Progress 10/01/05 to 09/30/10
Outputs
OUTPUTS: Numerous producer groups and individual farmers were engaged in educational activities and private discussions about demand for meat products and methods of production and marketing. Presentations were made at annual professional meetings of the Agricultural and Applied Economis Association. PARTICIPANTS: David Ubilava, Post-doctoral Fellow at Mississippi State University Jayson Lusk, Professor, Oklahoma State University Tomas Nilsson, Research Associate, Alberta Department of Agriculture Both Nilsson and Ubilava recieve doctoral degrees at Purdue University and received training related to or as a part of this project. In addition, both received opportunities to present their related research at numerous professional conferences. TARGET AUDIENCES: Farmer, food processors, and fellow applied economists Participated in meetings of producer groups where research results were shared and implications discussed. Interacted individually with management of pork processing plants, and presented research results at national conferences. PROJECT MODIFICATIONS: Not relevant to this project.
Impacts
The choice experiment applications pioneered in this project have been adopted and applied to other settings by Purdue scientists including pork demand in China. Indiana pork producers have greater understanding and recognition of the sources of demand heterogeneity among consumers and are building marketing plans to address this hetergeneity.
Publications
- Ubilava, D. and K. Foster "Quality certification vs. product traceability: Consumer preferences for informational attributes of pork in Georgia," Food Policy, Vol. 34, Iss. 3, June 2009, Pages 305-310.
- Ubilava, D., K. Foster, J. Lusk, and T. Nilsson "Effects of income and social awareness on consumer WTP for social product attributes," Technological Forecasting and Social Change, Vol. 77, Iss. 4, May 2010, Pages 587-593.
- Ubilava, D., Foster, K. A., Lusk, J. L. and T. Nilsson. "Differences in Consumer Preferences When Facing Branded vs. Non-Branded Choices," Journal of Consumer Behaviour, 2010.
|
Progress 10/01/08 to 09/30/09
Outputs
OUTPUTS: Attended the Central European Food Demand special session at the IAMA Conference in Budapest, Hungary, June 2009. Interacted with various stakeholder groups during 2009 as Head of the Department of Agricultural Economics including commodity groups, Indiana Department of Agriculture, and Indiana Farm Bureau. PARTICIPANTS: Dr. Jayson Lusk, Department of Agricultural Economics, Oklahoma State University, Stillwater, OK TARGET AUDIENCES: Purdue - Indiana Farm Bureau Supper Series, June 2009, discussion of animal welfare issues between Purdue faculty and IFB staff and leadership. National Swine Registry, Fall 2009, discussion of animal production and pork demand issues with leadership in Indiana's purebred swine sector. Numerous interactions with stakeholders and policymakers in the Agricultural Sector throughout the year in my role as Head of Department. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
The project activities provided evidence for the market alternatives to government intervention in fostering sustainable production. This led to numerous interactions between the investigators with stakeholders and policy makers to educate them about the market's power in regulating behavior.
Publications
- Ubilava, D. and Foster, K. (2009). Quality Certification vs. Product Traceablility: Consumer Preferences for Informational Attributes of Pork in Georgia, Food Policy, 34(3), pp. 305-10.
- Ubilava, D., Foster, K., Lusk, J., and Nilsson, T. (2009). Effects of Income and Social Awareness on Consumer WTP for Social Product Attributes, Technological Forecasting and Social Change, doi:10.1016/j.techfore.2009.02.002.
|
Progress 10/01/07 to 09/30/08
Outputs
OUTPUTS: A paper was presented at the American Agricultural Economics Association Annual Meeting focused on herd level production management rather than management decision based on the average animal in the herd. Another papers was presented at the PIC International Thinking Forward Symposium concerning Systems Management of Livestock production. A paper was presented at the Mitigation Air Emissions from Animal Feeding Operations Conference in Des Moines, IA that examined nutritional, emissions, and economics of alternative diet manipulations in swine. A paper was presented at the American Agricultural Economics Association Annual Meeting focused on hedonic pricing of real estate and the impact of proximity to CAFOs. An MS thesis was mentored that developed a whole farm (swine and crops production) and included swine diets with varying DDGS inclusion rates to help determine optimal trade offs between manure management, carcass value, and feed cost. An MS thesis was mentored that examined the economics of pasture based cattle production in Indiana. A PhD student was mentored and coauthored several manuscripts focused on demand for pork product attributes and the effect of branding on those values. PARTICIPANTS: Collaborators: Professor Allan Schinckel, Dept. of Animal Sciences, Purdue Univ. Professor Alan Sutton, Dept. of Animal Sciences, Purdue Univ. Professor Brian Richert, Dept. of Animal Sciences, Purdue Univ. Professor J. Scott Radcliff, Dept. of Animal Sciences, Purdue Univ. Professor Al Heber, Dept. of Ag and Biological Eng, Purdue Univ. Professor Wallace Tyner, Dept. of Agricultural Economics, Purdue Univ. Professor Paul Preckel, Dept. of Agricultural Economics, Purdue Univ. Professor Raymond Florax, Dept. of Agricultural Economics, Purdue Univ. Professor Bruce Craig, Dept. of Statistics, Purdue Univ. Professor Tomas Nilsson, Dept. of Rural Economy, Univ. of Alberta Professor Jayson Lusk, Dept. of Agricultural Economcs, Oklahoma State Professor Kathryn Boys, Dept. of Ag Econ and Applied Stat, Clemson Univ. Student Trainees: Mesbah Motamed, Dept. of Agricultural Economics, Purdue Univ. David Ubilava, Dept. of Agricultural Economics, Purdue Univ. Todd Hubbs, Dept. of Agricultural Economics, Purdue Univ. Todd Kuethe, Dept. of Agricultural Economics, Purdue Univ. Brandon Hollas, Dept. of Agricultural Economics, Purdue Univ. Della Serna, Dept. of Agricultural Economics, Purdue Univ. Devendra Canchi, Dept. of Agricultural Economics, Purdue Univ. TARGET AUDIENCES: 1. Academic economists and animal scientists were targeted through several meeting and proceedings presentations. 2. Farmers, food processors, and retailers were targeted through personal communications and consultations. PROJECT MODIFICATIONS: Not relevant to this project.
