Progress 10/01/01 to 09/30/06
Outputs
DECISION SUPPORT SYSTEM COMPONENTS TO SUPPORT INTERORGANIZATIONAL COLLABORATION: (1) Dynamic programming models were developed to identify optimal inventory management decisions for a retail outlet that can control inventory through orders to a wholesaler and through retail price changes and for the wholesale supplier. (2) A dynamic optimization model was developed to assess quality assurance incentive systems when there are rewards for building a strong reputation for quality. This model was applied to the design of incentives for salmonella control in pork production, focusing on the relationship between producers and the slaughter plant. Incentive systems that take past performance into account perform better than static systems with a fixed probability of testing for salmonella prevalence that base penalties or premiums on results from a single test. The choice of an incentive system and overall chain performance can differ considerably depending on whether the
slaughter plant is owned by an investor oriented form or by a farmer cooperative. This research will be published in a forthcoming article in the European Review of Agricultural Economics. (3) A dynamic model of producer investment in a New Generation Cooperative was developed. The model takes account of both the value of waiting for uncertainty to be resolved before investing and the value of diversification through investment in value-added processing. The model was incorporated into a market simulation model to explore conditions under which cooperatives are likely to be formed and/or taken over by investor owned firms. ADVANCES IN INFORMATION TECHNOLOGY AND EVOLUTION OF SUPPLY CHAIN STRUCTURES: (1) Data from the 2002 Supermarket Panel were used to investigate relationships between information technology adoption and store productivity. Adoption of vendor managed inventory and frequent shopper program is associated with significantly higher productivity. (2) These data were also
used to investigate the long-term viability of grocery wholesalers and the independent supermarkets they supply. Despite lower adoption of supply chain technologies and practices, wholesaler-supplied stores remain competitive, largely due to lower unit costs for labor and store selling area. INFORMATION SYSTEM MANAGEMENT CAPABILITIES IN SMALL FIRMS WITHIN THE FOOD SYSTEM: A study of links between member commitment and communications strategies used by local cooperatives focused on the effectiveness of electronic communications. After controlling for member and cooperative characteristics, good communications with the cooperative manager and more frequent press releases were found to have significant, positive effects on member commitment. The relationship between member commitment and use of electronic communications was not statistically significant. Communications preferences differ significantly with age, education, and level of involvement in the cooperative. Older, less-educated
members prefer print communication, while highly educated members prefer electronic communications and informal discussions with cooperative employees.
Impacts
Decision support tools developed under this project help identify means by which new information technologies can improve supply chain performance. Project research on adoption of new supply chain technologies and practices shows that these are having measurable benefits in food retailing. Project research on incentive system design demonstrates how the establishment of payment systems that take past performance into account can lower monitoring and control costs, while maintaining food safety. Project research on producer investment in New Generation Cooperatives has yielded important insights on the design of markets for cooperative shares and the long-term viability of farmer ownership of value added processing facilities.
Publications
- Lohano, H.D. and King, R.P. 2006. Accuracy of numerical solution to dynamic programming models. Staff Paper P06-3. St. Paul, MN: University of Minnesota, Department of Applied Economics.
- Ortmann, G.F. and King, R.P. 2006. Small-scale farmers in South Africa: can agricultural cooperatives facilitate access to input and product markets? Staff Paper P06-4. St. Paul, MN: University of Minnesota, Department of Applied Economics.
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Progress 01/01/05 to 12/31/05
Outputs
This progress report narrative is organized around specific objectives for the project. DECISION SUPPORT SYSTEM COMPONENTS TO SUPPORT INTERORGANIZATIONAL COLLABORATION: (1) Work continues on a dynamic optimization model has been developed to assess alternative quality assurance incentive systems in a long term setting where there are rewards for building a strong reputation for quality. This model has been applied to the design of incentives for salmonella control in pork production, focusing on the relationship between producers and the slaughter plant. Two dynamic incentive systems are being modeled: the first based on the number of periods since a positive salmonella test and the second (which is similar to a system currently being used in Denmark) based on a moving average of past salmonella prevalence levels. Two distinct slaughter plant ownership structures are being considered: ownership by non-producer investors and cooperative ownership. Performance of the
two incentive systems is similar, though the first system generally is more efficient than the second. The distribution of gains from improved salmonella control differs greatly under the two ownership structures, but ownership has little effect on overall system efficiency. (2) A journal article presenting finding based on a dynamic model of producer investment in a New Generation Cooperative is being prepared for submission. The model takes account of both the value of waiting for uncertainty to be resolved before investing and the value of diversification through investment in value-added processing. Simulation results based on the model predict that processing cooperatives are most vulnerable to takeover by investor owned firms when both raw commodity and processed product prices are low. ADVANCES IN INFORMATION TECHNOLOGY AND EVOLUTION OF SUPPLY CHAIN STRUCTURES: (1) A book chapter on supply chains for high-value food products investigates challenges suppliers of high value food
products face in creating and preserving the unique characteristics of their products and conveying information about those characteristics to consumers. Knowledge of supply chain design principles can foster changes in high value food supply chains that will facilitate information sharing and coordination of activities, quality assurance, and the provision of incentives for efficient resource use among input suppliers, farmers, manufacturers, and retailers. (2) A book chapter on the supply chain for Parmigiano-Reggiano cheese in the United States describes the channels through which Parmigiano-Reggiano cheese reaches U.S. consumers, develops hypotheses about how the supply chain will change as U.S. restrictions on Italian cheese imports are relaxed, and assesses the contributions of institutions that make it easier for Italian producers of Parmigiano-Reggiano cheese to signal quality to U.S. consumers.
Impacts
Food safety and quality are important concerns in the food system. Project research on incentive system design demonstrates how the establishment of payment systems that take past performance into account can lower monitoring and control costs, while maintaining food safety. Effective design of food supply chains can also be instrumental in improving food safety and quality while maintaining efficiency and keeping costs to a minimum. Project research on supply chain design identifies strategies that can improve supply chain performance.
Publications
- Berti, A; Canavari, M; and King, R.P. 2005. The supply chain for Parmigiano-Reggiano cheese in the United States. IN Food, agriculture and the environment: economic issues, eds. Edi Defrancesco, Luigi Galletto and Mara Thiene. Milano, Italy: Universita di Padova, Dipartimento Territorio e Sistemi Agro-forestali; Fondazione Cassa di Risparmio di Padova e Rovigo; FrancoAngeli, pp.117-133.
- Holland, S.J.and King, R.P. 2005. Co-op stock exchange: why choice of trading rules matters for new-generation co-op stockholders. Rural Cooperatives 72: 12-15.
- King, R.P. and Venturini, L. 2005. Demand for quality drives changes in food supply chains. IN New directions in global food markets, eds. Anita Regmi and Mark Gehlhar. Agriculture Information Bulletin 794. Washington, DC: U.S. Department of Agriculture, Economic Research Service, pp. 18-31.
