Progress 10/01/09 to 09/30/14
Outputs
Target Audience: agricultural producers, policy makers, peers, agribusiness managers Changes/Problems:
Nothing Reported
What opportunities for training and professional development has the project provided?
Nothing Reported
How have the results been disseminated to communities of interest? Using purchase price data from a bull auction, we show that buyers of high-priced (high quality) bulls value genetic and production characteristics differently than buyers who purchase lower-priced (low quality) bulls. The loss of an export market the size of South Korea's would cause a decline of U.S. meat industry producer surplus of $1,751 million over 10 years or 0.23% of its 10-year cumulative discounted present value. In addition, only small increases in U.S. beef exports would be necessary to offset direct costs associated with adoption of age and source verification. A key overview of changes in the Northern Great Plains grain markets and a discussion of potential longer run implications to the competition for grain and structural changes to wheat production areas and marketing is developed. Important implications about the potential oligopsonistic impacts of more concentrated grain handling facilities provides insights about potential marketing effects for small grains farmers in the region. Using a lengthy daily price time series data for North Carolina corn and soybean markets, we show that that generalized market-linkage models provide a better representation of price relationships over time, improving the understanding of price discovery dynamics and marketing strategies. High tunnels are investigated and compared to traditional crop insurance and found to mitigate risk more effectively. A new provision in crop insurance also allows individual producers to base their yield guarantee on a trend-adjusted yield, which became available to Montana wheat producers in 2012. This research demonstrates the advantages to opting for this new provision in crop insurance decisions. What do you plan to do during the next reporting period to accomplish the goals?
Nothing Reported
Impacts
What was accomplished under these goals?
Hedonic least squares estimates are commonly used to quantify the value of characteristics implicit in a product's price. However, least squares estimates only describe a characteristic's average marginal value across a spectrum of product quality levels as manifest in a price distribution. When different product qualities exist, marginal values placed on each product characteristic may substantially vary across quality market segments. Therefore, OLS estimates may not appropriately represent implicit values that vary with the quality of a product. Quantile regressions can reveal unique information about different quality segments and enhance our understanding of quality-differentiated product markets. The economic impacts of changes in age and source verification requirements and associated adjustments in international trade of U.S. beef are evaluated using an equilibrium displacement model. Because the United States lags behind many countries in adopting animal traceability systems, the United States risks losing export market access. Food security and decreased production concerns have likely prompted multinational agribusinesses to vertically integrate procurement, transportation, and export of Northern Great Plains wheat. Resulting grain demand increases may have already changed land conservation behaviors. An evaluation of these impacts can help producers and consumers of the region's small grains crops to better understand the dynamic nature of the area's marketing structure. Uncertain and changing economic conditions can have substantial effects on price relationships in spatially separated, linked agricultural markets. Although numerous studies have analyzed price relationships to characterize market linkage structures, most assume that the relationships and associated linkages are time invariant. This study extends the literature by modeling and estimating time-dependent market linkages that are conditional on changes in exogenous factors. The changing nature of crop insurance as a major tool in managing revenue risk in farm operations has caused confusion to producers regarding the optimal risk management policies. This is true for small-scale diversified farms as well as major grain producers. Two studies focus on how recent changes in farm policy influence optimal risk management.
Publications
- Type:
Journal Articles
Status:
Published
Year Published:
2013
Citation:
Adhikari, S., T.O. Knight, and Eric J. Belasco. 2013. Yield Guarantee Determination and the Producer Welfare Benefits
of Crop Insurance. Journal of Agricultural and Resource Economics. 38(1): 78-92.
- Type:
Journal Articles
Status:
Published
Year Published:
2013
Citation:
Bekkerman, A. 2013. The Changing Landscape of Northern Great Plains Wheat Markets. Choices. 28(2).
- Type:
Journal Articles
Status:
Published
Year Published:
2013
Citation:
Bekkerman, Anton, Gary W. Brester, and Tyrel J. McDonald. 2013. A Semiparametric Approach to Analyzing Quality-Differentiated Agricultural Markets. Journal of Agricultural and Applied Economics. 45(1):79-94.
- Type:
Journal Articles
Status:
Published
Year Published:
2013
Citation:
Bekkerman, A., Barry K. Goodwin, and Nicholas. E. Piggott. 2013. A Variable Threshold Band Approach to Measuring Market Linkages. Applied Economics. 45(19): 2705-2714.
- Type:
Journal Articles
Status:
Published
Year Published:
2013
Citation:
Belasco, Eric J., C. Miles, A.L. Wszelaki, S. Ponnaluru, S. Galinato, T. Marsh. 2013. High Tunnels Are My Crop
Insurance: An Assessment of Risk Management Tolls for Small-Scale Specialty Crop Producers. Agricultural and Resource Economics Review. 42(2): 403-418.
- Type:
Journal Articles
Status:
Published
Year Published:
2013
Citation:
Pendell, Dustin L., Glynn T. Tonsor, Kevin C. Dhuyvetter, Gary W. Brester, and Ted Schroeder. 2013. Evolving U.S. Beef Export Market Access Requirements for Age and Source Verification. Food Policy. 43:332-340.
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Progress 01/01/13 to 09/30/13
Outputs
Target Audience: Agricultural Producers, Peers, Colleagues, Students Changes/Problems: Eric Belasco was added to the project in the past two years. Assistant Professor, Montana State University, Department of Agricultural Economics and Economics What opportunities for training and professional development has the project provided? Attend the Western Agricultural Economics Association Annual Meeting Attend the Agricutlural and Applied Economics Association Annual Meeting How have the results been disseminated to communities of interest? In-person presentations. Seminars. Webinars. Popular Publications Television and Newspaper Interviews What do you plan to do during the next reporting period to accomplish the goals? Conduct unbiased research on each of the objectives. Disseminate research results in professional journal articles and outreach publications. Conduct in-person presenations to farmers and ranchers.
Impacts
What was accomplished under these goals?
When consumers have heterogeneous perceptions about product quality, traditional parametric methods may not provide accurate marginal valuation estimates of a product’s characteristics. A quantile regression framework can be used to estimate valuations of product characteristics when quality perceptions are not homogeneous. Semiparametric quantile regressions provide identification and quantification of heterogeneous marginal valuation effects across a conditional price distribution. Using purchase price data from a bull auction, we show that there are nonconstant marginal valuations of bull carcass and growth traits. Improved understanding of product characteristic valuations across differentiated market segments can help producers develop more cost-effective management strategies. Commodity futures contracts can be used to hedge against commodity price variability. That is, futures contracts can be used to offset unfavorable cash price movements with favorable futures contract price movements to reduce total price risk. However, an optimal hedging strategy requires that participants know the relationship between movements in the futures and cash prices. These relationships can be affected not only by volatility in a particular futures and cash price, but also by changes in other related prices, such as a cash price in a nearby market or in a nearby time period. Existing literature has only examined the bivariate futures/cash price relationship, without explicitly considering spatial and temporal effects of other prices. A vector autoregressive multivariate generalized autoregressive conditional heteroskedasticity (VAR-MGARCH) model is used to construct a time-varying correlation matrix for commodity prices across linked markets and across linked commodities. In-sample and out-of-sample portfolio variance comparison among no hedge, bivariate GARCH, and MGARCH models indicates that hedge ratios estimated using the MGARCH approach reduce agricultural producers’ and commercial consumers’ risks in futures market participation.
Publications
- Type:
Journal Articles
Status:
Published
Year Published:
2013
Citation:
Pendell, Dustin L., Glynn T. Tonsor, Kevin C. Dhuyvetter, Gary W. Brester, and Ted Schroeder. Evolving U.S. Beef Export Market Access Requirements for Age and Source Verification. Food Policy. 43(2013):332-340.
Bekkerman, Anton, Gary W. Brester, and Tyrel J. McDonald. A Semiparametric Approach to Analyzing Quality-Differentiated Agricultural Markets. Journal of Agricultural and Applied Economics. 45,1(2013):79-94.
Belasco, Eric J., Carol Miles, Anette L. Wszelaki. Srinivasa Ponnaluru, Suzette Galinato, Thomas Marsh. High Tunnels Are My Crop Insurance: An Assessment of Risk Management Tools for Small-Scale Specialty Crop Producers. Agricultural and Resource Economics Review. 42,2(2013):403-418.
Adhikari, Shyam, Thomas O. Knight, and Eric J. Belasco. Yield Guarantee Determination and the Producer Welfare Benefits of Crop Insurance. Journal of Agricultural and Resource Economics. 38,1(2013):78-92.
Bekkerman, Anton. The Changing Landscape of Northern Great Plains Wheat Markets. Choices. 28(2):2013.
Bekkerman, Anton, Barry. K. Goodwin, and Nicholas E. Piggott. 2013. A Variable Threshold Band Approach to Measuring Market Linkages. Applied Economics. 45(19): 2705-2714.
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Progress 01/01/12 to 12/31/12
Outputs
OUTPUTS: Wind-borne diseases can spread rapidly and cause large losses. Producers may have little incentive to prevent disease spread, because this may not be welfare-maximizing. This study proposes a market-based mitigation program that indemnifies producers against disease-related losses and provides an incentive to neighboring producers to take preventive action, which can substantially mitigate infestations, reduce the likelihood of catastrophic losses, and increase social welfare. The Supplemental Revenue Assistance Payments (SURE) program, introduced in the 2008 Farm Bill, provides disaster aid payments to producers in counties eligible for disaster payments and individual producers with crop production losses that exceed 50% of their expected yields. We show that the program's "rules of the game" and subsidies provide incentives for changes in production choices that encourage crop insurance participation, reducing adverse selection but increasing total tax payer costs. We empirically analyze crop insurance participation responses to the introduction of the SURE program by corn, soybean, and wheat producers. The rotational effects and economic potential of incorporating fall-seeded pea (Pisum sativum L.) and lentil (Lens culinaris Medik) into conventional wheat (Triticum aestivum L.)-based cropping systems in the northern Great Plains are not well understood. Two 2-yr crop rotation experiments were conducted in central Montana to investigate how winter pea hay, lentil green manure, and lentil grain affects subsequent winter wheat yield and protein content, as well as the economic returns of the systems under no-till conditions. In Exp. 1, a winter pea hay-winter wheat (WP-WW) rotation was compared to fallow-winter wheat (FW-WW) and spring wheat-winter wheat (SW-WW) rotations. In Exp. 2, a winter lentil for green manure-winter wheat [WL(m)-WW] rotation was compared to a winter lentil grain-winter wheat [WL(g)-WW] rotation. Four different rates of N were applied to the winter and spring wheat. Winter wheat yield in the WP-WW rotation was 2193 kg ha-1, which was equivalent to the yield in the FW-WW rotation (2136 kg ha-1), and much greater than the SW-WW rotation (1155 kg ha-1). PARTICIPANTS: Not relevant to this project. TARGET AUDIENCES: Not relevant to this project. PROJECT MODIFICATIONS: Not relevant to this project.