Impacts
Modelers of livestock production now have a framework for analyzing herd level decision based on stochastic growth of individual animals in the herd. This impact has occurred through previous publication in professional journals and our presentation at professional meetings. Farmers have adopted DDGS in swine ration at near the optimal level determined by the modeling efforts. This result is likely due both to market forces and the extension of the research results through informal extension and consulting contacts. There is increased interest among producers, processors, and consumers about certified product attributes. Indiana farmers are examining the potential for a branded Indiana grown pork product line. This impact has arisen through market forces and informal discussions and news releases about the research. The two MS students are now gainfully employed in the Agricultural and Food sectors, and the PhD student is well on his way to having a few published journal articles on his CV.
Publications
- Schinckel, A., M. Einstein, K. Foster, and B. Craig. 2008. "Evaluation of the Impact of Errors in the Measurement of Backfat on the Prediction of Fat Free Lean Percentage," Professional Animal Scientist, 24: 135-48.
- Motamed, M., K. Foster, and W. Tyner. 2008. "Applying Cointegration and Error Correction to Measure Trade Linkages: Maize Prices in the U.S. and Mexico" Agricultural Economics, 39:29-39.
- Schinckel, A. P., P. V. Preckel, B. Richert, K. Foster, L. Ning,K. Boys, J. T. Hubbs, and D. Canchi. 2008. "Pork production systems analyses, current status -future potential," Proc. PIC International Thinking Forward Symposium. Nashville TN. May 5-6, 2008. pp 56.
- Radcliffe, J. S., B. T. Richert, D. M. Sholly, K. A. Foster, B. .Hollas, T. Lim, J. Ni, A. J. Heber and A. L. Sutton. 2008. "Diet modifications to reduce odors, gas emissions and nutrient excretions from swine operations," Proc. Mitigation Air Emissions from Animal Feeding Operations Conference. pp. 114-119. Des Moines, IA.
- Hollas, B. 2008. Economic Assessment of DDGS Diets for Indiana Crop-Hog Farms, MS Thesis, Department of Agricultural Economics, Purdue University, West Lafayette, IN.
- Serna, D. 2008. Feasibility of Grass-Fed Cattle Production for Indiana Producers, MS Thesis, Department of Agricultural Economics, Purdue University, West Lafayette, IN.
|
Progress 10/01/06 to 09/30/07
Outputs
OUTPUTS: Professional paper presentations, meetings with producer groups, and discussions with extension clientele.
PARTICIPANTS: Dr. Allan Schinckel, Purdue University, Dept. of Animal Sciences Dr. Brian Richert, Purdue University, Dept. of Animal Sciences Dr. Jayson Lusk, Oklahoma State University, Dept. of Ag. Economics Dr. Tomas Nilsson, University of Alberta, Dept. of Ag. Econ and Rural Soc. Dr. Paul Preckel, Purdue University, Dept. of Ag. Economics
TARGET AUDIENCES: Producers, food processors, retailers, consumers, extension educators.
Impacts
Interest in product and process certification among producers, food manufacturers, retailers, and consumers has grown.
Publications
- Schinckel, A., N. Li, B. Richert, P. Preckel, K. Foster, and M. Einstein, "Development of a Model to Describe the Compositional Growth and Dietary Lysine Requirements of Pigs Fed Increasing Dietary Concentrations of Ractopamine." The Professional Animal Scientist, 22(2006): 438-49.
- Nilsson, T., K. Foster, and J. Lusk, "Marketing Opportunities for Certified Pork Chops," Can J of Agric Econ. 54(2006): 567-83.
- Lusk, J., T. Nilsson, and K. Foster, "Public Preferences and Private Choices: Effect of Altruism and Free Riding on Demand for Environmentally Certified Pork," Env and Res Econ. 36(2007):499-521.