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Progress 01/01/04 to 12/31/04
Outputs
This progress report narrative is organized around specific objectives for the project. DECISION SUPPORT SYSTEM COMPONENTS TO SUPPORT INTERORGANIZATIONAL COLLABORATION: (1) A dynamic optimization model has been developed to assess alternative quality assurance incentive systems in a long term setting where there are rewards for building a strong reputation for quality. This model has been applied to the design of incentives for salmonella control in pork production, focusing on the relationship between producers and the slaughter plant. Two dynamic incentive systems are being modeled: the first based on the number of periods since a positive salmonella test and the second (which is similar to a system currently being used in Denmark) based on a moving average of past salmonella prevalence levels. Two distinct slaughter plant ownership structures are being considered: ownership by non-producer investors and cooperative ownership. Performance of the two incentive
systems is similar, but optimal parameters and performance are quite different under the two ownership structures. This model is being extended to consider salmonella control investments at the slaughter plant level. (2) A dynamic model of producer investment in a New Generation Cooperative has been developed. The model takes account of both the value of waiting for uncertainty to be resolved before investing and the value of diversification through investment in value-added processing. The model has been incorporated into a market simulation model to explore conditions under which cooperatives are likely to be formed and/or taken over by investor owned firms. ADVANCES IN INFORMATION TECHNOLOGY AND EVOLUTION OF SUPPLY CHAIN STRUCTURES: (1) Data from the 2002 Supermarket Panel have been used to investigate store characteristics and operating practices in areas that serve low-income consumers. Stores that serve low-income shoppers are generally smaller and older and offer fewer
convenience services for shoppers. In metropolitan areas, stores that serve low-income consumers lag in the adoption of supply chain practices, but this is not true for stores located in non-metropolitan areas. Operating cost elasticities for supply chain practice adoption are consistently negative for metro and non-metro stores. This implies that there are significant store-level cost savings associated with the adoption of these technologies and business practices.(2) A dynamic heterogeneous agent model has been developed to investigate how information sharing between retail and wholesale trading partners affects overall chain performance. This model will serve as a conceptual framework for modeling the evolution of supply chain structures and for assessing the impacts of new information technologies on supply chain performance under alternative supply chain configurations.
Impacts
Food safety and quality are increasingly important concerns in the food system. Project research on incentive system design demonstrates how the establishment of payment systems that take past performance into account can lower monitoring and control costs, while maintaining food safety. Advances in information and communications technologies are influencing the internal organization of firms in the food system, relationships between firms, and the overall structure of food supply chains. Project research on adoption of new supply chain technologies and practices shows that these are having measurable benefits in food retailing.
Publications
- King, R.P., Leibtag, E.S. and Behl, A.S. 2004. Supermarket characteristics and operating costs in low-income areas. AER-839. Washington, D.C:U.S. Department of Agriculture, Economic Research Service.
- King, R.P. and Park, T.A. 2004. Modeling productivity in supermarket operations: incorporating the impacts of store characteristics and information technologies. Journal of Food Distribution Research 35:42-55.
- Zeuli, K.A. and King, R.P. 2004. The impact of organizational form on producer contracting decisions. Canadian Journal of Agricultural Economics 52:147-164.
- Holland, S.J. 2004. Investment in a thin and uncertain market: a dynamic study of the formation and stability of new generation cooperatives, Ph.D. Thesis, Department of Applied Economics, University of Minnesota, St. Paul, MN.
- Holland, S.J. and King, R.P. 2004. Trading mechanisms for new generation cooperative stock: the architecture of organizational formation and demise. American Journal of Agricultural Economics 86:1262-1268.
- Hoverstad, T.R., Gunsolus, J.L., Johnson, G.A. and King, R.P. 2004. Risk-efficiency criteria for evaluating economics of herbicide-based weed management systems in corn. Weed Technology 18:687-697.
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Progress 01/01/03 to 12/31/03
Outputs
This narrative is organized around specific objectives for the project. DECISION SUPPORT SYSTEM COMPONENTS TO SUPPORT INTERORGANIZATIONAL COLLABORATION: (1) A dynamic programming model has been developed to identify optimal inventory management decisions for a retailer that can control inventory through orders to a wholesaler and through retail price changes. A second dynamic programming model has been developed for inventory management decisions at the wholesaler level, with stochastic demand from retailers. These models are being used to investigate the value of downstream information flows about shortfalls in shipments from wholesalers to retailers and upstream information flows about product movement and inventory levels at retail outlets. (2) A dynamic optimization model has been developed to assess alternative quality assurance incentive systems in a long term setting where there are rewards for building a strong reputation for quality. This model has been
applied to the design of incentives for salmonella control in pork production, focusing on the relationship between producers and the slaughter plant. Results show that reputation-based incentive systems, which take past performance into account, perform better than static systems that have a fixed probability of testing for salmonella prevalence and that base penalties or premiums on test results from a single point in time. The reputation-based systems help reduce problems caused by measurement errors in test results. Furthermore, when testing is costly, reputation-based systems can lower testing frequency, while maintaining adequate levels of control efforts by producers. Results also show that the choice of an incentive system and overall chain performance can differ considerably depending on whether the slaughter plant is owned by an investor oriented firm or by a farmer cooperative. ADVANCES IN INFORMATION TECHNOLOGY AND EVOLUTION OF SUPPLY CHAIN STRUCTURES: (1) Data from the
2002 Supermarket Panel have been used to investigate relationships between information technology adoption and store productivity. Results show that adoption of two new supply chain technologies, vendor managed inventory and frequent shopper program, are associated with significantly higher productivity. that there are only minimal store-level productivity gains from adoption of information technology based supply chain practices. (2) Data from the 2002 Supermarket Panel were also used to investigate the long-term viability of grocery wholesalers and the independent supermarkets they supply. Despite lower adoption rates for supply chain technologies and practices, wholesaler-supplied stores remain competitive, largely due to lower unit costs for labor and store selling area. (3) A dynamic heterogeneous agent model has been developed to investigate how information sharing between retail and wholesale trading partners affects overall chain performance. This model will serve as a
conceptual framework for modeling the evolution of supply chain structures and for assessing the impacts of new information technologies on supply chain performance under alternative supply chain configurations.
Impacts
Advances in information and communications technologies are influencing the internal organization of firms in the food system, relationships between firms, and the overall structure of food supply chains. Decision support tools being developed under this project will help identify means by which new information technologies can improve supply chain performance. Models of supply chain structure will provide additional insights on the potential for information technology-based to improve efficiency and on the distribution of gains under alternative structures.
Publications
- DiGiacomo, G.; King, R.P.; Nordquist, D. 2003. Building a sustainable business: a guide to developing a business plan for farms and rural businesses. St. Paul, MN; Beltsville, MD: University of Minnesota, Minnesota Institute for Sustainable Agriculture; Sustainable Agriculture Network, 2003. (Handbook Series Book 6)
- King, R.P. 2003. Is there a future for wholesaler-supplied supermarkets? CHOICES (4th Quarter):17-20.