Impacts
An equilibrium displacement model simulates introduction of the program for U.S. soybeans. Simulations reveal that the market-based solution contributes to minor market distortions but also reduces social welfare losses and could succeed for other at-risk commodities. An empirical evaluation of crop insurance participation responses to the introduction of the SURE program by corn, soybean, and wheat producers reveals an important outcome. Results suggest that recent increases in crop insurance participation may be due to the direct incentives created by the SURE program and indirect incentives that are related to farmers rationally adjusting their production decisions. The rotational effects and economic potential of incorporating fall-seeded peas and lentils into conventional wheat could be substantial. Averaged over all N rates, the WP-WW, FW-WW, and SW-WW systems had $196, $116, and $41 ha-1 net return, respectively. In Exp. 2, the WL(m)-WW rotation produced greater grain yield and protein content at lower N input levels, indicating a greater N benefit. Nevertheless, the WL(g)-WW system generated $213 ha-1 net profit while the WL(m)-WW system produced $92 ha-1. Therefore, the winter pea cover crop, used for livestock feed, improves the system profitability.
Publications
- Chen, C., K. Neill, M. Burgess, and A. Bekkerman. 2012. Agronomic Benefit and Economic Potential of Introducing Fall-seeded Pea and Lentil into Conventional Wheat-Based Crop Rotations. Agronomy Journal. 104(2):215-224.
- Bekkerman, A., N. E. Piggott, B. K. Goodwin, and K. Jefferson-Moore. 2012. A Market-based Mitigation Program for Wind-Borne Diseases Agricultural and Resource Economic Review. 41(2):175-188.
- Bekkerman, A., V. H. Smith, M. Watts. 2012. The SURE Program and Incentives for Crop Insurance Participation: A Theoretical and Empirical Analysis. Agricultural Finance Review. 72(3):381-401.
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Progress 01/01/11 to 12/31/11
Outputs
OUTPUTS: Commodity futures contracts can be used to hedge against commodity price variability. That is, futures contracts can be used to offset unfavorable cash price movements with favorable futures contract price movements to reduce total price risk. However, an optimal hedging strategy requires that participants know the relationship between movements in the futures and cash prices. These relationships can be affected not only by volatility in a particular futures and cash price, but also by changes in other related prices, such as a cash price in a nearby market or in a nearby time period. Existing literature has only examined the bivariate futures-cash price relationship, without explicitly taking into account the spatial and temporal effects of other prices. In 2008, the U.S. Congress introduced the Food, Conservation, and Energy Act, which created a suite of five permanent disaster aid programs for U.S. agricultural producers - a major change from the existing ad hoc disaster aid policy. The largest and most expensive of the new disaster aid programs was the Supplemental Revenue Assistance Payments (SURE) program for crops. However, even the anticipated $714 million (revised from $425 million) in annual costs was an underestimate of actual outlays, which were over $1.7 billion during 2008 and 2009. One reason that outlays may have exceeded estimates was the moral hazard and adverse selection problems that may have been the consequence of the SURE program's structure. PARTICIPANTS: Not relevant to this project. TARGET AUDIENCES: Not relevant to this project. PROJECT MODIFICATIONS: Not relevant to this project.
Impacts
Understanding spatial and temporal factors affecting cash prices in linked markets can improve producers' ability to hedge price risk. A multivariate modeling approach is used to characterize the relationship among Montana wheat prices across linked markets, wheat types, and quality (protein) levels, and compare the empirical results to those using existing modeling methods. Outcomes of the study show that incorporating information about linked prices improves the estimation of the futures-cash price relationships and improves agricultural market participants' ability to hedge price risk. Specifically, producers are able to reduce the volatility of their local and futures positions by accounting for multivariate price relationships. Moreover, the outcomes confirm the need to use more sophisticated modeling approaches for accurately capturing the numerous interrelations that occur across markets. The effects of the SURE program structure can have important impacts on producers' moral hazard and adverse selection incentives. An economic model is used to identify and quantify these impacts. The results provide inferences about policy changes that may reduce the adverse economic incentives introduced by the program. The implications and recommendations in the study can provide policy makers with tools to reduce economic inefficiencies that may have been exacerbated by the structure of disaster aid programs introduced in the 2008 Farm Bill legislation.
Publications
- Bekkerman, A. 2011. Time-Varying Hedge Ratios in Linked Agricultural Markets. Agricultural Finance Review 71(2):179-200.
- Watts, M. J., and A. Bekkerman. Agricultural Disaster Aid Programs: A SURE Invitation to Wasteful Spending. American Boondoggle: Fixing the 2012 Farm Bill. AEI. Washington, D.C. 2011.
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Progress 01/01/10 to 12/31/10
Outputs
OUTPUTS: Organizers of formal bull auctions usually produce catalogs for potential buyers that advertise bull performance measures and genetic characteristics including expected progeny differences (EPDs) and simple performance measures (SPMs). Buyers use this information to make decisions regarding bull purchases based on heritable bull traits. Residual feed intake (RFI) is a relatively new simple performance measure of feed efficiency. The Midland Bull Test (MBT) company measures RFI in addition to other simple performance measures during bull performance testing. MBT records individual animal feed intake using GrowSafe technology. Residual feed intake for each bull is calculated as the difference between actual and expected feed intake. Livestock identification and tracing in the United States has attracted considerable interest in recent years. Both domestic and international consumers are increasingly demanding traceability and associated meat product quality attributes. Furthermore, global changes are occurring in animal identification adoption to the point where the United States lags behind major meat exporters as well as important meat importers. As such, meat products from animals that have identification and traceability systems are becoming the global standard. We develop a multi-market equilibrium displacement model to evaluate the impacts of animal identification systems. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
Cow/calf producers seek to reduce costs and increase profits by selecting bulls that produce more efficient offspring. MBT included RFI along with EPDs and other SPMs in its 2008 and 2009 sale catalogs. A linear hedonic price model is used to quantify RFI values with various bull performance measures from MBT sale catalogs and associated bull sale prices. Analyses indicate that buyers are willing to pay more for bulls that are RFI efficient (P < 0.01). Although other performance measures (e.g., weight gain, birth weight, and age) were valued more highly (P < 0.01) by bull purchasers, an RFI simple performance could eventually be valued to the point where an RFI EPD may be developed. Such a measure could substantially reduce production costs for cow-calf and feedlot producers. Producer and consumer welfare would be affected by the implementation of an animal identification and tracing system. We find that a modest increase in domestic demand for beef would offset the costs of an animal identification system. This study estimates 10-year discounted present value losses of producer surplus under various animal identification and tracing program adoption rates and demand scenarios. Losses are relatively small compared to the total surplus for each industry. If no demand enhancements occur and only adoption costs result from implementing an animal identification and tracing system (with a 90% adoption rate), total meat industry producer surplus would decline by $3.89 billion or 0.49% over a 10-year period.
Publications
- McDonald, Tyrel J., Gary W. Brester, Anton Bekkerman, and John A. Paterson. "Case Study: Searching for the Ultimate Cow: The Economic Value of Residual Feed Intake at Bull Sales." The Professional Animal Scientist. 26,6(2010):655-660.
- Pendell, Dustin L., Gary W. Brester, Ted C. Schroeder, Kevin C. Dhuyvetter, and Glynn T. Tonsor. "Animal Identification and Tracing in the United States." American Journal of Agricultural Economics. 92,3(2010):927-940.
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Progress 01/01/09 to 12/31/09
Outputs
OUTPUTS: A simulation model was developed to evaluate the relationship between USDA's farmer's-share-of-the-retail-dollar (FS) statistics and cattle/hog producer well-being. We estimate changes in cattle and hog FS statistics and their relationship with producer surplus (PS) for changes in various exogenous factors. The method accounts for correlations among structural parameter estimates while simulating multivariate distributions of joint parameter realizations. A case study of the development of Kamut brand wheat and wheat products was completed. Kamut brand wheat is organically-produced, and is used to make cereals, breads, cookies, snacks, pancakes, bread mixes, bulgur, pasta, and baked goods. Whole wheat products produced from Kamut brand wheat are less bitter than those produced from modern wheat varieties. Europe represents approximately two-thirds of the market for this product. We develop a case study of this niche market. PARTICIPANTS: Not relevant to this project. TARGET AUDIENCES: Agricultural policy makers, legistative staffs, agricultural producers, agricultural economists PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
Conventional wisdom appears to support the thesis that declines in USDA's farmer's-share-of-the-retail-dollar (FS) statistics are indicators of low returns to agricultural production. The simulations indicate that relationships between FS and PS depend on the source of exogenous shocks. The lack of informational content in FS statistics suggests that these data should not be used for policy purposes. Producers who enter non-commodity, niche markets face many obstacles and substantial risks. For example, it took 20 years for the principal of Kamut brand wheat to propagate an ancient Egyptian wheat variety that is generally known as Khorasan wheat. The importance of trademarking such varieties as a means of creating entry barriers is one of the central themes of the case study. Several entrepreneurial aspects of entering a vertically-integrated, value added market are highlighted.
Publications
- Brester, Gary W, John M. Marsh, and Joseph Atwood. "Evaluating the Farmer's-Share-of-the-Retail-Dollar Statistic" Journal of Agricultural and Resource Economics. 34,2(2009):213-236.
- Brester, Gary W, Michael A. Boland, and Brenna Grant. "Marketing Organic Pasta from Big Sandy to Rome: It's a Long Kamut" Review of Agricultural Economics. 31,2(2009):359-369.