- Ludena, C., T. Hertel, P. Preckel, K. Foster, and A. Nin-Pratt, "Productivity Growth and Convergence in Crop, Ruminant, and Non-Ruminant Production: Measurement and Forecasts." Agric Econ. 37(2007): 1-17.
- Boys, K., N. Li, P. Preckel, A. Schinckel, and K. Foster, "Economic Replacement of a Heterogenous Herd." Amer J Agric Econ. 89(2007): 24-35.
|
Progress 10/01/05 to 09/30/06
Outputs
The survey results about demand for hypothetical pork product attributes was analyzed with a latent class model. The results suggest three classes of individuals. The first group treats antibiotic free, environmentally friendly, and animal welfare as complements and have an extremely high willingness to pay for the first two but substantially less for the third. This is a relatively low pork consuming group. The second group views these attributes as substitutes and is also willing to pay substantially for the first two but not for the third. The last group is not willing to pay for any of the attributes. Another analysis examines the degree to which altruism and freeridership affect willingness to pay for pork product attributes and finds that the market might be able to alleviate public choice concerns associated wtih pork production activities. Production research was also conducted to analyze the implications of desensitization of pigs to ractopamine (Paylean). A
growth model of sequentially increasing the dose of ractopamine in swine production was produced and optimized to determine the profitability of a step-up strategy in ractopamine use. It was show to be profitable.
Impacts
The research results foreshadow increased emphasis on natural meat production focused on antibiotic use and environmental compliance at the production stage and a de-emphasis on animal welfare concerns because a broad segmet of consumers are willing to pay substantially for the former but not for the later.
Publications
- Schinckel, A., N. Li, P. Preckel, K. Foster, and B. Richert. "Using a Stochastic Model to Evaluate Swine Management with Paylean, Proceedings of the London Swine Conference, London, Ontario, Canada 2005.
- Schinckel, A., B. Richert, and K. Foster. "Management of Pigs in the Pork Production Chain," Proceedings of the London Swine Conference, London, Ontario, Canada 2005.
|
Progress 10/01/04 to 09/30/05
Outputs
1. Results of a random parameter logit model applied to choice data obtained from a nationwide survey in the United States indicates that more altruistic individuals are willing to pay more for pork products with public good attributes than less altruistic individuals and free riders. These results indicate that private purchases of goods with public-good attributes are not simply a result of individual perceptions of the ability to mitigate private risks such as food safety, but that individuals are making private choices to affect public outcomes. Results have implications for policy makers weighing the relative costs and benefits of food labeling policies versus bans related to certain livestock production practices. 2. We derive a generalized random utility model that allows for a test of the linearity of the attribute-based utility function. Our primary finding is that higher order effects are small in magnitude in representative consumer models, but we find
significant empirical evidence for large and statistically significant non-constant marginal utility effects when we account for individual or group-wise heterogeneity. Our primary insight is that utility specification and individual heterogeneity intertwine such that a full investigation into either issue requires joint consideration. 3. We find that U.S. pork consumers are a heterogenous group that consists of three segments. The socially-conscious group, which represents sixteen percent of the sample, has the highest mean willingness to pay but consumes the least pork. The second group, referred to as the price-conscious group, has the lowest willingness to pay. The associated class probability for this group is forty-one percent. The class probability for the third group, referred to as the mainstream group, is forty-three percent and their preferences are situated in between the concerned and the price-concerned group. The group has a positive significant willingness to pay for
the certification programs. However, the mainstream group is not willing to pay as high price premium as the first group and opt for the conventional product if the price is too high. Therefore, from a policy perspective it is crucial to investigate how the degree of consumer heterogeneity affects the economic viability of a voluntary certification scheme because the conventional product may be viewed as a perfect substitute by a significant population share.
Impacts
Increaed interest in certification of production processes to increase market access and possibly short-run profit.
Publications
- No publications reported this period
|
Progress 10/01/03 to 09/29/04
Outputs
Research to investigate the willingness to pay for certification of production processes (animal welfare, antibiotic use, and environmental compliance) was begun with a survey of 10,000 households. A PhD student is conducting further analysis of the welfare implications and willingness to pay as a part of his dissertation. This analysis will investigate the implications of imperfect competition and new product/product differentiation. Cost estimates for the above certification procedures at the farm level and processing level were also estimated. Another study conducted by Foster examined the trends in meat consumption in the U.S. Foster also provided information about the U.S. Animal Identification Systems and its potential benefits to the livestock sector to concerned citizens and media through various interviews and news releases.
Impacts
Farmers, policy makers and veterinarians will be able to make more accurate and optimal decisions concerning the application of new technology to feeding and marketing livestock, responding to manure management regulations, and intervening when animals become ill.