- King, R.P, Seltzer, J.M., and Poppert, W. 2003. The 2001 supermarket panel energy management study. St. Paul, MN: University of Minnesota, The Food Industry Center, Working Paper 03-3.
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Progress 01/01/02 to 12/31/02
Outputs
This progress report narrative is organized around specific objectives for the recently revised project. DECISION SUPPORT SYSTEM COMPONENTS TO SUPPORT INTERORGANIZATIONAL COLLABORATION ON INVENTORY MANAGEMENT DECISIONS: A dynamic programming model has been developed to identify optimal inventory management decisions for a retail output that can control inventory through orders to a wholesaler and through retail price changes. Modification of retail prices has not been considered in other work on retail inventory management. Preliminary results indicate that ability to modify retail prices is important for retailers and should be included in inventory management models. After further analysis has been done for an individual retail outlet, this model will be incorporated into a simulation model that can be used to study interactions between retailers and wholesalers that is being developed under objective 2. ADVANCES IN INFORMATION TECHNOLOGY AND EVOLUTION OF SUPPLY
CHAIN STRUCTURES: (1) Data from the 2002 Supermarket Panel are being used to analyze factors associated with adoption of information technologies that support supply chain initiatives in the food industry. Initial results suggest that larger annual sales and store selling area, and membership in a self-distributing chain are associated with higher adoption rates for electronic invoices, scan-based trading, and replenishment decisions based on scanner data. (2) Data from the 2002 Supermarket Panel are also being used to investigate relationships between information technology adoption and store productivity. Preliminary results suggest that there are only minimal store-level productivity gains from adoption of information technology based supply chain practices. (3) A conceptual framework for modeling the evolution of supply chain structures is being developed. This model will be able to represent differences in the timeliness and extent of information sharing and the effect these
differences have on performance under alternative supply chain configurations. INFORMATION SYSTEM MANAGEMENT CAPABILITIES IN SMALL FIRMS WITHIN THE FOOD SYSTEM: A study of links between member commitment and communications strategies used by local cooperatives in Minnesota and Wisconsin focused, in part, on the effectiveness of electronic communications. After controlling for member and cooperative characteristics, good communications with the cooperative manager and more frequent press releases were found to have significant, positive effects on member commitment. The relationship between member commitment and use of electronic communications was not statistically significant. Communications preferences differ significantly with age, education, and level of involvement in the cooperative. Older, less-educated members prefer print communication, while highly educated members prefer electronic communications and informal discussions with cooperative employees.
Impacts
Advances in information and communications technologies are influencing the internal organization of firms in the food system, relationships between firms, and the overall structure of food supply chains. Decision support tools being developed under this project will help identify means by which new information technologies can improve supply chain performance. Models of supply chain structure will provide additional insights on the potential for information technology-based to improve efficiency and on the distribution of gains under alternative structures. Better understanding of information system management in small firms will help ensure that firms of all sizes have equal access to the benefits of information technology.
Publications
- King, R.P., Jacobson, E.M., and Seltzer, J.M.. 2002. The 2002 supermarket panel annual report. St. Paul, MN: University of Minnesota, The Food Industry Center.
- Lohano, Heman Das. 2002. A stochastic dynamic programming analysis of farmland investment and financial maangement, Ph.D. Thesis, Department of Applied Economics, University of Minnesota, St. Paul, MN.
- Trechter, David D., Robert P. King, and Laura Walsh. 2002. Using communications to influence member commitment in cooperatives. Journal of Cooperatives 17: 14-32.
- Venturini, Luciano and Robert P. King. 2002. Vertical coordination and the design process for supply chains to ensure food quality. in Economic Studies on Food, Agriculture, and the Environment, eds. Maurizio Canavari, Paolo Caggiati, and K. William Easter. New York: Kluwer Academic/Plenum Publishers, pp. 57-87.
- Chambers, William and Robert P. King. 2002. Changing agricultural markets: industrialization and vertical coordination in the dry edible bean industry. Review of Agricultural Economics 24(Fall/Winter):495-511.
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Progress 01/01/01 to 12/31/01
Outputs
This progress report narrative is organized around specific objectives for the recently revised project. DECISION SUPPORT SYSTEM COMPONENTS TO SUPPORT INTERORGANIZATIONAL COLLABORATION ON INVENTORY MANAGEMENT DECISIONS: The literature on muti-stage inventory management and demand forecasting is being reviewed. Previous research will be the basis for development of a dynamic, stochastic simulation model that can be used to evaluate alternative inventory management policies and practices under differing levels of information and decision sharing. ADVANCES IN INFORMATION TECHNOLOGY AND EVOLUTION OF SUPPLY CHAIN STRUCTURES: (1) Data from the 2001 Supermarket Panel are being used to analyze factors associated with adoption of information technologies that support supply chain initiatives in the food industry. Initial results suggest that larger annual sales and store selling area, and membership in a self-distributing chain are associated with higher adoption rates for
electronic invoices, scan-based trading, and replenishment decisions based on scanner data. (2) A conceptual framework for modeling the evolution of supply chain structures is being developed. This model will be able to represent differences in the timeliness and extent of information sharing and the effect this will have on performance under alternative supply chain configurations. INFORMATION SYSTEM MANAGEMENT CAPABILITIES IN SMALL FIRMS WITHIN THE FOOD SYSTEM: Literature on information system management is being reviewed prior to design of surveys on information system management practices in supermarkets and local cooperatives.
Impacts
Decision support tools being developed under this project will help identify means by which new information technologies can improve supply chain performance. Models of supply chain structure will provide additional insights on the potential for information technology-based to improve efficiency and on the distribution of gains under alternative structures. Better understanding of information system management in small firms will help ensure that firms of all sizes have equal access to the benefits of information technology.
Publications
- Brienza, J.E. 2001. Fees and feasibility: requirements and costs to small regional producers looking to sell value-added food products through various supply chains, M.S. Thesis, Department of Applied Economics, University of Minnesota, St. Paul, MN.
- King, R.P. and Jacobson, E.M. 2001. A factor analysis of supermarket management practices, abstract. American Journal of Agricultural Economics 83(December): in press.
- King, R.P., Jacobson, E.M., and Seltzer, J.M.. 2001. The 2001 supermarket panel annual report. St. Paul, MN: University of Minnesota, The Food Industry Center.
- King, R.P., Kinsey, J.D., Wolfson, P.J., and Seltzer, J.M.. 2001. The supermarket industry at the start of the 21st century: key findings from the 2000 Supermarket Panel. Journal of Food Distribution Research XXXII: in press.