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Progress 01/01/08 to 12/31/08
Outputs
OUTPUTS: A lack of high quality beef has been cited as one of the primary factors for the 50% decline in beef demand from mid-1970s to the late-1990's. Cattle producers argue that appropriate price premiums are not sufficient to encourage the production of high quality cattle. Although some improvement in carcass quality can be made by the cattle feeding and processing sectors, substantial improvements in quality must include genetic progress. To the extent that genetics are an important contributor to improving fed cattle quality, price signals must also be transmitted to feeder cattle producers because most genetic progress in the beef industry occurs through seedstock selection. If consumers demand higher quality beef, this signal should be sent through the marketing chain to producers of feeder cattle. If such signals are not being transmitted, then cow-calf producers would not place any value on expected carcass-quality heritable traits when purchasing bulls. A hedonic analysis of four major U.S. beef seedstock producers indicates that bull purchasers place relatively high values on a bull's ability to produce progeny with improved carcass-quality traits. Transition to no-till (NT) and organic (ORG) farming systems may enhance sustainability. Our objectives were to compare transitional crop productivity and soil nutrient status among diversified NT and ORG cropping systems in Montana. Three NT systems were designed as 4-yr rotations, including a pulse (lentil [Lens culinaris Medik.] or pea [Pisum sativum L.]), an oilseed (canola [Brassica napus L.] or sunflower [Helianthus annuus L.]) and two cereal crops (corn [Zea mays L.], proso millet [Panicum miliaceum L.], or wheat [Triticum aestivum L.]). No-till continuous wheat was also included. The ORG system included a green manure (pea), wheat, lentil, and barley (Hordeum vulgare L.) and received no inputs. In May 2003, a beef cow in the Province of Alberta tested positive for bovine spongiform encephalopathy (BSE or mad cow disease). In December of 2003, a dairy cow in the state of Washington also tested positive for BSE. These discoveries disrupted cattle and beef trade in North America and major export markets. We examine the effects of these two North American BSE events on U.S. fed and feeder cattle prices. The results indicate that the demand for U.S. beef was affected to a much greater degree by the reactions of foreign governments to the BSE announcements than by the reactions of U.S. households. We explore how a thin market responds to a subsidized put option program. The United States Department of Agriculture initiated the Dairy Options Pilot Program in 1999 in an effort to provide dairy producers with real-world experiences trading options. The volume from this program represented a large share of total trades. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
Our hedonic analysis of four major U.S. beef seedstock producers indicates that bull purchasers place relatively high values on the expectation of a bull's ability to produce progeny with improved carcass-quality traits. Ranch-specific regression results indicate that ribeye area is the first or second most important heritable trait sought by bull purchasers. A one unit increase in ribeye area EPD caused a minimum increase in bull prices of $822/head and a maximum of $2,160/head. A one unit increase in intramuscular fat EPD causes a $600/head to a $3,292/head increase in the price of bulls sold by these ranches. Other EPDs are also important factors in explaining bull price variation. For example, a one unit increase in birth weight EPD is associated with decreases of $98/head to $287/head among four ranches considered. Estimates for birth-to-yearling gain EPDs are positive and statistically significant for each ranch. A one unit increase in this EPD results in a minimum increase of $16/head, and a maximum increase of $56/head. Winter wheat in the ORG system yielded equal or greater than in the NT systems, and had superior grain quality, even though 117 kg N ha-1 was applied to the NT winter wheat. After 4 yr, soil nitrate-N and Olsen-P were 41 and 14% lower in the ORG system, whereas potentially mineralizable N was 23% higher in the ORG system. After 4 years, total economic net returns were equal between NT and ORG systems on a per hectare basis. Studying simultaneous transition to diversified NT and ORG cropping systems was instructive for increased sustainability. Results indicate that, if the USDA-MRR rule been implemented on March 7, 2005 and Japanese and South Korean markets remained closed to U.S. exports, the U.S. fed cattle and feeder cattle prices would have declined by $3.90 per cwt and $5.90 per cwt, respectively, in 2005 relative to 2004. Given the size of the 2005 U.S. calf crop and fed cattle slaughter in that year, these decreases in cattle prices would have reduced fed cattle revenues by $1,357 million (4.5% of 2005 total revenues) and feeder cattle revenues by $1,282 million (4.9% of 2005 total revenues). If Japan and South Korea had resumed imports of U.S. beef at pre-BSE levels in 2005 and the U.S. had resumed normal beef trade relations with Canada, then U.S. fed and feeder cattle prices would have increased by $3.81 per cwt and $5.75 per cwt, respectively, relative to 2004 prices. These price changes would have increased total U.S. fed cattle revenues by $1,326 million (4.3% of 2005 total revenues) and total U.S. feeder cattle revenues by $1,249 million (4.8% of 2005 total revenues). The volume from the dairy option program represented a large share of trades. Empirical analysis shows that Dairy Options Pilot Program trades occurred at significantly high prices, Dairy Options Pilot Program volume had a price-reducing effect on other options trades, and some brokers filled Dairy Options Pilot Program orders at relatively high prices. We also find that these brokers appear to be providing acceptable service to their producer clients.
Publications
- Vanek, Joseph K., Myles J. Watts, and Gary W. Brester. "Carcass Quality and Genetic Selection in the Beef Industry." Journal of Agricultural and Resource Economics. 33,3(2008):349-363.
- Miller, P.R., D.E. Buschena, C.A. Jones, and J.A. Holmes. "Transition from Intensive Tillage to No-till and Organic Diversified Annual Grain Cropping Systems: Agronomic, Economic, and Soil Nutrient Analyses." Agronomy Journal. 100(2008):591-599.
- Marsh, John M., Gary W. Brester, and Vincent H. Smith. "Effects of North American BSE Events on U.S. Cattle Prices." Review of Agricultural Economics. 30,1(2008):136-150.
- Buschena, David E. and Kevin McNew. "Subsidized Options in a Thin Market: The Dairy Options Pilot Program." Review of Agricultural Economics. 30(Spring 2008):103-119.
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Progress 01/01/07 to 12/31/07
Outputs
The Mountain States Lamb Cooperative was formed in 2001 to ensure markets for fed lambs. The Cooperative markets approximately 750,000 lambs per year, or almost 25% of U.S. domestic lamb production. The case describes how trade and exchange rates affect competitiveness in the U.S. lamb industry and how a firm's choice of strategy is dictated by global trade issues. A nationally representative mail survey of lamb producers and feeders was conducted to determine the reasons and extent for using cash (spot) markets relative to contracts for the sale of fed lambs. The survey collected information on purchase, sales and pricing methods, reasons why producers use their choice of marketing arrangements, and size of operations. U.S. lamb producers primarily use cash markets to purchase and sell lambs. However, there appears to be a slight trend away from auction markets towards other types of cash market transactions such as direct trade. Large producers are more likely to use
alternative marketing arrangements than small producers. Subsidized options programs have long been suggested as a substitute for crop insurance, but thinly traded commodities such as Minneapolis Grain Exchange Spring Wheat futures, are thought to be poor candidates for such programs. We find relatively good performance of options trades under this subsidization program despite market thinness. A long-term interdisciplinary study of agronomic sustainability and profitability of several no-till and organic rotational crops has been completed. The results suggest that several no-till and organic rotations exhibit reasonable levels of agronomic and economic sustainability. The relationship between agricultural policy and the US livestock industry was evaluated in terms of the 2007 Farm Bill. Cross-sector relationships between feed grains and the livestock and poultry sectors were evaluated with respect to recent BSE events in Canada and the U.S. increases in the demand for corn-based
ethanol, though beneficial to corn producers, investors, and ethanol producing communities, negatively affect revenues received by cattle and hog producers. On 1/4/07, the USDA proposed to expand the list of allowable products from countries that present a minimal risk of transmitting bovine spongiform encephalopathy (BSE) into the U.S. For all practical purposes, the proposal will allow U.S. beef processors to import Canadian beef cattle that exceed 30 months of age, but born after 3/1/99 (the date that Canada imposed a ruminant-to-ruminant feed ban). The proposal will allow U.S. imports of Canadian beef cattle older than 30 months (and processing beef from older animals) has generated concern among some U.S. cattle producers. The primary issue is whether or not the expansion of allowable beef imports will reduce U.S. cull cow prices. The ultimate impact of this trade action depends to a great extent on whether it causes a net increase in U.S. beef supplies, or whether imports from
Canada simply replace imports from other countries.
Impacts
This research helped producers decide on the relative merits of participating in vertical coordination/integration market structures. The trade-offs between selling lambs using cash markets versus alternative marketing arrangements were clearly identified. U.S. and Canadian BSE occurrences reduced real corn revenues in the U.S. by $0.62 billion, or 5.0% of its 2003 level. Much of the costs of crop insurance may be reduced through subsidized options efforts. The most successful rotations in an economic sense incorporated some level of crop diversity. Montana dryland producers continue to benefit from such long-term studies of rotations. Ethanol-driven impacts resulted in revenue reductions in the feeder cattle, fed cattle, and hog sectors of about 15.20 percent, 2.42 percent, and 2.76 percent of 2000-2005 annual average livestock revenues. It the proposal to allow U.S. imports of Canadian cull cows and processing beef increases U.S. beef supplies, then U.S. cull cow
prices may decline by $1.55/cwt if imports are not displaced, or $0.78/cwt if one-half of U.S. imports of Canadian cull cows and processing beef displaces beef imports from other sources. The public policy survey results suggest that producers preferred policies that promised to support agriculture and agriculture's opportunity to grow within a changing environment. Producers' preferences for pursuing new forms of support for specialty crops and creating new risk management tools shows a general preference for policies that focus on addressing emerging issues.
Publications
- Viator, Catherine L., Sheryl C. Cates, Mary K. Muth, Shawn A. Karns, and Gary W. Brester. "Cash Versus Contract Marketing in the U.S. Lamb Industry." Sheep & Goat Research Journal. 22(2007):32-41.
- Boland, Michael A., Alena M. Bosse, and Gary W. Brester. "The Mountain States Lamb Cooperative: Can Vertical Integration Keep Lamb Producers From Being Fleeced?" Review of Agricultural Economics. 29,1(Spring 2007):157-169.
- Brester, Gary W., and Vincent H. Smith. "Agricultural Policy and the U.S. Livestock Industry." Agricultural Policy for the 2007 Farm Bill and Beyond. American Enterprise Institute. 2007.