Publications
- Schroeter, C. and K. Foster "The impact of health information and demographics on aggregate meat demand," Purdue Ag Econ Report, Sept. 2004.
|
Progress 10/01/02 to 09/30/03
Outputs
Governance Structure: Foster spent six months in Denmark at the Danish Meat Research Institute examining the cooperative governance structure of that industry. While the Danish pork industry has often been characterized as a cooperative, it is not like any cooperative that farmers in the U.S. would recognize. Farmers are the owners of the slaughter and processing facilities, but the coordination goes much deeper than simple ownership. In Denmark, the umbrella organization (The Danish Meat and Bacon Council) also controls the research agenda for much of the research into farm and slaughter technology and marketing and product development. This agenda is set based on extensive communication between farmers, packers, the council's marketing arm, Danbred (the Council's genetics subsidiary), representatives from input industries, etc. This high degree of information sharing is unprecedented and leads to decisions that are optimal for the entire pork production and
marketing system as well as earnings from the marketing of technological developments. In order to gain the full range of benefits to the Danish system, farmers in the U.S. would not only have to invest in slaughter and processing facilities but also in research institutes and other important dimensions of the pork industry. In fact, missing one or more of these components may be sufficient to compromise the value of controlling the others. Environmental Regulation and Compliance: Foster's research demonstrated that a phosporus manure spreading regulation would not increase costs substantially for farms that have options to feed alternative feed and have sufficient land for application. For farms that are land constrained the cost of compliance is prohibitive and would result in a shut down or partial shut down of production and an associated large loss of revenue. Swine Nutrition Management: The feeding of Paylean(TM) can substantially increase the efficiency of swine growth and
profitability. However, the benefits of Paylean feeding can only be fully achieved with improved feeding and marketing management. Research results indicate that the collection of serial live weight and compositional data as well as develop and implementation of the optimal marketing system via animal sorting technology can result in a $7,000 to $10,000 increase in profitability per 1000 head finishing facility. The optimal use of Paylean(TM) increased profitability almost an additional $9,000 per year for the 1000 head finishing facility. One of the interesting results from the research was that it is optimal to adjust the Paylean level upward through the life of the pig, starting with a relatively low level and increasing it as the pig becomes desensitized to the lean growth enhancement from Paylean(TM). Forecasting Ultridian Biorhythm: Foster used standard time series methods to develop a forecast of cyclical cellular behavior. The approach demonstrated the cyclical nature of NADH
oxidation. Greater ability to forecast the cyclical behavior of biological systems could allow veterinary, medical, and pharmaceutical investigors to more accurately time inteventions using an accurate forecast of cellular activity.
Impacts
Farmers, policy makers and veterinarians will be able to make more accurate and optimal decisions concerning the application of new technology to feeding and marketing livestock, responding to manure management regulations, and intervening when animals become ill.
Publications
- Maung, A. and Foster, K. 2003. Capital Investment under Alternative Marketing Scenarios in the Hog Industry: A Real Option Approach. Can. J. Agric. Econ. 50:223-35.
- Foster, K., Anwar, N., Pogue, R., Morre', D., Keenan, T., and Morre, J. 2003. Decomposition Analysis Applied to Complex Ultridian Biorhythm: The Oscillating NADH Oxidase Activity of Plasma Membranes Having a Potential Time Keeping Function. Nonlinearity in Biology, Toxicology, and Medicine. 1:
- Hyde, J. and Foster, K. 2003. Estimating Dynamic Relationships Between Pork Advertising and Revenues. Rev of Agric. Econ. 25:279-93.
- Li, N., Preckel, P., Foster, K., and Schinckel, A. 2003. Analysis of Economically Optimal Nutrition and Marketing Strategies for Paylean Usage in Hog Production. J of Agric. and Res. Econ. 28:272-86.
- Foster, K. and Weydman, C. Foster and Weydman, 2003. Does Brazil Pose a Threat to the U.S. Pork Industry? Purdue Ag Econ Report. May:10-13.
|
Progress 10/01/01 to 09/30/02
Outputs
An analysis of market power in the pork industry was conducted. This analysis allowed market power to vary over time according to unanticipated supply and demand shocks and capacity constraints proxied by pork in cold storage. The results suggested that significant market power exists in the wholesale/retail sector but not at the live animal level of the marketing channel. Research on optimal pork production strategies with ractopamine and changes in environmental regulations are ongoing. They suggest that earlier ractopamine recommendations were overstated for today's leaner genetic lines and that much of the cost to comply with environmental regulations can be offset by modifying and adjusting animal diets, changing cropping patterns, and employing alternative methods of manure disposal. Dr. Foster also investigated policy options and management strategies aimed at ameliorating the effect of oligopsony power in live animal markets.
Impacts
Policy makers will focus greater attention on the competitiveness of pork markets and finding incentive based policies to ameliorate the problems associated with concentration in the slaughter, processing, and retail sectors. Farmers will efficiently implement the use of ractopamine, phytase, synthetic amino acids and other diet modifiers to maintain competitive costs in pork enterprises. Farmers will cautiously approach direct investment in downstream processing due to the irreversibily and uncertainty associated with such investments. They will examine alternative strategies to share in downstream value adding and manage risk.
Publications
- Yap, C., K. Foster, P. Preckel, O. Doering, and B. Richert. 2001, "The Economic Impacts of Phosphorus Based Manure Management Policies on a Representative North Central Indiana Hog-Grain Farm." Staff Paper #01-03, Department of Agricultural Economics, Purdue University, West Lafayette, IN.