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Progress 01/01/00 to 12/31/00
Outputs
Research under this project addresses Goals 1, 2, 4, and 5 in the University of Minnesota Agricultural Experiment Station and University of Minnesota Extension Service 1999-2004 Federal (AREERA) Plan of Work. This progress report narrative is organized around specific objectives for the project. NEED FOR, VALUE OF, AND ADOPTION OF INFORMATION SYSTEMS: (1) The two publications on farm information systems use case studies to document the structure and use of farm information systems in a wide range of settings. Key findings include: (i) farm information systems are used to support decisions and monitor progress related to both quantitative and qualitative goals, (ii) managers of each case farm used their information systems to prepare financial statements and analyze enterprise performance, (iii) more extensive production records were maintained as the intensity of the key enterprise increased, (iv) motivation and skills in record keeping are independent of computer
skills. (2) The 2000 Supermarket Panel included 342 supermarkets that are representative of supermarkets in the U.S. This survey will be repeated annually to provide longitudinal data on store characteristics, business practices, and operating performance in the supermarket industry. Key findings related to information systems include: (i) adoption of technologies and business practices that support supply chain management initiatives is associated with superior performance at the store level, (ii) stores in larger groups are better positioned to take part in supply chain initiatives, and (iii) stores that place increased emphasis on supply chain and human resource practices have more efficient management of space, labor, and inventories. DESIGN AND DEVELOPMENT OF PROTOTYPICAL DECISION SUPPORT SYSTEM COMPONENTS: Work continues on a dynamic programming model designed to help farmers make decisions about investments non-farm assets, including value added cooperatives. ORGANIZATIONAL
STRUCTURE AND INFORMATION SYSTEMS IN AGRIBUSINESSES: (1) The publications on collaborative marketing provide an introduction to the benefits from and challenges associated with collaborative marketing of agricultural products. Case studies illustrate how farmers can work together under a variety of organizational forms. (2) The USDA-RBS publication documents positive and negative aspects related to linkages between new generation cooperatives and local communities. Key findings include: (i) strong community links are a key for cooperative success, (ii) new cooperative ventures often create conflicts, (iii) establishment of one new generation cooperative often leads to others, and (iv) cooperative development revitalizes communities. (3) Case study research on supply chain design for identity preserved agricultural products continued in 2000. Work includes a study of requirements for and costs of farmers' participating in alternative retail supply chains.
Impacts
Information technologies are having important impacts on the structure of the food system and on the strategies of farm and agribusiness firms. Research under this project is improving our understanding of new firm structures and new relationships among firms that are made possible by information technology and our ability to assess the impact of these new developments on efficiency and the distribution of returns in the food system. The Supermarket Panel offers a unique opportunity to understand the evolution of the retail segments of the food supply chain.
Publications
- Livingston, K., A. Reynolds, D. Trechter, R.P. King, M. Cook, and D. Hackman. Northeast Missouri Grain Producers, Inc. The impact of new generation cooperatives on their communities, D. Trecheter and R.P. King, eds. RBS Research Report 177, Washington, DC: U.S. Department of Agriculture, Rural Business- Cooperative Service, 2000, pp. 39-49.
- Trechter, D. and R.P. King. Case study design and research protocol. The impact of new generation cooperatives on their communities, D. Trecheter and R.P. King, eds. RBS Research Report 177, Washington, DC: U.S. Department of Agriculture, Rural Business- Cooperative Service, 2000, pp. 15-29.
- Trechter, D. and R.P. King, eds. The impact of new generation cooperatives on their communities. RBS Research Report 177, Washington, DC: U.S. Department of Agriculture, Rural Business- Cooperative Service, 2000.
- Goreham, G., R.P. King, E. Van der Sluis, and K.A. Zeuli. The Dakota Growers Pasta Company. The impact of new generation cooperatives on their communities, D. Trecheter and R.P. King, eds. RBS Research Report 177, Washington, DC: U.S. Department of Agriculture, Rural Business- Cooperative Service, 2000, pp. 58-67.
- King, R.P. Lessons and challenges. The impact of new generation cooperatives on their communities, D. Trecheter and R.P. King, eds. RBS Research Report 177, Washington, DC: U.S. Department of Agriculture, Rural Business- Cooperative Service, 2000, pp. 77-83.
- King, R.P. and G. DiGiacomo. Collaborative marketing: a roadmap and resource guide for farmers. BU-7539-S. St. Paul, MN: University of Minnesota Extension Service and Minnesota Institute for Sustainable Agriculture, 2000.
- King, R.P. and G. DiGiacomo. Collaborative marketing groups: working together to meet new challenges. Greenbook 2000. St. Paul, MN: Minnesota Department of Agriculture, Energy and Sustainable Agriculture Program, 2000, pp. 7-9.
- King, R.P., P.J. Wolfson, and J.M. Seltzer. The 2000 supermarket panel annual report. St. Paul, MN: University of Minnesota, The Retail Food Industry Center, 2000.
- Doye, D., R. Jolly, R. Hornbaker, T. Cross, R.P. King, W.F. Lazarus, and A. Yeboah. Case studies of farmers use of information systems. Review of Agricultural Economics. 22(Fall/Winter 2000):566-585.
- Doye, D. R. Jolly, R. Hornbaker, T. Cross, R.P. King, W.F. Lazarus, A Yeboeh, and E. Rister. Farm information systems: their development and use in decision making. Research Bulletin 601 and North Central Regional Research Publication 345. Ames, IA: Iowa State University and NC-191 Regional Committee on Farm Information Systems, 2000.
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Progress 01/01/99 to 12/31/99
Outputs
NEED FOR, VALUE OF, AND ADOPTION OF INFORMATION SYSTEMS: The paper by King, Ashman, and Bosley summarizes findings from studies on Efficient Consumer Response (ECR) adoption in supermarkets and convenience stores and looks ahead to research questions on: (1) store level technolgy and business practices, (2) human resource management, (3) frequent shopper programs, and (4) home shopping. DESIGN AND DEVELOPMENT OF PROTOTYPICAL DECISION SUPPORT SYSTEM COMPONENTS: Work continues on a dynamic programming model designed to help farmers make decisions about investments nonfarm assets, including value added cooperatives. ORGANIZATIONAL STRUCTURE AND INFORMATION SYSTEMS IN AGRIBUSINESSES: (1) William Chambers' dissertation reports on findings from case studies on supply chain structures in the dry bean industry. Contrary to expectations, he finds that a shift toward non-standard product specifications does not necessarily lead to increased use of production contracts when bean
ingredient attributes are observable. When attributes are not observable, as is the case for organic beans, production contracts are common and canners often deal directly with farmers rather than purchasing through elevators. (2) Nancy Havir's dissertation reports on findings from a study on choice of production and distribution methods in the craft brewing industry. Choice of production method (traditional craft brewer, excess capacity brewer, or brewer using contract service) is related to annual output, capacity, and number of production locations. Choice of distribution method (distributor only, own trucks only, both distributor and own trucks) was more difficult to predict due to the influence of state regulations on beer distribution. (3) Case study research on supply chain design for identity preserved agricultural products has been initiated and will continue in 2000.