- Marsh, John M. "Cross-Sector Relationships Between the Corn Feed Grains and Livestock and Poultry Economies." Journal of Agricultural and Resource Economics. 32,1(2007): 93-114.
- Marsh, John M. "Ethanol Demand and Corn Prices: Impacts on Cattle and Hog Producers." Agricultural Marketing Policy Center, Briefing Paper No. 85. March 2007.
- Brester, Gary W., John M. Marsh, and Brenna Grant. "The Impacts of Resuming Canadian Cull Cow and Processing Beef Imports on U.S. Cull Cow Prices." Agricultural Marketing Policy Center, Briefing Paper No. 84. February 2007.
- Johnson, James B., George W. Haynes, Gary W. Brester. "The 2007 Farm Bill: Montana Producer Preferences for Agricultural, Food, and Public Policy." Agricultural Marketing Policy Center, Policy Issues Paper No. 20. February 2007.
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Progress 01/01/06 to 12/31/06
Outputs
The impact of feed costs and meat demand on livestock and grain sectors are not symmetric. North American BSE events and access to foreign beef markets after U.S. beef is declared BSE risk free results in net increases in cattle prices of $3.80 cwt to $5.75/cwt. LMR policy in the lamb industry reduced price risk in the fed lamb market. Coors Brewing Company engaged in vertical coordination/contracting activities increases its malting barley efficiency. The Mountain States Lamb Cooperative case study demonstrates how trade and exchange rates affect competitiveness in the U.S. lamb industry. Farm financial survival and profitability have a large impact on marketing and crop insurance decisions. Subsidized options programs are important for agricultural markets, and budgets for organic and no-till farming assist in developing appropriate price premiums and specialty crop prices.
Impacts
The U.S. opening up its border to Canadian live cattle and beef under the 2005 USDA - MRR rule reduces fed cattle and feeder cattle revenues by $1.36 billion and $1.28 billion, respectively. But if these Canadian impacts are coupled with U.S. access to Japanese and South Korean beef markets, fed cattle and feeder cattle revenues increase by $1.33 billion and $1.25 billion, respectively.
Publications
- Marsh, J. M., and T. McDonnell. Livestock Mandatory Price Reporting and Effects on Lamb Price Risk. Policy Paper 18, Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, November 2006.
- Marsh, J. M., and B. M. Holzer. Health Information and Impacts on the Beef Industry. Paper 17, Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, November 2006.
- Marsh, J. M. Retained Ownership-Value Added. PowerPoint Presentation. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, July 2006.
- Miller, Perry, Dave Buschena, Clain Jones, Rich Smith, and Andy Hulting. 2006. Agroeconomic Analyses of Organic and No-Till Diversified Cropping Systems in the Northern Great Plains. Ecological Society. In (CD-ROM) Agronomy Abstracts, ASA, Memphis.
- Boland, Michael A., and Gary W. Brester. Vertical Coordination in the Malting Barley Industry: A 'Silver Bullet' For Coors? Review of Agricultural Economics. 28, 2 (Summer 2006): 272-282.
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Progress 01/01/05 to 12/31/05
Outputs
Asymmetric cross effects occur subsequent to market shocks among livestock-poultry sectors and corn feed grain sectors. Impacts of BSE and re-admitting Canadian live cattle imports in 2005 on U.S. farm beef prices were estimated. A hedonic regression model was used to estimate the impact of U.S. sugar policy on Montana irrigated cropland prices. Alternative methods of procuring wheat by processors such as General Mills is investigated. Consumers paid premiums for "GMO-Free" labeled fluid milk, and Chinese grain farmers stored considerable grain in response to government-sanctioned freedom in wheat marketing.
Impacts
1) BSE in Canada and the U.S. in 2003 reduced real revenue to U.S. corn growers (feed suppliers) by 5.3%, or $0.62 billion; 2) Opening the Canadian border and regaining Asian beef markets increases net U.S. fed steer price and feeder steer price by $2.50/cwt and $4.00/cwt, respectively; 3) Montana irrigated farmland prices would decline 16-32% in the absence of state sugar beet production; 4) 500 Montana farm producers gained $150,000 by making crop insurance decision based on publicly provided information by MSU.
Publications
- Kiesel, Kristin, David Buschena, and Vincent Smith. Do Voluntary Biotech Labels Matter to the Consumer? Evidence from the Fluid Milk Market. American Journal of Agricultural Economics Vol. 87 (2005): 378-392.
- Buschena, David E., Vincent Smith, and Hua Di. Government Policies and On-Farm Wheat Allocation in Rural Chine. Australian Journal of Agricultural Economics Vol. 49 (2005): 143-158.
- Chen Zhen. Celestial Satellite and Earthly Crop Yield: Informational Content of Satellite-Based Crop Yield Forecasts. Masters Thesis. Department of Agricultural Economics and Economics. Montana State University. 2001.
- Kristin Kiesel. Consumer Response to Biotech Food Labeling: The Effects of Voluntary RBGH-Free Labels on Fluid Milk Demand. Masters Thesis. Department of Agricultural Economics and Economics. Montana State University, 2002.
- Marsh J. M., G. W. Brester, and V. H. Smith, Re-opening the U.S./Canadian Border to Live Cattle and Beef Trade:Estimated Impacts on U.S. Beef Producers. Policy Paper 9. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, MT, September 2005.
- Marsh, J. M., Livestock Marketing Issues: Impacts on Feed Grain Producers. Briefing Paper 79. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, MT, September 2005.
- Marsh, J. M., G. W. Brester, and V. H. Smith, The Impacts on U. S. Cattle Prices of Re-establishing Beef Trade Relations. Briefing Paper 74. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, MT, February 2005.
- Marsh, J. M., G. W. Brester, and V. H. Smith, The Impacts of North American BSE Discoveries on U.S. and Canadian Cattle Prices. Briefing Paper 73. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, MT, February 2005.
- Marsh, J. M., Feed Grain Volatility and Effects on Feeder Cattle Producers. Briefing Paper 72. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, MT, February 2005.
- Marsh J. M., Demand and Supply Factors in the Feed Grain Market: Effects on Corn Producers. Briefing Paper 71. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, MT, February 2005.
- Marsh, J. M. and T. McDonnell. Livestock Mandatory Price Reporting: Estimated Effects on U.S. Lamb Carcass Prices. Paper submitted to U.S. Senate Agricultural Committee for testimony on Livestock Mandatory Price Reporting. Department of Agricultural Economics and Economics. Montana State University-Bozeman, October 2005.
- Taylor, Mykel R., and Gary W. Brester. Non-Cash Income Transfers and Agricultural Land Values. Review of Agricultural Economics. 27,4 (Winter 2005): 526-541.
- Taylor, Mykel R., Gary W. Brester, and Michael A. Boland. Hard White Wheat and Gold Medal Flour: General Mills' Contracting Program. Review of Agricultural Economics. 27, 1(Spring 2005): 117-129.
- Brester, Gary W., and James B. Johnson. Livestock Risk Protection for Feeder Cattle. Briefing Paper No. 46. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, November, 2005.
- Brester, Gary W., and James B. Johnson. Forage and Rangeland Production Risk Management in Montana: Noninsured Crop Disaster Assistance Program. Briefing Paper No. 39. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, November, 2005.
- Hewlett, John, Gary W. Brester, and James B. Johnson. Rangeland Production Risk Management for Wyoming. Policy Paper No. 8. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman. November, 2005.
- Brester, Gary W., John Hewlett, and James B. Johnson. Rangeland Production Risk Management for Montana. Policy Paper No. 7. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, November, 2005.
- Brester, Gary W., and James B. Johnson. Forage Production Risk Management in Montana-Crop Insurance. Briefing Paper No. 80. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, November, 2005.
- Brester, Gary W., and David Buschena. Chickpea Production and Price Risk Management in the Northern Plains. Briefing Paper No. 78. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, August, 2005.
- Boland Michael, Gary W. Brester, and Mykel R. Taylor. Global and U.S. Wheat Gluten Industries: Structure, Competition, and Trade. Briefing Paper No. 76. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, June, 2005.
- Boland, Michael, Gary W. Brester, and Mykel R. Taylor. An Overview of the Wheat Gluten Industry. Briefing Paper No. 75. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, June, 2005.
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Progress 01/01/04 to 12/31/04
Outputs
An equilibrium displacement model of red meat and poultry indicates beef demand would have to increase 4% for feeder cattle producers to be no worse off (cover costs) under COOL. Strategic management issues for the Rocky Mountain Sugar Growers Cooperative were evaluated. Subsidized dairy options, an alternative to price insurance for dairy producers, enhanced dairy market performance. Relative volatility in retail beef demand and cattle supplies respectively accounted for 43% and 25% of cattle price changes. Prior to the BSE outbreak, 78% of October 2002 to October 2003 fed price increases were supply related, and the distribution of price and revenue benefits in the livestock industry from cost efficiencies is skewed towards processors and retailers.
Impacts
1) Variable costs of producing sweet cherries in Lake County, Montana are $4,570/acre; 2) Relative volatility in retail beef demand from 1980-2002 affected fed steer price by $12/cwt and feeder steer price by $20/cwt; 3) Reduced real food marketing costs and increased efficiencies increased boxed beef price by $16/cwt and fed cattle price by $5.25/cwt.
Publications
- Buschena, Dave and Kevin McNew. An Exploration of Market Pricing Efficiency During the Dairy Options Pilot Program. Ag Policy Paper 3. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University. Bozeman, September 2004.
- Brester, Gary W., John M. Marsh, and Joseph Atwood. Distributional Impacts of Country-of-Origin Labeling in the U.S. Meat Industry. Journal of Agricultural and Resource Economics. 29, 2 (August 2004): 206-227.
- Marsh, John M., and Gary W. Brester. Wholesale-Retail Marketing Margin Behavior in the Beef and Pork Industries. Journal of Agricultural and Resource Economics. 29, 1 (April 2004): 45-64.
- Miljkovic, Dragan, John M. Marsh, and Gary W. Brester. Japanese Import Demand of U.S. Beef and Pork: Effects on U.S. Red Meat Exports and Livestock Prices: Reply. Journal of Agricultural and Applied Economics. 36 (April 2004): 257-260.