- Poray, M., K. Foster, and J. Dorfman. 2001, "Measuring an Almost Ideal Demand System with Generalized Flexible Least Squares." Staff Paper #01-01, Department of Agricultural Economics, Purdue University, West Lafayette, IN.
- Maung, A. and K. Foster. 2001, "The Value of Waiting to Invest in a Cooperative Hog Slaughter Plant." Purdue Agricultural Economics Report, Purdue University, West Lafayette, IN, September 2001, pp10-11.
- Gray, A., K. Foster, and M. Boehlje. 2002, "Implication of Banning Packer Ownership of Livestock." Purdue Agricultural Economics Report, Purdue University, West Lafayette, IN, March 2002, pp10-12.
- Foster, K., J. Fulton, A. Gray, E. Beetschen, and S.Martin. 2002, "Evaluating Cooperation Between Hog Producers and Pork Processors." Purdue Agricultural Economics Report, Purdue University, West Lafayette, IN, June 2002, pp4-7.
- Li, N., A. Schinckel, P. Preckel, K. Foster, and B.Richert. 2002, "Profitable Use of Ractopamine in Hog Production - Economic Evaluation Using a Pig Growth Model." Purdue Swine Research Report, Purdue University, West Lafayette, IN, pp77-82.
- Li, N., A. Schinckel, P. Preckel, K. Foster, and B.Richert. 2002, "Economic Evaluation of Ractopamine Step-up Programs Using a Biological Growth Model." Purdue Swine Research Report, Purdue University, West Lafayette, IN, pp. 72-6.
|
Progress 10/01/00 to 09/30/01
Outputs
Analysis was conducted to determine the financial feasibility of pork producer cooperative ownership in a modest sized slaughter plant. Given the financial stress of 1998 in the pork industry there is great interest in such alternative ways of adding value to hogs. However, previous analysis of the strategy mentioned above has used a traditional Net Present Value (NPV) approach to analyze the investment. Given the uncertainties faced in the live hog and wholesale pork markets such an approach is not valid. To properly analyze this investment, a Real Options approach was employed. The Real Options approach incorporates the option to wait and see how the uncertainty is resolved. Whenever decision makers are faced with irreversible investments and great uncertainty about future returns it is often optimal to delay investment. Consider the life experience of searching for a mate. We do not enter such endeavors rashly, but tend to postpone marriage while gathering more
information about our prospective mate. This research primarily quantified the input and output price uncertainties that a cooperatively owned slaughter plant would face. The results suggest that is optimal for hog farmers to wait rather than make the investment today. There are additional uncertainties not to the least of which is "how existing slaughter companies might respond to the new entrant." Pork slaughter is a very concentrated industry and existing firms might employ predatory pricing to drive the cooperative out of business. Consequently, additional research was conducted to analyze the competitive nature of the pork slaughter industry. The research extended previous econometric analyses of the meat sector by focusing on pork alone and incorporating some strategic market conduct variables suggested by published literature in the game theory area. The results of this analysis suggest that pork packers have significant market power in the wholesale pork market, but not in the
live hog market. The market power increases with capacity constraints and unanticipated demand shocks.
Impacts
Pork producers will be more cautious about making large irreversible investments in slaughter facilities. They and producer organizations that support them will seek to resolve some of the uncertainties about market structure, prices, and markets before making these sizeable investments. This is particularly true since it appears that existing packers may have the capability to employ short term predatory pricing to force the cooperative out of the market. It is also likely that this research will convince policy makers and regulators to watch the concentration of the pork slaughter industry more closely.
Publications
- No publications reported this period
|
Progress 10/01/99 to 09/30/00
Outputs
Analysis was conducted to estimate the impact of various components of proposed livestock waste management regulations at the state and federal. The most costly proposals are those that involve reduced application rates of phosphorus from livestock manure. The research suggests that farmers could optimally employ alternative feeding and cropping strategies that will mitigate some of the impact of phosphorus application restrictions. However, in the case of swine farms will face substantial cost if land available for application is constrained.
Impacts
Policy makers and producers will find information about making informed decisions concerning regulating animal agricultural and producing under greater regulatory burdens.
Publications
- No publications reported this period
|
Progress 10/01/98 to 09/30/99
Outputs
Research was conducted on the economics of livestock manure disposal and proposed regulations. The economics of alternative technologies to mitigate phosphorus spreading restrictions were examined and phytase appears to have economic significance when coupled with such a regulation or a binding land constraint An analysis of physical deliver mechanism in the live cattle industry was conducted. Current approaches to set ad hoc premiums and discounts for delivery markets create market failures. A time series model was used to generate appropriate indices for physical delivery settlement of live cattle futures. These improved indices perform favorably because they incorporate market arbitrage opportunities and result in optimal delivers across the various markets. Econoimics of phased feeding in swine were analyzed using a dynamic optimization framework that simultaneously optimizes ration composition, timing of ration switches, and slaughter weight for improved lean
growth genetics.