Impacts
Information technologies are having important impacts on the structure of the food system and on the strategies of farm and agribusiness firms. Research under this project is improving our understanding of new firm structures and new relationships among firms that are made possible by information technology and our ability to assess the impact of these new developments on efficiency and the distribution of returns in the food system.
Publications
- CHAMBERS, W.B. 1999. Changes in the structure of the U.S. Food system: evidence from the dry bean industry. Ph.D. Thesis, Department of Applied Economics, University of Minnesota, St. Paul, MN.
- HAVIR, N. 1999. An analysis of firm performance in the U.S. craft brewing industry. Ph.D. Thesis, Department of Applied Economics, University of Minnesota, St. Paul, MN.
- KING, R.P., ASHMAN, S.M and BOSLEY, A. 1998. Store-level innovation in the retail food industry: the ECR initiative and beyond. In Proceedings of the 6th Joint Conference on Food, Agriculture, and the Environment, Tiziano Tempesta and Mara Thiene, eds. Padova, Italy: University of Padova and St Paul, MN: University of Minnesota, Center for International Food and Agricultural Policy, pp. 479-488.
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Progress 01/01/98 to 12/31/98
Outputs
NEED FOR, VALUE OF, AND ADOPTION OF INFORMATION SYSTEMS: 1. Survey results presented by Ashman and Ashman and King show that adoption of technologies and business practices associated with the ECR initiative is less advanced in convenience stores than in supermarkets. Survey results are anaylzed by store location, chain size, and ECR adoption. Stores that have made more progress in ECR adoption generally have superior performance. 2. Results reported by Zeuli and King identify areas of similarity and difference between male and female managers of commericial farms. DESIGN AND DEVELOPMENT OF PROTOTYPICAL DECISION SUPPORT SYSTEM COMPONENTS: A dynamic programming model designed to help farmers make decisions about investments in value added cooperatives is being designed and developed. ORGANIZATIONAL STRUCTURE AND INFORMATION SYSTEMS IN AGRIBUSINESS: 1. Results from Kimberly Zueli's dissertation show that the organizational form of processing firms affects the
feasibility and level of processing, distribution of returns, and extent of farmer participation 2. The paper by King uses the ECR initiative to illustrate the use of four design tools for interorganizational information systems: i.industry standards, ii. shared transaction data, iii. shared facility and process descriptions, and iv. interorganizational sharing or transfer of decision making. 3. Two studies on vertical coordination in the food system are underway. The first focuses on market linkages in the dry bean industry. The second focuses on the economics of alternative production and distribution systems for craft brewers. Results from both studies should be forthcoming in 1999.
Impacts
(N/A)
Publications
- Phumpiu, P.F. and King, R.P. 1998. Efficient Consumer Response adoption at the store-level. In Proceedings of the Third International Conference on Chain Management in Agribusiness and the Food Industry, Ede, May 28-29, 1998. G.W. Ziggers, J.H. Trienekens and P.J.P. Zuurbier, eds Wageningen, Netherlands: Wageningen Agricultural University, Management Studies Group, pp.359-368.
- Phumpiu, P.F. and King, R.P. 1998. Modeling the division of managerial responsibilities between segments of a supply chain. In Proceedings of the Third International Conference on Chain Management in Agribusiness and the Food Industry, Ede, May 28-29, 1998, G.W. Ziggers, J.H. Trienekens and P.J.P. Zuurbier, eds Wageningen, Netherlands: Wageningen Agricultural University, Management Studies Group, pp.691-701.
- Vonnegut, A.M. 1998. Three essays on structural change in transition from central planning. Ph.D. Thesis, Department of Applied Economics, University of Minnesota, St. Paul, MN.
- Zeuli, K.A. 1998. Value-added processing: an assessment of the risks and returns to farmers and communities. Ph.D. Thesis, Department of Applied Economics, University of Minnesota, St. Paul, MN.
- Zeuli, K.A. and King, R.P. 1998. Gender differences in farm management. Review of Agricultural Economics 19:In press.
- King, R.P., Ashman, S.M. and Bosley, A. 1998. Store-level innovation in the retail food industry: the ECR initiative and beyond. Presented at Sixth Joint Conference on Food, Agriculture and the Environment, Minneapolis, MN, August 31-September 2, 1998. Published electronically (Web address: http://agecon.lib.umn.edu/mn/c6king01.pdf).
- King, R.P., Trechter, D.D. and Cobia, D. 1998. Managerial compensation in Midwestern cooperatives: results from a follow-up study. Journal of Cooperatives 13:35-43.
- Ashman, S.M. 1998. An analysis of industry practices and effecient consumer response adoption in Minnesota convenience stores. M.S. Plan B Paper, Department of Applied Economics, University of Minnesota, St. Paul, MN.
- Ashman, S.M. and King, R.P. 1998. Convenience store practices and progress with efficient consumer response: the Minnesota case. Working Paper 98-03, The Retail Food Industry Center, University of Minnesota, St. Paul, MN.
- King, R.P. 1998. Information and communications technology-based tools for reengineering interfirm business processes: the effecient consumer response initiative. Revista Brasileira de Agroinformatica 1:17-27.
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Progress 01/01/97 to 12/31/97
Outputs
NEED FOR, VALUE OF, AND ADOPTION OF INFORMATION SYSTEMS: (1) A field test of the WEEDSIM model for soybeans was completed. The economic performance of model generated treatments was not significantly different from that of standard herbicide treatments. (2) Data collected in a 1991 mail survey were analyzed to characterize similarities and differences between farms managed by men and women. A manuscript on results from this analysis is nearly ready for journal submission. Men and women managers are similar in age, but, on average, women managers have more formal education. Women managers are more concentrated in specialty farms than men. Average gross farm income, net farm profit, family income, and outstanding debt are all significantly lower on farms managed by women. However, average debt-to-asset and return-on-equity ratios are not significantly different for farms managed by women and men. ORGANIZATIONAL STRUCTURE AND INFORMATION SYSTEMS IN AGRIBUSINESSES: (1)
Case studies on managerial compensation practices in local cooperatives in MN, ND, and WI were completed and published. Findings suggest that successful cooperatives are reluctant to include incentive-based bonuses in compensation packages. (2) Results from Paul Phumpiu's dissertation help explain how technology and the institutional environment affect firms choice of organizational form for vertical relationships. The dissertation includes case studies of the swine industry and the retail food industry. (3) Preliminary findings from a study of information technology and business practice adoption in convenience stores suggest that store that have adopted practices associated with the Efficient Consumer Response initiative have higher sales per square foot of selling area and inventory turnover. (4) Research on 'new generation' cooperatives in Minnesota continues. A model designed to predict when this organizational form is preferred to traditional cooperatives and investor oriented
firms has been refined, and case study research of new generation cooperatives has been initiated.