- Marsh, J.M. Relative Volatility in the U.S. Beef Market. Briefing Paper 67. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, January 2004.
- Marsh, J.M. U.S. Beef Price Dynamics. Briefing Paper 63. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, January 2004.
- Marsh, J.M. Distribution of Cost Efficiencies in the Beef Marketing Channel. Briefing Paper 62. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, January 2004.
- Brester, Gary W., Michael A. Boland, Wendy Umberger. Vertical Coordination in the Malting Barley Industry: A Silver Bullet for Coors? Montana State University, Bozeman, 2004
- Brester, Gary, W., John M. Marsh, and Jason Jimmerson. Briefing Paper 51 (revised). Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, January 2004.
- Brester, Gary W., and Michael A. Boland. The Rocky Mountain Sugar Growers Cooperative: Sweet or Sugar-Coated Visions of the Future? Review of Agricultural Economics. 26(Summer 2004): 287-227.
- Johnson, James B., Jack Stivers, and Gary W. Brester. Crop Insurance for Cherries in Lake County, Montana. Briefing Paper No. 65. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman, April 2004.
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Progress 01/01/03 to 12/31/03
Outputs
Wholesale-retail margins for beef and pork and livestock prices were affected more by the retail grocery sector than by the meat processing sector. NAFTA resulted in a net gain to beef producers because of the expanding Mexican market. Country-Of-Origin Labeling (COOL) will require a 3% increase in demand to cover its costs, and revenue risk from fed cattle grid pricing depends upon carcass traits and base price. Consumer response to GMO-free labels on branded milk exceeded 50% of market sales. Pre-outbreak program of vaccinating all cattle herds for brucellosis with tests of 25% random selection dominated other vaccination/testing programs.
Impacts
1) Increased retail grocery concentration and decreased retail grocery productivity decreased cattle and hog prices by an average of $3.02/cwt and $2.28/cwt, respectively; (2) Improved U.S. net beef trade from pre-NAFTA to post-NAFTA increased revenues in the fed and feeder cattle sections by $0.57 billion and; (3) loss of sugarbeet production in Montana would reduce irrigated land values by an average of $272/acre.
Publications
- Marsh, J.M. "Impacts of Declining U.S. Retail Beef Demand on Farm-Level Beef Prices and Production." American Journal of Agricultural Economics 85 (November 2003): 902-913.
- Miljkovic, D., G.W. Brester and J.M. Marsh. "Exchange Rate-Pass Through, Price Discrimination, and U.S. Meat Export Prices." Applied Economics 35(May 2003): 641-650.
- Marsh, J.M. and G.W. Brester. "Technology Changes in the U.S. Beef and Pork Sectors." Briefing Paper No. 34, Montana State University, Agricultural Marketing Policy Center, February 2003.
- Buschena, David, Myles Watts, and Kristin Kiesel. "Economic Modeling Effort for Brucellosis Outbreaks in Cattle Herds in the Greate Yellowstone Area." Montana State University, Department of Agricultural Economics and Economics, Staff Paper No. 2003-03, 2003.
- Brester, Gary W., and Michael A. Boland. "Entrepreneurial Risk-Taking Versus Growth Management: The Case of Premier Technology, Inc." Journal of Food Distribution Research. 34,3(November 2003):21-30.
- Batres-Marquez, S. Patricia, Helen H. Jensen, and Gary W. Brester. "Salvadoran Consumption of Ethnic Foods in the United States." Journal of Food Distribution Research. 34,2(July 2003):1-15.
- Brester, Gary W., John M. Marsh, and Ronald L. Plain. "International Red Meat Trade." Economics of the Red Meat Industry. Stephen R. Koontz, Guest Editor. The Veterinary Clinics of North America: Food Animal Practice. 19,2(July 2003):403-518.
- Brester Gary W., John M. Marsh, and Jason Jimmerson. "Distributional Impacts of Country-Of-Origin Labeling the U.S. Meat Industry." Briefing Paper No. 51. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman. November 2003.
- Brester, Gary W., Vincent H. Smith, and John M. Marsh. "Do Protectionist Trade Policies Protect?: The Unintended Consequences Of An Antidumping Tariff." Choices. August 2003. http://www.choicesmagazine.org/current/2003-3-09.htm.
- Marsh, J.M. "Post-NAFTA and the U.S. Beef Market." Briefing Paper No. 50, Montana State University, Agricultural Marketing Policy Center, November 2003.
- Marsh, J.M. "Impacts on U.S. Cattle Producers from Changes in Retail Beef Demand." Briefing Paper No. 38, Montana State University, Agricultural Marketing Policy Center, February 2003.
- Mijkovic, D., J.M. Marsh and G.W. Bester. "Japanese Import Demand for U.S. Beef and Pork." Briefing Paper No. 37, Montana State University, Agricultural Marketing Policy Center, February 2003.
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Progress 01/01/02 to 12/31/02
Outputs
Declines in retail beef demand accounted for about 60% of the decline in real cattle producer revenues. Generic promotion expenditures and effects on cattle prices are problematic due to differing effects of advertising elasticities. Liberalization of U.S. sugar imports would substantially affect Montana sugar beet producers and irrigated land values. Strategic management decisions for value-added products rely upon entrepeneural skills and product differentiation due to relatively high cost. Options market premiums provide a viable method to estimate agricultural price distributions, and labeling of "bio-tech" free milk indicates consumers will pay demand price premiums.
Impacts
1) An increase in consumer beef demand of 6% would result in additional consumer beef spending of $2.2 billion, of which 40% would acrue to producers; 2) Net returns to cow-calf producers from advertising under the Beef Check Off Program ranges from $-0.35/hd to $6.75/head; 3) Liberalization of U.S. sugar imports could reduce Montana irrigated land prices $60-$115/acre, but $180-360/acre in the worst case scenario, and 4) Consumers would pay from $0.90 to $1.60 demand premium for milk labeled as "bio-tech."
Publications
- Brester, G.W., J.M. Marsh, and V.H. Smith. 'The Impacts of U.S. and Canadian Slaughter and Feeder Cattle Prices of a U.S. Import Tariff on Canadian Slaughter Cattle.' Canadian Journal of Agricultural Economics 50(2002): 51-66.
- Miljkovic, D., J.M. Marsh, and G.W. Brester. 'Japanese Import Demand for U.S. Beef and Pork: Effects of U.S. Red Meat Exports and Livestock Prices.' Journal of Agricultural and Applied Economics 34(December 2002): 501-512.
- Marsh, J.M. 'Evaluation of Beef Promotion Expenditures Under the U.S. Beef Promotion Program.' Briefing Paper No. 32, Montana State University Agricultural Marketing Policy Center, November 2002.
- Brester, G.W. 'Meeting Consumer Demands with Genetic and Market Coordination: The Case of the Leachman Cattle Company.' Review of Agricultural Economics. 24,1(Spring/Summer 2002): 251-265.
- Brester, G.W., D. Buschena, and K. Gray. 'Economic Issues Related to Chickpea Production In the Northern Plains.' Briefing Paper No. 33. Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman. December 2002.
- Brester, G.W., and J.M. Marsh. 'U.S. Beef Trade Issues.' In Managing for Today's Cattle Market and Beyond,eds. C. Bastian and D. Bailey, Unviersity of Wyoming, March 2002.
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Progress 01/01/01 to 12/31/01
Outputs
Economic effects of finance and risk, technology, and Mexican feeder imports were econometrically estimated and found to impact U.S. feeder price comparatively close to U.S. slaughter cattle and feed grain prices. Meat packer adoption of cost saving technologies has not been rent captured but passed through to livestock producers in terms of higher prices and lower margins. A tariff on U.S. imports of Canadian slaughter cattle to increase U.S. cattle prices would be problematic considering effects on packer processing costs, but a relatively large price drop would occur for Canadian producers. Large declines in consumer beef demand has been a major contribution to long-term declines in real U.S. cattle prices.
Impacts
1)Finance, risk, and technology impact U.S. feeder price about 0.65 of the effect of fed cattle price; 2)Increased Mexican feeder imports from 1980-1999 reduced U.S. feeder price by $2.00/cwt; 3)Net effect of improved meat packing technology increased fed cattle price by $1.75/cwt and reduced the beef margin by 22.8 cents/lb; and 4) A 5.57% tariff on imported Canadian cattle would decrease imports by 19%, increase U.S. slaughter prices by $0.63/cwt and Montana feeder price by $0.86/cwt but decrease Canadian cattle prices by about $2.20/cwt.
Publications
- Batres-Marquez, P.S., Jensen, H.H., Brester, G.W. October 2001. Salvadoran Consumption of Ethnic Foods in the United States. Working Paper 01-WP 289. Center for Agricultural and Rural Development. Iowa State University, Ames.
- Brester, G.W. 2001 In press. CUSTA and U.S./Canadian Beef Trade Issues. Chapter 6 in Agricultural Trade Under CUSTA. Won Koo, William Wilson, eds. North Dakota State University.
- Brester, G.W. and Boland, M.A. December 2001. The Rocky Mountain Sugar Growers Cooperative: 'Sweet' or 'Sugar-Coated' Visions of the Future? Staff Paper Montana State University. Bozeman.
- Brester, G.W. 2001. Challenges Facing Small Food Manufacturers in a Consolidating Food Industry: The Case of 'Cream of the West.' Staff Paper. Montana State University. Bozeman.
- Brester, G.W. and Marsh, J.M. December 2001. The Effects of U.S. Meat Packing and Livestock Production Technologies on Marketing Margins and Prices. Journal of Agricultural and Resource Economics. 26,2: 445-462.
- Johnson, J.B and Brester, G.W. November 2001. Economic Considerations of Expanding Crop Rotations. Briefing Paper No. 5 Agricultural Marketing Policy Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman.
- Johnson, J.B. and Brester, G.W. May 2001. The Structure of Montana Production Agriculture. Policy Issues Paper No. 13. Trade Research Center, Department of Agricultural Economics and Economics. Montana State University, Bozeman.
- Marsh, J.M. December 2001. U.S. Feeder Cattle Prices: Effects of Finance and Risk, Cow-Calf and Feedlot Technologies, and Mexican Feeder Imports. Journal of Agricultural and Resource Economics 26:463-477.
