining regions. Economic value and distributional aspects of the value of climate forecasts have implications for producers, policy makers, and meteorologists. Finally, the results clearly suggest all producers will not prefer one forecast type. Forecasts need to be tailored to specific regions.

Optimizing Subindustry Marketing Organizations: A Network Analysis Approach

A technique for solving large-scale mixed-integer plant-location problems is developed and utilized. The plant-location problem is formulated as a minimum-cost-flow network problem and solved with a special purpose network code in conjunction with implicit enumeration. Implicit enumeration reduces the number of plant combinations that need to be examined. The technique was applied to resolve a cotton-ginning subindustrys least-cost organizational adjustment to exogenous factors and involved consideration of short-run plant costs that were piecewise linear with fixed charges, two-levels of variable labor cost, storage costs, and assembly costs.

Railroad wheat transportation markets in the central plains: modeling with error correction and directed graphs

Time series methods are used to study the dynamics of regional, export-wheat, railroad rates linking seven central US regions to Texas Gulf ports. Research focuses on the extent and nature of regional rate interactions to determine whether regional rail transportation rates are established independently, through interaction and/or dominated by several regional leaders. Analysis is carried out on 1988-1994 public waybill data for seven Business Economic Areas (BEA) located in Kansas, Oklahoma, Texas and Colorado: these regions originate virtually all of the eight million tons of hard red winter wheat annually shipped to Texas Gulf ports. Results show all rail transportation markets linked in varying degrees. Some regions are near-independent or highly exogenous regarding rate-setting, while others interact with and to rates established in other regions. Regions that are dominated by a single carrier tend to be more independent and insulated regarding rate-setting. Export rates in regions dominated by the Union Pacific (UP) generally account for a significant variation in the rates of other regions. Data show the UP to have been aggressive in providing incentives for country elevators to consolidate for purposes of making unit train shipments, thus their presumed influence on rates of other regions. As expected, export rates for regions with substantial storage and transhipment facilities are sensitive to export rates of regions which ship to the transhipment facilities. Finally, results suggest that rate-setting in a particular region is in part a function of the dominant railroads management and its aggressiveness, an expected outcome in an oligopolistic market.

IMPORT DEMANDS FOR U.S. FRESH GRAPEFRUIT: EFFECT OF U.S. PROMOTION PROGRAMS AND TRADE POLICIES OF IMPORTING NATIONS

This study estimates import demands for U.S. fresh grapefruit in Japan, France, Canada, and the Netherlands. Historically, these nations have imported about 90 percent of U.S. grapefruit exports. Four import demand functions were specified and estimated by joint generalized least squares based on the sample period 1969I to 1988IV. Results show that U.S. FOB price, per capita income of importing countries, exchange rates, price of substitutes, U.S. grapefruit promotion programs, and removal of trade restrictions have had an important effect on U.S. fresh grapefruit exports. Analyses suggest that U.S. producers can effectively promote fresh grapefruit in foreign markets, and that trade concessions have an important influence on grapefruit exports.

A Cotton Ginning Problem

This paper examines the plant location problem of the cotton-processing industry. In recent years the industry has experienced an excess gin plant capacity. By considering the transportation requirements from the farms to the gins, the gin costs, and the gin capabilities, we develop a model to determine which gins should be used for this seasonal product. A case study is used to illustrate the analysis and emphasis is placed on alternative formulations of the model.

EFFECT OF RAILROAD DEREGULATION ON EXPORT-GRAIN RATES

The principle purpose of this study is to determine the likelihood of real rail rate increases on export-grain movements, given the increased pricing freedom of the Staggers Rail Act. Results indicate the pre-Staggers rate structure as one where railroads successfully levied charges as high as intermodal competition would permit. Thus, increases in real rail rates would bring about substantial railroad traffic losses to competing modes. Based on this analysis, the additional pricing flexibility of the Staggers Act should not yield general real rail rate increases on export-grain movements.

Effects of Improving Transportation Infrastructure on Competitiveness in World Grain Markets

Abstract South America has emerged as a major competitor of the United States in world grain markets. Spatial models of the international corn and soybean economies are used to evaluate the effect of recent and expected improvements in transportation infrastructure in South America on competitiveness in world grain markets. Results suggest these improvements yield noteworthy gains in South America with producer revenues increasing over

Effectiveness of Competition to Limit Rail Rate Increases Under Deregulation: The Case of Wheat Exports from the Southern Plains

1 billion/year and annual exports increasing 3.28 million tons. As a result of the added efficiency and increased exports, world prices decline and projected exports and producer revenues in the United States decline 1.37 million tons and

Transportation Developments in South America and Their Effect on International Agricultural Competitiveness

290 million, respectively. Although the absolute losses in the United States are significant, they represent a fraction (< 1.4%) of total revenues and exports.

Panama canal: How critical to U.S. grain exports?

Much of the early 1860s discontent with railroads was centered in agricultural regions, particularly the new regions of the West, where monopolistic price discrimination was most easily practiced by railroads. Because of unavailable or inaccessible forms of competing transportation and numerous small shippers, railroads were able to exploit their monopolistic position (Meyer et al.). Agrarian political action in the 1860s resulted in unsuccessful regulatory efforts by states, but laid the base for the cornerstone of federal transportation regulation, the Act to Regulate Commerce, which was passed in 1887. The Act requires that all rates be “just and reasonable” and provides that “every unjust and unreasonable charge” is unlawful.