Impacts
(N/A)
Publications
- HARDAKER, J.B., HUIRNE, R.B.M., BARRY, P.J., and KING, R.P. 1997. Risk management strategies in agriculture: the state of the art and future perspectives; executive summary. In Risk Management Strategies in Agriculture: State of the Art and Future Perspectives, R.B.M. Huirne, J.B. Hardaker, and A.A. Dijkhuizen, eds. Wageningen, The Netherlands: Wageningen Agricultural University, pp. ix-xiv.
- KING, R.P. 1997. Managerial decision making. In Beyond Agricultural Economics: Management, Investment, Policy, and Methodology, A.A. Schmid, ed. East Lansing, MI: Michigan State University Press, pp. 7-26.
- BUHLER, D.D., KING, R.P., SWINTON, S.M., GUNSOLUS, J.L., and FORCELLA, F. 1997. Field evaluation of a bioeconomic model for weed management in soybean (Glycine max). Weed Science 45:158-165.
- KING, R.P. and PHUMPIU, P.F. 1997. ECR: A revolution in the retail food system. Minnesota Agricultural Economist. No. 688. St. Paul: Minnesota Extension Service, Univ. of MN, pp. 1-4.
- KING, R.P., TRECHTER, D.D., and COBIA, D. 1997. Managerial compensation in Midwestern cooperatives: results of a follow-up study. Staff Paper P97-11. St. Paul: Dept. of Applied Economics, Univ. of MN.
- LOHANO, H.D. 1997. The Cost-Size Relationship for Corn and Soybeans in Minnesota. M.S. Plan B Paper. St. Paul: Dept. of Applied Economics, Univ. of MN.
- PHUMPIU, P.F. 1997. Institutional and Technological Innovations and the Changing Form of Business Relationships: Evidence from the Food Industry. Ph.D. Thesis, Department of Applied Economics, University of Minnesota, St. Paul, MN.
- PHUMPIU, P.F. and KING, R.P. 1997. Adoption of ECR practices in Minnesota grocery stores. Working Paper 97-01, The Retail Food Industry Center, University of Minnesota, St. Paul, MN.
- TRECHTER, D.D., KING, R.P., COBIA, D.W., and HARTELL, J.G. 1997. Case studies in executive compensation in agricultural cooperatives. Review of Agricultural Economics 19:492-503.
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Progress 01/01/96 to 12/30/96
Outputs
MIN-14-035 NEED FOR, VALUE OF, AND ADOPTION OF INFORMATION SYSTEMS: Two studies on the value of information in weed management were completed. (1) In a four-year field test the WEEDSIM model made recommendations for corn and soybean that adequately controlled weeds, reduced herbicide use, and increased gross margins when compared to standard weed management practices. (2) Benefits of site specific management for weed control in corn and soybean were found to be affected by weed pressure and patchiness. Economic benefits from site specific management of weeds may not be large enough to offset added expenses, but there are also important environmental benefits from site specific management. DECISION SUPPORT SYSTEMS: A description of the GWM decision support system for weed management was published. ORGANIZATIONAL STRUCTURE AND INFORMATION SYSTEMS IN AGRIBUSINESSES: (1) Analysis of data collected during the second year of a study of compensation practices in local
cooperatives in Minnesota and Wisconsin has been completed. These data have been supplemented by a series of case studies on compensation practices. Manuscripts on findings are being prepared (2) A study of the impacts of Efficient Consumer Response (ECR) at the retail grocery store level has been completed and a report of findings is being prepared. Stores that scored higher in ECR "readiness" have significantly higher sales per labor hour, sales per square foot, and inventory turnover. (3) Research on "new generation" cooperatives in M.
Impacts
(N/A)
Publications
- Ehlert, K.S. 1996. Economies of Size and Scope of Local Agricultural Cooperatives in the Upper Midwest. M.S. Thesis. Department of Applied Economics, University of Minnesota.
- Forcella, F., R.P. King, S.M. Swinton, D.D. Buhler, and J.L. Gunsolus. 1996. Multi-year validation of a decision aid for integrated weed management in row crops. Weed Science 44:650- 661.
- King, R.P. and C.L. Dobbins. 1996. Farm information systems for cash grain, forage, and fiber farms. Adoption and Use of Farm Information Systems. North Central Regional Publication 339, The Ohio State University, pp. 37-46.
- King, R.P. and P.F. Phumpiu. 1996. Reengineering the food supply chain: the ECR initiative in the grocery industry. American Journal of Agricultural Economics 78:in press.
- King, R.P., S.M. Swinton, D.W. Lybecker, and C.A. Oriade. 1996. The economics of weed control and the value of weed management information. In Weed Biology, Soil Management, and Weed Management,
- Hatfield, J. L., D.D. Buhler, and B.A. Stewart, Oriade, C.A., R.P. King, F. Forcella, and J.L. Gunsolus. 1996. A bioeconomic analysis of site-specific management for weed control. Review of Agricultural Economics 18:523-535.
- Wiles, L.J., R.P. King, E.E. Schweizer, D.W. Lybecker, and S.M. Swinton. 1996. GWM: General Weed Management Model. Agricultural Systems 50:355-376.
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Progress 01/01/95 to 12/30/95
Outputs
NEED FOR, VALUE OF, AND ADOPTION OF INFORMATION SYSTEMS: Site specific management and delayed planting are two management practices that have the potential to increase profits and reduce harmful environmental effects in crop production. A simulation analysis of the value of site specific management for weed control indicated that it yields modest increases in net return and modest decreases in herbicide use when weeds are concentrated in patches in a field. The benefits may not be large enough to cover the added costs for data collection and equipment required for site specific management. A simulation analysis of delayed planting, which allows early emerging weeds to be killed by pre-plant tillage operations, can increase net returns substantially, especially when weed populations are high. MANAGEMENT SUPPORT SOFTWARE: (1) A general description of MarketTools, a computerized commodity marketing game, has been published. (2) Key features of the position report from the
MarketTools software have been described in an article. This position report summarizes current inventories, future commitments, and returns from previous decisions. The position report was used to compare five marketing strategies. ORGANIZATIONAL STRUCTURE AND INFORMATION SYSTEMS IN AGRIBUSINESSES: (1) Analysis of data collected during the second year of a study of compensation practices in local cooperatives in Minnesota and Wisconsin has nearly been completed. These data have been supplemented by a series of case studies on co.