- Marsh, J.M. and Brester, G.W. January 2001. U.S. Beef By-Product Markets. Briefing Paper No. 14. Trade Research Center, Department of Agricultural Economics and Economics. Montana State University, Bozeman.
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Progress 01/01/00 to 12/31/00
Outputs
Economic effects of finance and risk, technology, and Mexican feeder imports were econometrically estimated and found to impact U.S. feeder price comparatively close to U.S. slaughter cattle and feed grain prices. Asian demand for U.S. red meats and by-products significantly affect meat packer profits, hence, prices received by U.S. cattle finishers and cow-calf operators. National incomes and exchange rates are signficant. Policy shortcomings in China have adversely affected Chinese wheat production and marketing and consequently U.S. grain export markets. Montana grain producers will rely more upon modern grain marketing tools as government support programs are diminshed and risks increase.
Impacts
(1) finance, risk, and technology impact U.S. feeder price about 0.65 of the effect of fed cattle price; 2) increased Mexican feeder imports from 1980-1999 reduced U.S. feeder price by $2.00/cwt; 3) reduced U.S. by-product exports due to the Asian economic crises reduced producer prices by $2.20/cwt; and 4)improved Japanese trade and income policies could add $1.50/cwt and $0.70/cwt to U.S. fed cattle and hog prices.
Publications
- Brester, G.W., and Smith,V.H. 2000 'Beef at the Border: Here's the Beef.' Choices. (Second Quarter 2000): 28-32.
- Boland, M.A., Freberg C., Brester, G.W. and Barton, D. 2000 'American Crystal Sugar.' Invited paper presentation and publication in Proceedings of the North American Case Research Assocation annual meeting, San Antonio, TX, October 12-14,.
- Miljkovic, D., Marsh,J.M. and Brester, G.W. 2000'Japanese Import Demand for U.S. Beef and Pork: Effects on U.S. Red Meat Exports and Livestock Prices.' Research Discussion Paper No. 46. Trade Research Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman. October,.
- Brester, Gary W. 2000 'The Dynamics of Trade: U.S. Beef and Cattle Imports and Exports.' Fencelines. Bozeman, MT. (September): 4-5.
- Brester, G.W. 2000 'The Intricate Dynamics of Trade: U.S. Beef and Cattle Imports and Exports, January-April 2000.' Trade Research News. Montana State University. Summer.
- Leuck, D. and Brester, G.W. 2000 'Bonanza' or 'Little House on the Prairie'.' Montana Farmer-Stockman. Vol 88, 6(April): 10-25.
- Brester, G.W. 2000 'Prospects for Strong Fall, Feeder-Cattle Prices Remain Good.' Fencelines. Bozeman, MT. (April): 4-5.
- Marsh, J.M., and Brester, G.W. 2001 U.S. Beef By-Product Markets. Trade Research Center, Montana State University-Bozeman, Briefing No. 14, January.
- Marsh, J.M., 2000 U.S. Feeder Cattle Prices: Effects of Finance and Risk, Cow-Calf and Feedlot Technology, and Mexican and Canadian Feeder Imports. Trade Research Center, Montana State University-Bozeman, Research Discussion Paper No. 47, December.
- Mastel, M. and Buschena, D. 2000 'Futures and Options Markets, Basis, and the Timing of Grain Sales in Montana.' Trade Research Center Special Reprot #4. March.
- Johnson, J.B., and Brester, G.W. 2000 'More Info: Deadline Sept. 1, but Sugar Program Detaisl Just Emerging.' NEWS Communication Services. Montan State University. Bozeman, MT. August.
- Johnson, J.B., and Brester, G.W. 2000 'Deadline Sept. 1, but Sugar Program Details Just Emerging.' NEWS Communication Services. Montana State University. Bozeman, MT. August.
- Leuck, D. and Brester, G.W. 2000 'Will Corporations Dominate Agriculture in the 21st Cenury?' Fencelines. Bozeman, MT (August): 12-13.
- Brester, G.W. 2000 'The Intricate Dynamics of Trade: U.S. Beef and Cattle Imports and Exports, January-April 2000.' Briefing Paper No. 10. Trade Research Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman. July 25.
- Brester, G.W. 2000 'Meeting Consumer Demands with Genetics, Market Coordination, and Technology: The Case of the Leachman Cattle Company.' Montana State University, Bozeman.
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Progress 01/01/99 to 12/31/99
Outputs
Economic factors affecting long term declines in real livestock prices were econometrically estimated in order to rank causality and importance. Farm technology and meat supplies contributed substantially to lower prices. Econometric estimation of the effects of meat packer concentration and technology delineated their separate efforts on real livestock prices and farm-wholesale marketing margins. Packer technology has positively impacted cattle and hog prices. A partial equilibrium net trade model was developed to evaluate the effects of the Department of Commerce 5.57 percent import tariff on imported Canadian cattle into the U.S. Packer processing cost effects are critical here. Qualitative analysis of benefits and costs of country-of-origin labeling for U.S. beef and live cattle imports emphasized benefits and costs. Domestic demand and segregation costs are important. Qualitative and quantitative analyses were performed in choice of cropping patterns in the
Northern Plains, and determinants of China's grain stock policies were evaluated by regression analysis. Agricultural options markets were estimated by parametic probability distributions to evaluate information and decision making content.
Impacts
(1) 1988-1998 competitive meat supplies reduced real cattle and hog prices by 29 percent average; 2) technology increases in meat packing and farm production increased and decreased cattle prices 0.12 percent and 0.75 percent per unit; 3) the import tariff (later rescinded) would increase U.S. fed price by $0.13/cwt to $0.31/cwt, but could be zero with increased processing costs; 4) crop price changes will have modest effects on crop allocation in Northern Plains.
Publications
- Brester, Gary W. 'Vertically Integrating Production Agriculture Into Value-Added Niche Markets: The Case of Wheat Montana Farms & Bakery.' Review of Agricultural Economics. 21,1(Spring/Summer 1999):276-285.
- Brester, Gary W., and J.B. Penn. 'Strategic Business Management Principles for the Agricultural Production Sector in a Changing Global Food System.' Policy Issues Paper No. 11. Trade Research Center, Department of Agricultural Economics and Economics Montana State University, Bozeman, November 1999.
- Brester, Gary W., John M. Marsh, and Vincent H. Smith. 'Potential Impacts of Tariffs on U.S. Imports of Canadian Live Cattle.' Briefing Paper No. 9. Trade Research Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman. September, 1999.
- Brester, Gary W., John M. Marsh, and Vincent H. Smith. 'Evaluating the Impacts of the U.S. Department of Commerce's Preliminary Imposition of Tariffs on U.S. Imports of Canadian Live Cattle.' Research Discussion Paper No. 34. Trade Research Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman. August, 1999.
- Marsh, John M., and Gary W. Brester. 'Technological Change in the U.S. Beef and Pork Sectors: Impacts on Farm-Wholesale Marketing Margins and Livestock Prices.' Research Discussion Paper No. 31. Trade Research Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman. August, 1999.
- Brester, Gary W., and Vincent H. Smith. 'Country-of-Origin Labeling in the U.S. Beef Industry: Potential Economic Benefits and Costs.' Briefing Paper No. 7. Trade Research Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman. April, 1999.
- Brester, Gary W., and John M. Marsh. 'U.S. Beef and Cattle Imports and Exports: Data Issues and Impacts on Cattle Prices.' Policy Issues Paper No. 9. Trade Research Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman. April, 1999.
- Brester, Gary W. 'U.S. Beef and Cattle Imports and Exports: Impacts on U.S. Cattle Prices.' Briefing Paper No. 3. Trade Research Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman. February, 1999.
- Brester, Gary W., and Michael K. Boland. 'Entrepreneurial Risk-Taking Versus Growth Management: The Case of Premier Technology, Inc.' Montana State University. Bozeman. 1999.
- Brester, Gary W. 'Why Cattle Markets are on the Rebound.' Fencelines. Bozeman, MT. October 1999: 5.
- Brester, Gary W., Dermot Hayes, and Roxanne Clemens. 'Beef Trade Negotiations in the WTO Millennium Round.' U.S. Meat Export Analysis and Trade News. Meat Export Research Center, Iowa State University, Ames, IA. Vol. 7, No. 7 August/September 1999.
- Brester, Gary W., and John M. Marsh, and Vincent H. Smith. 'Impacts of the R-CALF Tariff.' Montana Farmer-Stockman. Vol 87,11(September 1999):WB10,14
- Brester, Gary W., and John M. Marsh. 'USDA Data and U.S. Beef Imports.' Issues Update. National Cattlemen's Beef Association. Denver, CO. March/April 1999.
- Brester, Gary W., and John Antle. 'An Imperfect Business.' Montana Farmer-Stockman. 87,2(February 1999):WB28-WB35.
- Brester, Gary W., and John M. Marsh. 'USDA Data and U.S. Beef Imports.' Trade Research News. Montana State University. Winter 1999. Buschena, David E. and Lee Ziegler. 'Options Markets for Crop Revenue Insurance Rating.' Journal of Agricultural and Resource Economics. Vol. 24 (1999):398-423.
- Marsh, J. M. 'The Effects of Breeding Stock Productivity on the U.S. Beef Cattle Cycle.' American Journal of Agricultural Economics. 81(May 1999): 335-346.
- Marsh, J.M. 'Economic Factors Determining Changes in Dressed Weights of Livestock.' Journal of Agricultural and Resource Economics. 24 (December 1999): 313-326.
- Marsh, J. M. 'U.S. Beef Trade and Price Relationships with Japan, Canada, and Mexico.' Policy Issues Paper No. 12. Trade Research Center, Department of Agricultural Economics and Economics, Montana State University, Bozeman. December, 1999.
- Marsh, J.M., 'Retaining Ownership of Calves: Economic Factors and Comparison of Returns For 1999 Weanlings.' Departmental Special Report #31, Department of Agricultural Economics and Economics, Montana State University. November, 1999.