Impacts
Improved understanding of the economics of manure disposal and the impacts of alternative policies. Improved efficiency in the live cattle futures market. Current industry rations over prescribe protein in swine and result in rations that are not profit maximizing but rather lean growth maximizing.
Publications
- Boland, M., K. Foster, P. Preckel, D. Jones, and B. Joern, "Using Linear Programming to Minimize Manure Storage and Application Costs in Pork Production," Journal of Prodn Ag. 12: 405-8, 1999.
- Boland, M., P. Preckel, and K. Foster, "Economic Analysis of Phosphorus Reducing Technologies in Pork Production," Journal of Ag and Res Econ 23(1):468-82, 1998.
- Boland, M., K. Foster, and P. Preckel "Nutrition and the Economics of Swine Management,"Journal of Ag and Applied Econ. 31(1): 83-96, 1999.
- Foster, K. and A. Havenner, "Cointegration and Settlement of Commodity Futures Contracts," Macroeconomic Dynamics, 3:226-42, 1999.
|
Progress 10/01/97 to 09/30/98
Outputs
Prices of commodities such as cattle vary by location. Static economic theory suggests that, in a competitive market, these prices should deviate by the cost of cross shipping cattle between the locations. However, this is not always the case. These deviations from equilibrium prices may be transitory or related to market factors. The paper by Dr. Walburger and myself in JARE estimates the dynamic equilibrium between cattle prices in different markets and uses market factors to determine the causes of deviations from this equilibrium. We found that forward contract deliveries, slaughter volume, and transportation costs were significant in explaining the disequilibria. Forward contract deliveries could be a market power tool exercised by packers. There has been great interest in the imperfect market structure of the U.S. beef sector, not only in recent years, but also over the past century. Central to this issue is the definition of market boundaries. The study by
Walburger and myself published in AJAE provides an effective way of providing information which may be used to suggest relevant market boundaries. The state space model was fit to fourteen years of weekly data on nineteen price series from regional U.S. fed cattle markets. Tight regional market price interrelationships were discovered. By accounting for these interrelationships, it was discovered that, in general, spot market prices simply cannot move independently. The dynamics of the system of prices revealed the existence of between five and seven focal price discovery regions.
Impacts
(N/A)
Publications
- Walburger, A. and Foster, K. 1997, Assessing the Relationship Between Market Factors and Regional Price Dynamics in U.S. Cattle Markets, Journal of Agricultural Resource Economics, Vol. 22, pp.133-144.
- Walburger, A. and Foster, K. 1998, Determination of Focal Pricing Regions for U.S. Fed Cattle, American Journal of Agricultural Economics, Vol. 80, pp. 84-95.
|
Progress 10/01/96 to 09/30/97
Outputs
Asian markets represent a significant part of U.S. pork exports, but the Australian pork industry is poised to grow and may compete for this market in the future. I spent eight months in Australia interacting with individuals in the pork industry and appraising their competitive position. Australia's advantages are lower shipping costs, less potential environmental damages and restrictions, lower incidence of swine diseases, and readily available feed. Australia's disadvantages are a lack of infrastructure, high feed costs, no very high quality genetics (import ban in existence), high construction costs, and a lack of human capital in pork production. Canada is also a competitor for Asian markets. I worked on a project to compare the pork marketing chains in the U.S. and Canada. Differences include use of restricted marketing systems in Canada contrasted with more vertically coordinated markets in the U.S. (see Klein, et al.). Prices of commodities such as cattle vary
by location. Static economic theory suggests that, in a competitive market, these prices should deviate by the cost of cross shipping cattle between the locations. However, this is not always the case. These deviations from equilibrium prices may be transitory or related to market factors. The paper by Dr. Walburger and I estimates the dynamic equilibrium between cattle prices in different markets and uses market factors to determine the causes of deviations from this equilibrium. We found that forward contract deliveries, slaughter volume, and transportation costs were significant in explaining the disequilibria. Forward contract deliveries could be a market power tool exercised by packers.
Impacts
(N/A)
Publications
- Klein, K., Faminow, M., Walburger, A., Larue, B., Romain, R., and Foster, K. 1996, Evaluating Supply Chain Performance: A Case Study of the Canadian Pork Sector, Supply Chain Management: An International Journal, Vol. 1, pp. 10-22.
- Walburger, A. and Foster, K. 1997, Assessing the Relationship Between Market Factors and Regional Price Dynamics in U.S. Cattle Markets, Journal of Agricultural Resource Economics, Vol. 22, pp.133-144.
|
Progress 10/01/95 to 09/30/96
Outputs
Various sorting systems exist to identify quality and reward producers in pork slaughter plants. In previous work, my coauthors and I have developed models to predict carcass quality and producer premiums for a variety of these methods currently in use or those proposed for use. These estimates along with a swine growth model and economic data were used to determine the economic incentives for alternative marketing of hogs. The research examined differences in marketing according to type of carcass evaluation system used in the plant, alternative genetic lines, and sex of the animals. It was found that optimal slaughter weights do changes somewhat and that there may be incentives to market different types of animals to different plants to take advantage of (or avoid) some systems of compensation based on quality. A relatively large scale multivariate time series model was used to evaluate the potential to profitably forecast live cattle prices in different locations
and the future market. Using this model in simulations, it was discovered that indeed profitable trading schemes could be enacted.