Impacts
(N/A)
Publications
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Progress 01/01/94 to 12/30/94
Outputs
NEED FOR, VALUE OF, AND ADOPTION OF INFORMATION SYSTEMS: (1) A facilitator's guide for workshops on farm information system needs was published as a regional publication. (2) The WEEDSIM bioeconomic model was used to assess the value of weed seed and weed seedling density information for weed control in corn and soybean. Estimates for the value of seedling counts range from $20 to $54 per hectare. The value increases with weed pressure. Weed seed counts add little value to this information. (3) A preliminary analysis of the value of site specific management for weed control indicated that site specific management yields modest increases in net return and modest decreases in herbicide use when weeds are concentrated in patches in a field. MANAGEMENT SUPPORT SOFTWARE: (1) A general description of WEEDSIM, a bioeconomic model for analyzing weed management decisions has been published. (2) An initial release version of, GWM, a decision support system for weed management
decisions, has been published in cooperation with scientists in Colorado and Michigan. ORGANIZATIONAL STRUCTURE AND INFORMATION SYSTEMS IN AGRIBUSINESSES: Data collection and analysis have been completed for the second year of a study of compensation practices in local cooperatives in Minnesota and Wisconsin. The study has also been expanded to North Dakota. Findings from the first year are reported in a forthcoming publication.
Impacts
(N/A)
Publications
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Progress 01/01/93 to 12/30/93
Outputs
NEED FOR, VALUE OF, and ADOPTION OF INFORMATION SYSTEMS: Findings from farm information system workshops conducted from 1990 through 1993 have been summarized in papers presented in the Netherlands and Hungary. Findings underscore the importance of computerized farm information systems but also point to the need for improved tools for operational decisions, more effective communications within farm firms, and stronger linkages to external information sources and advisory services. MANAGEMENT SUPPORT SOFTWARE: A preliminary version of GWM, a decision support system for weed management decisions, has been completed and demonstrated to weed scientists and agricultural economists. In cooperation with scientists in Colorado and Michigan, the model and documentation are being revised for initial release in 1994. ORGANIZATIONAL STRUCTURE and INFORMATION SYSTEMS IN AGRIBUSINESSES: (1) A theoretical model of optimal incentive design in cooperative firms is currently being
developed. Initial results predict that cooperatives will make greater use of bonuses than do investor owned firms in which managers have an equity position. (2) Data collection and analysis have been completed for a study of compensation practices in local cooperatives in Minnesota and Wisconsin. (3) A theoretical model for assessing the effect of centralized decision making in business firms has been refined. Simulation results based on the model identify conditions under which centralized structures dominate decentralized structures.
Impacts
(N/A)
Publications
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Progress 01/01/92 to 12/30/92
Outputs
NEED FOR, VALUE OF, AND ADOPTION OF INFORMATION SYSTEMS: A facilitator's guide for workshops on farm information system needs has been prepared. Analysis of data from a 12-state survey of farmers has been initiated. A study of sales levels in the agricultural computing industry was conducted in cooperation with the Association of Agricultural Computing Companies. A paper on the value of scouting data for weed management decisions has been prepared in cooperation with Scott Swinton of Michigan State University. MANAGEMENT SUPPORT SOFTWARE: Software designed to record price and marketing transaction data (MarketTools) has been developed and tested. The market timing performance of option-based price forecasts was evaluated for corn. These forecasts did not consistently predict the direction of change in futures prices. The user interface for WeedSim, a bioeconomic model that supports weed management decisions for corn and soybean production, is being revised in
cooperation with scientists in Colorado. PROBLEM RECOGNITION AND PROBLEM SOLVING STRATEGIES: Initial design for a study of decision processes in commodity marketing has been completed in cooperation with Larry Lev of Oregon State University. ORGANIZATIONAL STRUCTURE AND INFORMATION SYSTEMS IN AGRIBUSINESSES: A theoretical model that assesses the effect of organizational structure on operating performance and investments in information has been refined and used in an empirical analysis of these issues in grain cooperatives.
Impacts
(N/A)
Publications
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Progress 01/01/91 to 12/30/91
Outputs
NEED FOR, VALUE OF, AND ADOPTION OF INFORMATION SYSTEMS: Materials for farmer workshops on information system needs have been modified and tested in four workshops. Analysis of data from a 12-state survey of farmers has been initiated. Results from a study of the economics of information systems in local cooperatives have been published. A paper on the use of hedonic pricing models to value software characteristics was prepared with Tim Cross of Oregon State University. MANAGEMENT SUPPORT SOFTWARE: Software designed to record price and marketing transaction data has been developed and is being tested in several marketing clubs. Alternative designs for sequentially updated cash price and basis forecast models have been identified and evaluated. Option-based price forecasting software was completed and released. An initial version of software to support weed management decisions for corn and soybean production has been completed and tested. PROBLEM RECOGNITION AND
PROBLEM SOLVING STRATEGIES: A paper on the use of protocol analysis in the study of farmer decision processes has been prepared with Craig Dobbins of Purdue University. ORGANIZATIONAL STRUCTURE AND INFORMATION SYSTEMS IN AGRIBUSINESSES: Literature review has been initiated for a study of alternative incentive structures for managers of local cooperatives.
Impacts
(N/A)
Publications
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Progress 01/01/90 to 12/30/90
Outputs
INFORMATION SYSTEM REQUIREMENTS: Standardized materials have been developed for use in workshops on farm information needs to be conducted in 1991. Analysis of a local cooperative information system survey has been completed. Computerization is more widespread in farm supply cooperatives than in grain cooperatives. Computerization is associated with improved operating performance in farm supply cooperatives. Results from a study of centralization of decision making authority in grain marketing indicate that there are not significant advantages associated with centralization of selling activities. DATABASE DESIGN STANDARDS: Commodity marketing management database design standards have been developed. Major components of the database are price records, market accounts, and planning data. PROTOTYPE DECISION SUPPORT AND EXPERT SYSTEM COMPONENTS: A microcomputer program for constructing option-based price probability distributions is ready for release. Basis forecasting
models are being developed and tested. A dynamic programming model of grain elevator management has been developed and tested. MARKETS FOR INFORMATION PRODUCTS AND SERVICES: Current corn root worm scouting methods were found to have significant value in continuous corn production. A shift to more intensive methods is not warranted. Model development and parameter estimation are under way for a bioeconomic model of weed management in corn and soybeans.
Impacts
(N/A)
Publications
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Progress 01/01/89 to 12/30/89
Outputs
INFORMATION SYSTEM REQUIREMENTS: Data on information system characteristics and costs for 63 local farm supply and grain cooperatives in Minnesota have been analyzed. Farm supply cooperatives are more highly computerized than grain cooperatives. There is not a statistically significant relationship between degree of computerization and technical or allocative efficiency. Initial design for farmer workshops on information requirements has been developed. Preparations are being made for trial workshops, which will be a vehicle for data collection on information system needs. DATABASE DESIGN STANDARDS: A manuscript describing the structure of a marketing management database is being prepared. PROTOTYPE DECISION SUPPORT AND EXPERT SYSTEM COMPONENTS: Alternative techniques for detrending yield data have been evaluated. Contrary to expectations, OLS outperforms robust methods. Methods for combining farm and county level data in constructing yield distributions have been
refined. Data entry, analysis, and reporting capabilities have been extended in the marketing management decision support system, MMS. MARKETS FOR INFORMATION PRODUCTS AND SERVICES: Parameter estimation and model development are under way in an analysis of the value of information in managing corn rootworm and European corn borer in continuous corn. A theoretical model of the effect of organizational structure on information expenditures, innovation, and profitability has been developed.