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Progress 01/01/98 to 12/31/98
Outputs
The first objective of this project was to estimate the market supply, demand, price, and margin relationships or different market levels in agricultural commodity markets, in order to evaluate market response, efficiency, and prediction characteristics. Research accomplished under this objective included 1) cattle supply response; 2) market concentration; 3) food demand and policy issues; 4) international trade and trade liberalization; and 5) health costs regulation. Findings for 1 and 2 show the ability of beef feedlot oeprators to respond to economic stimuli impacts the welfare of cow-calf producers and the end product user, the consumer. This occurs through price, cost, quality and quantity of the product. Econometric estimation of supply response for feed cattle indictated responses to input and output prices are opposite in the short run versus the long run due to resource commitment, adjustment costs (including biological), and expectations (permanency) about
the future. Results indicate fed cattle supply elasticity of -0.17 in the shor run but 3.24 in the long run. Implicaitons are that any U.S. trade benefits or value-based benefit is captured in the beef market could reduce long term price gains to producers due to elastic supply response. However, total revenue benefits may accrue. Points 3 and 4 were based on a random sample of 2,500 U.S. residents provided under contract, multinomial logit models were used to quantify the effects of socioeconomic characteristics such as gender, income.
Impacts
(N/A)
Publications
- Marsh, J.M., and L.M. Young, 1997, Effects of Increased Canadian Slaughter Capacity and the Montana Pilot Project on Montana Feeder Cattle Price. Report prepared for the Montana Stockgrowers Association.
- Moutou, C., G.W. Brester, and J. A. Fox, 1997, U.S. Consumers' Socioeconomic Characteristics and the Consumption of Grain-Based Foods. International Food and Agribusiness Management.
- Brester, G.W. and M.K, Wohlgenant, 1997, Impacts of the GATT/Uruguay Round Trade Negotiations on U.S. Beef and Cattle Prices. Journal of Agricultural and Resource Economics 22:145-156.
- Brester, G.W. and T.C. Schroeder and J. Mintert, Fourth Quarter 1997, Challenges of the Beef Industry. Choices.
- Brester, G.W., J. Minert, and D. Hayes, Fourth Quarter 1997, Graphically Speaking: Increasing U.S. Meat Exports. Choices.
- Brester, G.W. and M.K. Wohlgenant, 1997, Impacts of the GATT/Uruguay Round Trade Negotiations on U.S. Beef and Cattle Prices. Kansas Stockman 82:30-32.
- Marsh, J.M., 1997, GATT Policies and Effects on the U.S. Beef Market. Research Discussion Paper #5, Trade Research Center, Montana State University, September.
- Marsh, J.M., 1997 Fall, The Growing Canadian Feeding and Packing Segments-How Will Montana Feeer Cattle Prices Be Affected? The Montana Stockgrower.
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Progress 01/01/97 to 12/31/97
Outputs
The first objective of this project was to estimate the market supply, demand, price, and margin relationships of different market levels in agricultural commodity markets, in order to evaluate market response, efficiency, and prediction characteristics. Research accomplished under this objective included 1) cattle supply response; 2) market concentration; 3) food demand and policy issues; 4) international trade and trade liberalization; and 5) health cost regulation. Findings for 1 and 2 show the ability of beef feedlot operators to respond to economic stimuli impacts the welfare of cow-calf producers and the end product user, the consumer. This occurs through price, cost, quality and quantity of the product. Econometric estimation of supply response for fed cattle indicated responses to input and output prices are opposite in the short run versus the long run due to resource commitment, adjustment costs (including biological), and expectations (permanency) about the
future. Results indicate fed cattle supply elasticity of -.17 in the short run but 3.24 in the long run. Implications are that any U.S. trade benefits or value-based benefitis captured in the beef market could reduce long term price gains to producers due to elastic supply response. However, total revenue benefits may accrue. Points 3 and 4 were based on a random sample of 2,500 U.S. residents provided under contrac,t multinomial logit models were used to quantify the effects of socioeconomic characteristics such as gender, income.
Impacts
(N/A)
Publications
- BRESTER, G.W. and M.K. WOHLGENANT, 1997, "Impacts of the GATT/Uruguay Round Trade Negotiations on U.S. Beef and Cattle Prices." Journal of Agricultural and Resource Economics 22:145-156
- BRESTER, G.W. and T.C. Schroeder and J. Mintert, Fourth Quarter 1997 "Challenges of the Beef Industry." Choices.
- BRESTER, G.W., J. MINERT, and D. HAYES, Fourth Quarter, 1997, "Graphically Speaking: Increasing U.S. Meat Exports." Choices.
- BRESTER, G.W. and M.K. WOHLGENANT, 1997, "Impacts of the GATT/Uruguay Round Trade Negotiations on U.S. Beef and Cattle Prices." Kansas
- KLEIN, N. and G.W. BRESTER, 1997, "Economic Impacts of the Zero Tolerance Directive on the Cost Structure of Beef Packing Companies." Selected paper presented at the Western Agricultural Economics
- MARSH, J.M., Fall 1997, "The Growing Canadian Feeding and Packing Segments-How Will Montana Feeder Cattle Prices Be Affected?" The
- MOUTOU, C., G.W. BRESTER, and J.A. FOX, 1997, "U.S. Consumers' Socioeconomic Characteristics and the Consumption of Grain-Based Foods." International Food and Agribusiness Management.
- MOUTOU, C., 1997, "U.S. Consumer Attitudes and the Market Potential for Wheat-Based Food Products." M.S. Thesis, Kansas State University.
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Progress 01/01/96 to 12/30/96
Outputs
Retained ownership alternatives were evaluated in light of feed cost and price trends of the 1995 to 1996 period. Ranch resources of labor, feed supplies, capital and the alternatives of custom feeding are coupled with cost of gain and price projections to make marketing recommendations. Futures and options are useful tools. The severe price break in cattle prices of 1994 led to a statistical analysis of price decomposition regarding cause and effects. Results indicate 95-96 percent of the price decline is attributed to domestic factors, the remaining 4-5 percent is due to beef and live cattle trade. U.S. live cattle price effects due to Canadian and Mexican live cattle imports were econometrically estimated. Net live cattle inports have significantly increased due to drought, peso devaluation, and delayed packer expansion. The effect has been to reduce U.S. feeder cattle prices by about $1.30 cwt since 1994. U.S. Beef export gains to the Pacific Rim have been
offsetting, however.
Impacts
(N/A)
Publications
- Marsh, John M. "Economic Considerations of Retained Ownership Alternatives." Departmental Special Report #15, Department of Agricultural Economics and Economics, Montana State University. April 1996.
- Marsh, John M. and Clint Peck. "The U.S. Beef and Live Cattle Trade: Effects on Domestic Feeder Cattle Prices." Departmental Special Report #18, Department of Agricultural Economics and Economics, Montana State University. June 1996.
- Peck, Clint, Clyde Greer and John Marsh. "U.S. Beef and Cattle Trade Report: NAFTA and GATT - Review of the Agreements and Analysis of Beef and Cattle Trade." Report to the Montana Stockgrowers Association. June 1996.
- Murra, Gene, Dillon Fenz and John Marsh. "Retained Ownership of Cattle: Factors to Consider." Managing for Todays Cattle Market and Beyond (National Extension Education Committee Report). August 1996.
- Marsh, John and Derrell S. Peel. "International Beef and Cattle Trade." Managingfor Todays Cattle Market and Beyond (National Extension Education Committee Report). August 1996.
- Marsh, John. "The 1996 Beef Outlook." Western Beef Producer, Western Farmer-Stockman Magazine, January 1996.
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Progress 01/01/95 to 12/30/95
Outputs
A statistical analysis was performed on the effects of fed beef exports in U.S. wholesale and live cattle prices. The Pacific Rim and North American markets were targeted. Results indicate that gains in U.S. fed beef exports offset the price declines of large live cattle imports in 1995 by about $ .50 cwt. Projections of export growth with GATT included could add $10 cwt to cattle prices by the end of the 1990s. Retained ownership decisions appear more attractive in the current period of low cattle prices, but are still quite risky with higher feed cost of grain. Wintering calves, grazing yearlings, and custom finishing offer profit potential for some producers. Breakeven analysis was performed for barley marketing alternatives, i.e., cash sales or feeding calves. Opportunity cost of calves, as well as yearling prices, must be integrated with barley prices for solution.
Impacts
(N/A)
Publications
- Marsh, J.M. 1995. Beef and Wheat-Canadian Trade. In Trade Issues Pertinent to Montana Agriculture. Ag Econ & Econ, MSU, February. pp. 1-2,11-19,20-26.
- Marsh, J.M. 1995. A Profitable Approach to Retained Ownership. In Inter- national Beef Symposium #SR58. Animal & Range Sci, MSU, Janaury. pp. 155-162.
- Marsh, J.M. and R.C. Greer. 1995. Fed and Feeder Cattle Price Effects from U.S. Imports of Canadian Live Cattle and Beef. Montana AgResearch. pp. 15-18.
- Marsh, J.M. and J.B. Johnson. 1995. Changes in Wheat Stocks and Cash Price. Montana AgResearch. pp. 19-22.
- Marsh, J.M. and R.C. Greer. 1995. US.-Canadian Trade in Beef. In Analysis of the Impact of Canadian Slaughter Cattle Imports on Colorado and U.S. Slaughter Cattle Industry. Colorado Dept Ag Markets. pp. 6-8.
- Marsh, J.M. 1995. Calves an Option for Marketing Barley. Montana Farmer, September. pp. 6-7.
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Progress 01/01/94 to 12/30/94
Outputs
A quarterly econometric model was used to estimate the effects of U.S. beef imports and exports on U.S. beef prices. Emphasis was on Canadian and Mexican (CM) trade, hence NAFTA implications. Results indicate that U.S. beef exports to CM and to the Pacific Rim outweigh the negative price effects of beef imports, suggesting mitigation of price changes in the cattle cycle with continued export growth. Projection of beef export growth shows CM accounts for 20% and the Pacific Rim for 80% of the export market. Retained ownership for winter grazing, backgrounding, and finishing calves offer profit opportunities with futures/options hedging, but market risks exist. Hedge prices are nearly par with breakeven costs, leaving little allowance for basis change. A statistical analysis of Canadian live cattle and beef imports into the U.S. indicate imports accounted for $2.00 - 2.20 cwt or about 12% of the drop in U.S. cattle prices since spring 1993; however, the nearly 30%
increase in U.S. beef exports to Canada essentially negated the price decrease.