Impacts
(N/A)
Publications
- BOLAND, M., FOSTER, K., PRECKEL, P., and SCHINCKEL, A. 1996. Analyzing Pork Carcass Evaluation Technologies in a Swine Bioeconomic Model. Journal of Production Agriculture. Vol. 9.
- FOSTER, K., HAVENNER, A., AND WALBURGER, A. 1995. System Theoretic Time Series Forecasts of Weekly Live Cattle Prices. American Journal of Agricultural Economics. Vol. 77.
|
Progress 10/01/94 to 09/30/95
Outputs
Various sorting strategies exist for pork slaughter and processing firm. Furthermore, alternative strategies may depend on the firms method of quality evaluation. Regression models to predict carcass quality and/or value were analyzed for various technologies, and a packing plant simulation model was developed to examine their use. Strategies were devised and evaluated based on costs and returns via the simulation model. Asset fixity, capital accumulations and their long and intermediate effects on maize supply in Zambia were investigated and found to be significant.
Impacts
(N/A)
Publications
- BOLAND, M., and FOSTER, K. A. 1995. Simulation of Carcass Evaluation Technology in a Pork Packing Plant: Feasibility and Economic Analysis. Transactions of the American Society of Agricultural Engineering. Vol. 38.
- BOLAND, M., FOSTER, K. A. and AKRIDGE, J. 1995. Packer Sorting Strategies for Fresh Pork. Agribusiness an International Journal.
- BOLAND, M., FOSTER, K. A. and SCHINCKEL, A. 1995. Alternative Pork Carcass Evaluation Technologies: 1. Differences in Predictions of Value. Journal of Animal Science. Vol. 73.
- BOLAND, M., FOSTER, K. A. and SCHINCKEL, A. 1995. Alternative Pork Carcass Evaluation Technologies: 2. Statistical Analysis of Error Attributable to Sex, Genotype, and Weight. Journal of Animal Science. Vol. 73.
- FOSTER, K. A. and MWANAUMO, A. 1995. Estimation of Dynamic Maize Supply Response in Zambia. Agricultural Economics. Vol. 12.
|
Progress 10/01/93 to 09/30/94
Outputs
The profitability of feeding food processing by-products to Indiana beef cattle was analyzed. It was found that acquisition costs are such that it is often not optimal to incorporate such products into rations. However, using such products to feed livestock does represent a more sustainable food processing chain. Various sorting strategies exist for pork slaughter and processing firm. Furthermore, alternative strategies may depend on the firms method of quality evaluation. Regression models to predict carcass quality and/or value were analyzed for various technologies, and a packing plant simulation model was developed to examine their use. Strategies were devised and evaluated based on costs and returns via the simulation model.
Impacts
(N/A)
Publications
- BOLAND, M., FOSTER, K.A., AKRIDGE, J. and FORREST, J. 1994. Simulation Results for a Pork Packing Plant. Purdue University Agricultural Experiment Station Bulletin No. 677.
- FOSTER, K., KLOTZ, J-C., CLARK, L., JONES, D. and SUTTON, A. 1994. A Feasibility Study of Some Alternative Dead Hog Disposal Methods. Purdue Swine Day Report, pp. 13-24.
- BOLAND, M., FOSTER, K.A. and SCHINCKEL, A. 1994. An Analysis of Error in Pork Carcass Evaluation. Abstracted in: Journal of Agricultural Economics. Vol. 76.
- BOLAND, M., SCHINCKEL, A., FOSTER, K.A. and PRECKEL, P. 1994. Errors in Predicting value due to Genotype, Sex, and Weight Under Alternative Carcass Evaluation Technologies. Abstracted in: Journal of Animal Science. Vol. 72. Supplement 1.
- BOLAND, M., PRECKEL, P., SCHINCKEL, A., FOSTER, K.A. and AKRIDGE, J. 1994. Determining Producer Profit Maximizing Slaughter Weights for Three Swine Genotypes Under Alternative Pricing Systems. National Pork Producers Council 1994 Research.
- DRAKE, D., FOSTER, K., PETRITZ, D. and PERRY, T. 1993. An Economic Analysis of Alternative Feeds in Midwestern Beef Cattle Finishing Rations. Journal of Sustainable Agriculture. Vol. 4.
- FOSTER, K.A., GREEN, R. and ALSTON, J. 1994. Estimating Elasticities with the L.
|
Progress 10/01/92 to 09/30/93
Outputs
Data from Indiana pork producers was used to determine the statistical linkages between productivity and profitability. Factors significantly effecting returns to management and labor included: pigs sold per sow per year, pigs sold per crate per year, feed efficiency, feed costs, and facility costs. It was also found that top ranking producers tend to maintain that ranking over time. Finally, significant economies of size were also discovered. Various sorting strategies exist for pork slaughter and processing firm. Furthermore, alternative strategies may depend on the firms method of quality evaluation. Regression models to predict carcass quality and/or value were analyzed for various technologies, and a packing plant simulation model was developed to examine their use. Strategies were devised and evaluated based on costs and returns via the simulation model.
