Vernon R. Eidman

The Effect of Risk and Autonomy on Independent Hog Producers' Contracting Decisions

The introduction of vertical coordination in the hog industry has provided producers with new business arrangements for raising hogs. While some researchers have elicited utility functions for hog producers on the basis of income risk, none have addressed autonomy, a factor which appears to be important in business arrangement selection for independent family hog operations. In this study, a method is developed for eliciting a multi-attribute function with attributes of income and autonomy. Utility functions are elicited for a group of Minnesota farrow-to-finish hog producers. For these producers, autonomy dominated risk as the most important attribute in business arrangement selection.

Valuing Information When Risk Preferences Are Nonneutral: An Application to Irrigation Scheduling

A method for valuing information when risk attitudes are nonneutral is presented. The procedure uses simulation and generalized stochastic dominance to value information by level of risk aversion. The value of soil water and weather information to irrigators is quantified to illustrate the procedure. The empirical results show that additional information has diminishing marginal returns for a given level of risk aversion and that the value of information increases with the level of risk aversion. The application demonstrates the importance of valuing information on a whole-firm basis when returns to information are related to returns of other firm enterprises and risk preferences are nonneutral.

Intensive rotational grazing for dairy cattle feeding

A 2-year study compared milk production and profitability for confinement feeding versus rotational grazing. Guernsey and Guernsey x Holstein cows grazed perennial grass pastures from mid-May to October or were fed in confinement. Averaged over both years, confined cows produced 7% more milk; their milk was similar in fat concentration to that of grazing cows. Body weight changes and health of the two groups were similar. Net return per cow averaged

A Bioeconomic Simulation Analysis of Regulating Groundwater Irrigation

64 higher for rotational grazing than for confinement because of lower costs for feeding, facilities, equipment, and labor. Intensive rotational grazing of pastures is a competitive alternative for dairy cow feeding. However, farmers in the northern U.S. will still require stored feeds from late fall through early spring.

Tradable Permits For Controlling Nitrates In Groundwater At The Farm Level: A Conceptual Model

This study develops a firm-level bioeconomic simulation model capable of stochastically determining yields for the major dryland and irrigated crops in the central basin of the Ogallala Formation as a function of soil moisture and atmospheric stress during critical stages of plant development. The model is used to evaluate three methods of regulating groundwater irrigation—no restriction, a quantity limitation, and a graduated tax per unit above the quantity limitation. Results differ for poor and adequate water situations but indicate the potential value of an educational program on timing of irrigation application to maximize net farm income.

Dominant Enterprise Size in the Swine Production Industry

Nitrate contamination of municipal and domestic well water supplies is becoming an increasing problem in many rural and urban areas, raising the cost of providing safe drinking water. The objective of this paper is to describe a marketable permit scheme that can effectively manage nitrate pollution of groundwater supplies for communities in rural areas without hindering agricultural production in watersheds. The key to implementing this scheme is being able to link nitrate leaching from nitrogen fertilizer applied to crops at a farm to nitrate levels measured at a drinking water well.

The Continuing Search for Relevance in Agricultural Economics

Dominant swine enterprise size may be determined by the geographic location of the production unit and the risk attitudes of the producer. Distributions of after-tax net revenues for thirteen swine production units in three subregions of the Corn Belt are generated from empirical data gathered from 1,181 swine enterprises. Stochastic dominance with respect to a function is used to rank these distributions for five Arrow-Pratt intervals. Western swine production units stochastically dominate units in the eastern and southern subregions. Risk-averse producers prefer smaller operations, while risk-loving managers prefer relatively large-scale swine enterprises.

Simulation and Gaming Models: Application in Teaching and Extension Programs

Agricultural economists have published thought-provoking papers on the problems of the land grant system (LGS), in general, as well as discussions of how agricultural economists can adjust resident teaching, research, and outreach programs to provide more relevant educational materials for society. Some of the recommendations presented must be implemented by individual universities, government agencies, institutes, research groups, or businesses. Others can be implemented by the American Agricultural Economics Association (AAEA). The association has responded to some of these ideas, adjusting the composition of the program at the annual meeting and providing some additional services to members. Given the demand

Financial Stress in Agriculture: Implications for Producers

Management games are an accepted component of the education and training program for students on the university campus as well as participants in extension workshops. Numerous applications in agriculture and agribusiness can be cited including the use of farm management games (Menz and Longworth; Boehlje, Eidman, Walker), grain merchandising and feed supply management games (Babb and Eisgruber), and, more recently, the use of games in area economic development training (Nelson and Doeksen). Our purpose is to evaluate simulation and gaming as an educational tool with reference to educational objectives and learning styles of individual students. The discussion briefly reviews concepts of educational objectives and learning theory, and then moves to the use of simulation and games as educational aids. Two examples of management gaming are reviewed and critiqued. Finally, issues confronted in evaluating the costs and benefits of using gaming procedures will be briefly discussed.

Agricultural Income Tax Expenditures—A Microeconomic Analysis

Significant changes have occurred in the financial environment for agriculture during the last few years. Farm incomes have declined substantially since the late 1970s, and debt use has continued to grow, resulting in a historically high debt load as measured by the debt to income ratio of approximately ten to one (USDA 1982). Along with this higher debt load, interest rates have risen dramatically in both real and nominal terms; the relative importance of interest as a percentage of all cash expenses has almost doubled since the mid1970s (USDA 1980). Farmers also restructured their balance sheets during the 1960s and 1970s, which reduced their liquidity and ability to service debt (USDA 1980). Many farmers converted assets in the form of grain and livestock inventories into intermediateand long-term assets, such as machinery, equipment, or land, which generate less cash flow and are not readily available to service debt. Furthermore, a substantial portion of the increased debt load is of a shorter term nature including short-term land contracts and one-year notes for capital items such as machinery and equipment. In essence, farmers are trying to pay higher principal and interest payments with less cash and liquid assets.