Impacts
(N/A)
Publications
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Progress 01/01/88 to 12/30/88
Outputs
INFORMATION SYSTEM REQUIREMENTS: Data on information system characteristics andinformation system costs have been collected for a sample of 66 local farm supply and grain cooperatives in Minnesota. These data are being used in a descriptive analysis of information systems in local cooperatives and in an econometric analysis of the effects information system investments have on financial performance. DATABASE DESIGN STANDARDS: A standard database structure for marketing transaction records has been developed to go along with the price records database structure previously developed. PROTOTYPE DECISION SUPPORT AND EXPERT SYSTEM COMPONENTS: An improved model for constructing option-based price probability assessments has been developed and tested; an expert system that helps users enter and adjust herd information data for a sow culling model has been developed; and methods for combining county and farm level data in constructing farm level yield distributions have been
developed. MARKETS FOR INFORMATION PRODUCTS AND SERVICES: Yield and pest population dynamics components have been specified and estimated for a simulation model designed to assess the value of scouting information in corn pest management decisions.
Impacts
(N/A)
Publications
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Progress 01/01/87 to 12/30/87
Outputs
INFORMATION SYSTEM REQUIREMENTS: Impacts of information technology on organizational structure and competitive strategy of local cooperatives are examined in "Strategic Responses to Changes in Information Technology." This provides some of the theoretical basis for a study of the economic impacts of information systems in local coops. Data collection for that study, which will provide insights on IS needs, is underway. DATABASE DESIGN STANDARDS: A standard commodity price records database structure has been developed and is being tested. This provides a flexible data resource for a wide range of marketing management models. PROTOTYPE DECISION SUPPORT AND EXPERT SYSTEM COMPONENTS: The performance of probabilistic price forecasts derived from option premiums has been evaluated for corn, soybeans, cattle, and hogs. All except hog forecasts are well calibrated and so provide reliable information for decision making. A sow culling analysis model that can be linked to
production record systems has also been developed. It calculates economic benefit from retaining a sow and is sensitive to changes in sow status. MARKETS FOR INFORMATION PRODUCTS AND SERVICES: A study of the costs and benefits of scouting information in corn pest management decisions has been initiated.
Impacts
(N/A)
Publications
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Progress 01/01/86 to 12/30/86
Outputs
NONFARM FIRM MANAGEMENT AND INFORMATION NEEDS: MIS problems of small and large agribusiness firms and information providers are identified in the paper on MIS for agribusiness firms. Research issues related to information systems analysis and design for small firms, the design and development of MIS components, and markets for information products and services are discussed. A literature review on MIS planning and evaluation has been initiated. COMMODITY MARKETING DECISION SUPPORT: The performance of option-based probabilistic price forecasts has been evaluated for Treasury Bonds and soybeans. T-bond forecasts are well calibrated. Soybean forecasts tend to overestimate price variability. This may be due to traders' inexperience or market inefficiencies. PRODUCTION/MARKETING/FINANCIAL CONTROL SYSTEMS: ARMS, a microcomputer program for evaluating production and marketing risk management strategies will be released early in 1987. A study on the value of interpretive
summaries of monthly financial reports has been initiated to assess the feasibility of developing an expert system for this purpose. RISK MANAGEMENT METHODS: The value of information used in weed management decisions was assessed in the paper on bioeconomic modeling. Strategies that base herbicide decisions on weed seed counts increase net returns by $1.08 to $3.24 per hectare, depending on initial weed seed numbers. It is unlikely that this is sufficient to offset the costs of making those counts.
Impacts
(N/A)
Publications
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Progress 01/01/85 to 12/30/85
Outputs
NONFARM FIRM MANAGEMENT AND INFORMATION NEEDS: Five key issues for farm and rural firm managers--managing innovation and change, managing risk, organizational design, information systems design, and human resource management--were identified in the King and Sonka paper on management issues. Sources of failure in markets for information products and services were identified and the implications for both farmers and product suppliers were examined. COMMODITY MARKETING DECISION SUPPORT: A new method for deriving probabilistic price forecasts from commodity option values and a new test for evaluating forecast performance was developed. These forecasts require no assumptions about distribution form and are easily updated. Initial test results (reported in a forthcoming paper) indicate this method is successful in characterizing actual price distributions. This approach will be implemented in MMS, a commodity marketing management decision support system. Major
components of MMS are: record keeping, external data access, forecasting, and strategy evaluation. PRODUCTION/MARKETING/FINANCIAL CONTROL SYSTEMS: ARMS, a microcomputer program for evaluating production and marketing risk management strategies under yield and price uncertainty, has been substantially revised. RISK MANAGEMENT METHODS: General purpose software modules have been developed for stochastic simulation, sequential regression, and robust regression. Documentation and source code will be included in a forthcoming publication.
Impacts
(N/A)
Publications
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Progress 01/01/84 to 12/30/84
Outputs
Interview questionnaire design and sample selection are underway for an assessment of key management problems and information needs in non-farm firms serving agriculture. Components of a commodity marketing management decision support systems (DSS) have been developed. These allow analysis of alternative strategies, display probabilistic forecast information, and support marketing strategy implementation. In gaming experiments with a small panel of farmers using the DSS, subjects overrode strategies they had selected and consistently did worse than they would have had they adhered to them. Stochastic budgeting software has been developed for the integrated analysis of crop mis, crop insurance, and forward contracting decisions. Applications of the model have demonstrated significant interdependence between crop insurance and forward contracting decisions. Methodological work has focused on the development of sequential regression methods that facilitate frequent
updates of forecast models and provide information on the distribution of out of sample forecast errors. Work has also been done on alternative approaches for constructing non-parametric representations of probability distributions based on sparse data.
Impacts
(N/A)
Publications
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Progress 07/01/83 to 12/30/83
Outputs
The initial design phase for a farm level decision support system for commodity marketing has been completed. This computer-based system will include decision aids and records of past marketing performance and will access basis pattern information from a county level information source and repeatedly updated futures market price forecasts from a state level information source. This decision support system will interface with other farm level programs for production planning and cash flow analysis. A dynamic model for grain elevator management is being specified and linear decision rules are being derived from a simplified version of the model. The decision rules will identify optimal current levels of bid prices for cash grain and forward contracts as well as optimal levels of cash sales from inventory and forward sales by the elevator. Work is progressing on the automation of the interval procedure for risk perference measurement. This requires improved
understanding of how to specify levels on an absolute risk aversion measurement scale. Improved understanding of this issue will also facilitate the more effective use of stochastic dominance with respect to a function in anayses where direct preference measurements are not made.
Impacts
(N/A)
Publications
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