Impacts
(N/A)
Publications
- MARSH, J.M. AND R.C. GREER. 1994. Price Effects From U.S. Imports of Canadian Live Cattle and Beef. Departmental Special Report #4, Ag Econ and Econ, MSU, December.
- MARSH, J.M. 1994. Fed Beef Production and Cost Impacts on Retail Prices. Montana AgResearch, Spring, 16-19.
- MARSH, J.M. AND R.C. GREER. 1994. Backgrounding Montana Steer Calves. Montana AgResearch, Fall, 19-23.
- MARSH, J.M. AND R.C. GREER. 1994. Retained Ownership of Calves Through Custom Backgrounding. Departmental Special Report #3, Ag Econ and Econ, MSU, September.
- MARSH, J.M. 1994. Estimating Intertemporal Supply Response in the Fed Beef Market. American Journal of Agricultural Economics 76:444-453.
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Progress 01/01/93 to 12/30/93
Outputs
A monthly econometric model was used to estimate short-, intermediate-, and long-run fed beef supply response. Previous work has produced conflicting coefficient estimates. The model, based on input and output price expectations, shows short-run elasticities of supply to be negative in the short-run due to cattle as capital goods; but the elasticizes are positive in the long-run as placement demand responds to firm size and technology changes. The implications are that changes in feedgrain programs and livestock and meat trade will have greater domestic supply impacts than previously estimated. Economic criteria for retaining ownership of Montana produced calves were evaluated. Net returns for a backgrounding alternative were evaluated, considering cash market and future/options transactions. Results show that from 1981-1992, backgrounding resulted in an average net return of $11 per head (opportunity costs included), but that considerable risk is involved since the
standard deviation is $32 per head.
Impacts
(N/A)
Publications
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Progress 01/01/92 to 12/30/92
Outputs
Since the 1970s, the demand mix for beef cuts such as steaks, roasts, and groundbeef has changed. These changes have implications for demand and prices of slaughter cattle. A partial equilibrium, econometric model was used to relate retail cut prices to live animal value. The dynamics permitted short run and long run price transmission measurements from steaks, roasts, and ground beef to choice slaughter price. The results show beef cut price effects are inelastic, that the effect of steak prices on cattle prices is almost twice that of roasts and ground beef, and that increases in cut prices lead to increases in meat packer margins. The implication of the study is that the beef industry should consider beef promotion more on a product cut rather than a general basis. The three equation (bred heifer price, heifer calf price, and feed price) model used to generate transition probabilities for the stochastic DP was reestimated using quarterly observations. Parameter
estimates were essentially the same as those previously reported for the semi-annual specification. Thus, optimal procurement of bred beef heifers is a mixed strategy of raising or buying conditional upon price level and prediction. The inference is that producers following a traditional strategy of raising all of their bred heifers pay a high premium for the "better" information regarding the genetics and rearing of "their" heifers.
Impacts
(N/A)
Publications
- DAVIS, K.C., M.W. TESS, D.D. KRESS, D.E. DORNBOS, D.C. ANDERSON AND R.C. GREER. 1992. Life Cycle Evaluation of Five Biological Types of Beef Cattle in a Range Production System. Proc, W. Section, Amer Soc Animal Sci, 43.
- GREER, R.C., R.B. STAIGMILLER AND J.J. PARRISH. 1992. Female Traits, Ovary and Follicle Characteristics, and the Conditional Probability of Normal Oocyte Development. Jour Animal Sci, 70:263-272.
- MARSH, J.M. 1992. USDA Data Revisions of Choice Beef Prices and Price Spreads: Implications for Estimating Demand Responses. Jour Ag & Res Econ, December.
- MARSH, J.M. 1992. The Effects of USDA Beef Data Revisions on Estimating Market Prices. Montana AgResearch, Fall.
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Progress 01/01/91 to 12/30/91
Outputs
A stochastic dynamic programming model was solved for optimal decision rules foracquiring bred beef heifers. Three equations predicting bred heifer price, heifer calf price, and feed price generated transition probabilities for price and heifer states. Added information changed the producer return-maximizing strategy from traditional (always raising replacement heifers) to raising/buying bred heifers depending upon price expectations; returns increased by selling heifer calves and buying bred heifers when prices were expected to drop. The probability of normal oocyte development after super ovulation of the beef cow and in vitro maturation/fertilization of the oocytes was modelled as the restricted dependent variable of a logistic function. Five equations best represented the data sample; plane of nutrition, hormone levels, and oocyte characteristics conditioned the probability of normal development. Marketing margin methods versus an inverse demand model estimated
farm-level demand elasticities. Results show margin methods are quite restrictive; forecasting overpredicts changes in cattle prices. Inverse demand elasticities and price predictions are more accurate, matching market experience due to input substitution. The USDA recently revised beef price, by-product, and margin data. An econometric model was used to test primary and derived demand elasticities with revised vs traditional beef data. Results show the revised data demand elasticities at the retail & farm levels average 20% lower.
Impacts
(N/A)
Publications
- MARSH, T.L. 1991. "Optimal Decision Alternatives for Acquiring Bred Beef Heifers by Montana Producers." M.S. Thesis, Department of Agricultural Economics and Economics.
- GREER, R.C., R.B. STAIGMILLER, and J.J. PARRISH. 1991. "Female Traits, Ovary and Follicle Characteristics and the Conditional Probability of Normal Oocyte Development." Journal of Animal Science (accepted).
- GREER, R.C., M.D. FRANK, and J.J. URICK. 1991. "Yearling Bull Breeding Performance." Montana AgResearch. Winter/Spring 1991. MAES/MSU.
- MARSH, J.M. 1991. "USDA Corn Loan Rate Effects on the Fed and Nonfed Cattle Markets." Montana AgResearch. Fall. MAES/MSU.
- MARSH, J.M. 1991. "Derived Demand Elasticities: Marketing Margin Methods Versus an Inverse Demand Model for Choice Beef." Western Journal of Agricultural Economics. December.
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Progress 01/01/90 to 12/30/90
Outputs
Perceived errors in the literature motivated discussion of modelling between animal differences in the partitioning of energy to maintenance, weight change, lactation, and gestation. The paper discussed appropriate specification and selection of estimation procedures in the statistical model. A paper incorporating earlier results of relations between management variables and reproductive performance of beef heifers with the economic implications was delivered at the 39th Annual Beef Cattle Short Course, University of Florida. Inferences from hedonic price model parameters led to the ex post conclusion that commercial and purebred cattle producers perceive differences in the value of, and therefore pay different prices per unit for traits of purebred yearling bulls. A model to predict which bull will be purchased by a purebred producer vs a commercial producer has not yet been successfully estimated. A dynamic econometric model was employed to estimate the effects of
foreign trade variables in meat and by-products in U.S. beef markets. Results show EC by-product demand and liberalization of Japanese beef quotas are important, but their impacts on domestic prices vary, ranging from less than one percent to nine percent. A dynamic regression was used to estimate the impacts of subprimal beef and pork cut values in cattle and hog prices. Results show significant, but inelastic effects conditioned by primal quality, processing alternatives, and primal properties of carcasses.
Impacts
(N/A)
Publications
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Progress 01/01/89 to 12/30/89
Outputs
Long-run farm elasticities of demand for beef & pork based on fixed & var proportions input substitution were estimated. The respective procedures were linear margins & unrestricted reduced forms of inverse demand functions. Methodology was nonstochastic-nonlinear least squares regression. Results show variable proportions elasticities of demand average 24% higher than estimates under 0 input substitution. Preliminary estimates of a model to explain dif in prices paid for yearling bulls suggest that indices of relative performance are more important to buyers than absolute weight of bull at various ages or weights linearly adjusted for age of dam & other characteristics. An index formed from 2 measures of relative performance, weaning ratio & yearling ratio, explained more of the variation in bull price dif than any of the measures of absolute or relative performance. As anticipated, purebred breeders are willing to pay more for bulls than are commercial breeders. A
system of 5 equations relating plane of nutrition & cow age to presence of a CL, progesterone concentration, ovary characteristics, & cumulus qty best represented the conditional probability of normal oocyte development in the sample of oocytes obtained from beef females by superovulation procedures.
Impacts
(N/A)
Publications
- GREER, R.C, URICK, J.J., FRANK, M.D. and CARROLL, L.G. 1989. A comparison of the breeding performance of yearling and 2-year-old Hereford bulls. J Anim Sci 67(May):1175-1182.
- MARSH, J.M. 1989. The effects of a beef grade change on choice and select slaughter cattle prices. N Cent J Ag Econ 11(July):221-230.
- MARSH, J.M. and BRESTER, G.W. 1989. Intertemporal adjustments in the beef market: A reduced form analysis of weekly data. W J Ag Econ 14(December):235-245.
- GREER, R.C., SHORT, R.E. and BELLOWS, R.A. 1990. A simultaneous equations model of the cause-effect relationships among biological variables: An analysis using postpartum cows. Can J Anim Sci (forthcoming, March).
- GREER, R.C. and URICK, J.J. 1989. Purebred breeding bull price. Montana AgResearch (Winter):6-9. MT Ag Exper Sta, MT State U, Bozeman.
- PHILLIPS, S.S. 1989. A dynamic model of prices, supplies & revenue adjustments in US beef mkt: Emphasis on changing feed costs. M.S. Thesis. Ag Econ & Econ Dept, MT State U, Bozeman. 81p.
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Progress 10/01/88 to 12/30/88
Outputs
(1) Estimating the value buyers place on yearling breeding bull characteristics is being initiated. The model to be estimated is a hedonic price model. The data sample will be the production and sales records of yearling bulls sold at the LARRS annual surplus animal sale. Another study being initiated is the deriving of decision rules for aspirating follicles when superovulating beef females. Logit analysis will be applied to estimate the conditional probability of normal oocyte development. Work on the physiological and reproductive response to management decision variables will be continued. (2) Work is being conducted on estimating the dynamic efforts of cattle feeder and meat packer returns on factor demands and prices. The purpose is to predict future cattle demands and prices based on historical patterns of returns experienced in the cattle feeding and meat packing industry. Prediction is based on modified distributed lags by ARMA forecasts of future returns.
Impacts
(N/A)
Publications
- JONES, L.E. 1988. A semi-strong form evaluation of the efficiency of the wheat standards market. M.S. Thesis. Montana State Univ., Bozeman. 78p.
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