Impacts
(N/A)
Publications
- BOLAND, M.A., FOSTER, K.A., PATRICK, G.F., FOSTER, J. and ORR, D. 1993. Estimating the Linkages Between Productivity and Profitability in Swine Enterprises: The Journal of the American Society of Farm Managers and Rural Appraisers. vol. 57.
- BOLAND, M., FOSTER, K., PRECKEL, P., and SCHINCKEL, A. 1993. Genotype and Measurement Bias in Predicting Lean for Three Genotypes of Hogs. Abstracted in: Journal of Animal Science. Vol 71, Supplement 1.
- BOLAND, M., BERG, E., FOSTER, K., FORREST, J. and AKRIDGE, J. 1993. Technology Transfer and Value Based Marketing of Pork: Packer Sorting Strategies Using Electromagnetic Scanning. Abstracted in: Journal of Animal Sciences. Vol 71, Suppl.
- BOLAND, M., FOSTER, K., and PRECKEL, P. 1993. Biases in Pork Packer Methods of Estimating Carcass Lean and Their Effects on Producer Profits. Abstracted in: American Journal of Agricultural Economics. Vol. 75.
- FOSTER, K., HAVENNER, A. and WALBURGER, A. 1993. System Theoretic Time Series Forecasts of Weekly Live Cattle Prices. Abstracted in: American Journal of Agricultural Economics. Vol. 75.
|
Progress 10/01/91 to 09/30/92
Outputs
An analysis of a variety of swine production and marketing arrangements was conducted to evaluate their risk and financial attributes. It was found that the risk concerns of the very risk averse producer could be addressed by some of the available contracts but only for a substantial risk premium which could lead to financial stress. At the same time, arrangements are also available which alleviate enough risk to be preferred by the slight to moderate risk averse producers who dominate the industry, but still provide sufficient returns on average. Auction sales data and boar test station records were used to construct a nedonic pricing model for breeding boars. The results suggest significant influences for backfat thickness, loin-eye area, feed efficiency, and average daily gain. The implicit prices of these attributes were also calculated and provide guidelines for buyers and sellers of swine breeding stock. A dynamic model of the U.S. beef breeding herd suggests
that much of the cyclical nature in beef supply may be attributed to replacement decisions of producers and the resulting skewness in the cow herd age distribution. From a practical point of view, this suggests that cow-calf producers may be wise to smooth out their investments in cows to avoid bubbles of age cohorts.
Impacts
(N/A)
Publications
- FOSTER, K.A. AND BURT, O.R. 1992. A Dynamic Model of Investment in the U.S. Beef-Cattle Industry, Journal of Business and Economic Statistics. 10:419-26.
- WALBURGER, A. AND FOSTER, K.A. 1992. An Estimation of the Implicit Value of Swine Breeding Stock Attributes. Abstracted in American Journal of Agricultural economics. 74:.
|
Progress 10/01/90 to 09/30/91
Outputs
A DYNAMIC MODEL OF THE U.S. BEEF BREEDING HERD SUGGESTS THAT MUCH OF THE CYCLICAL NATURE IN BEEF SUPPLY MAY BE ATTRIBUTED TO REPLACEMENT DECISIONS OF PRODUCERS AND THE RESULTING SKEWNESS IN THE COW HERD AGE DISTRIBUTION. FROM A PRACTICAL POINT OF VIEW, THIS SUGGESTS THAT COW-CALF PRODUCERS MAY BE WISE TO SMOOTH OUT THEIR INVESTMENTS IN COWS TO AVOID BUBBLES OF AGE COHORTS. A FLEXIBLE LEAST SQUARES MODEL OF AGGREGATE U.S. AGRICULTURAL OUTPUT WAS ESTIMATED. THIS MODEL SUGGESTS THAT TECHNILOGICAL PROGRESS IN THE DECADES OF THE 1960'S AND 1970'S WAS LESS PRONOUNCED THAN PREVIOUSLY THOUGHT. IN ADDITION, A NEW MEASURE OF TECHNILOGICAL CHANGE WAS DERIVED (FLEXIBLE TECHNICAL CHANGE) WHICH WAS SHOWN TO BE MORE STABLE THAN PREVIOUS METHODS. THE RESULTS IMPLY A LOWER RETURN TO AGRICULTURAL RESEARCH SINCE THE BENEFIT OF RESEARCH IS USUALLY MEASURED IN INCREASED PRODUCTIVITY. FINALLY THERE ARE IMPLICATIONS FOR DEVELOPMENTS IN THE QUANTITY AND QUALITY OF THE AGRICULTURAL RESOURCE
BASE.
Impacts
(N/A)
Publications
|
|