Progress 10/01/04 to 09/30/09
Outputs
OUTPUTS: A study was completed using data from Agribank to examine the default risk and pricing of agricultural loans from a financial institution perspective. In addition, this data were used to examine credit quality migration for Kansas farms. The probability of default and credit rating was converted into a pricing grid. Off-farm investment decisions of farm households were analyzed using a sample of Kansas farms observed from 1994 through 2000. The central question underlying the analysis is whether farm income variability influences off-farm investment decisions. Previous analyses on the determinants of non-farm investments have failed to consider the role of income variability. A study was undertaken to estimate the effect of social capital on land valuation. A study was conducted in Indiana and Kansas to examine the importance of character on the loan approval decision. A study examined the effects of decoupling agricultural policies on agricultural production. Another study was conducted to analyze the impacts of decoupled government payments on production and investment decisions of Kansas farmers. A threshold regression model approach was used and found three regimes characterized by different economic behavior. PARTICIPANTS: Allen Featherstone and his collaborators conducted the probability of default and credit quality migration studies. Christine Wilson, Allen Featherstone and collaborators loan approval study. Allen Featherstone and his collaborators conducted the off-farm investment study and the effect of government payments on investment study. TARGET AUDIENCES: Kansas Farmers, U.S. and International Policymakers PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
The importance of this work rests in the ability to more accurately assess the financial situation of Kansas farms. Being able to communicate the financial vulnerability of Kansas farms in a credit rating framework allows farmers to better understand the credit markets and more accurately price the risk of their operation, and negotiate interest rates. Understanding the importance of character in the credit decision will help farmers better understand the loan approval process. Character continues to play a more important role in the decision than the financial variables. WTO negotiations consider the importance of farm program payments in distorting the markets. Results indicate that while distortion of the markets is theoretically possible, the empirical effects are small. Understanding the U.S. Farm Bill is not only important for U.S. producers but also for producers around the world. Understanding the role of subsidies and their affect on stimulating production is important for policy design not only in the U.S. but also in other countries around the world as more countries are adopting decoupled payment systems.
Publications
- Springer, J.D., A.K. Lusby, J.C. Leatherman, and A.M. Featherstone. 2009. An Evaluation of Alternative Tax and Expenditure Limitation Policies on Kansas Local Governments. Public Budgeting & Finance, 29(Summer):48-70.
- Serra, Teresa, S.E. Stefanou, J.M. Gil, and A.M. Featherstone. 2009. Investment Rigidity and Policy Measures. European Review of Agricultural Economics, 36(March):103-120.
- Tonser, G.T. and A.M. Featherstone. 2009. Production Efficiency of Specialized Swine Producers. Review of Agricultural Economics, 31(Fall):493-510.
- Christev, Atanas and A.M. Featherstone. 2009. A Note on Allen-Uzawa Partial Elasticities of Substitution: The Case of the Translog Cost Function. Applied Economics Letters, 16(11):1165-1169.
- Serra, T., D. Zilberman, J.M. Gil, and A.M. Featherstone. 2009. The Effects of Decoupling on Land Allocation. Applied Economics, 41(18):2323-2333.
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Progress 01/01/08 to 12/31/08
Outputs
OUTPUTS: A study was conducted to analyze the financial effects and background of the Farm Bill. Results suggested that the complexity of the decision process has increased for producers. In addition, the current financial situation could also effect the performance of the farm bill. Another study was completed to look at the effect that the access to credit had on the efficiency of backyard hog production in the Philippines. Results indicated that efficiency was constrained by access to credit. PARTICIPANTS: Allen Featherstone, Christine Wilson, NC-1014 Participants, Chuck Moss TARGET AUDIENCES: Agricultural Lenders, Farmers PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
Understanding the U.S. Farm Bill is not only important for U.S. producers but also for producers around the world. The study on understanding the U.S. Farm Bill was done for New Zealand producers. The study on credit and the production efficiency is another study indicated that credit access is not neutral to production decisions. In this case, access to credit negatively effects production efficiency in the Philippines. Policy intervention is needed to increase access to credit services in the Philippines.
Publications
- Mugera, A.W. and A.M. Featherstone. 2008. Backyard Hog Production Efficiency: Evidence from the Philippines. Asian Economic Journal, 22(September):267-87.
- Dumler, T.J. and A.M. Featherstone. 2008. The 2008 United States Farm Bill. New Zealand Journal of Primary Industry Management. 11(December):forthcoming.
- Travis R. Gullickson. 2008. Net Present Value Analysis of Plant Investment to Add Capacity, MAB Thesis, December 2008.
- Stacie M. Garvert. 2008. Performance of Female Hedge Fund Managers, MAB Thesis, January.
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Progress 01/01/07 to 12/31/07
Outputs
A study was conducted in Indiana and Kansas to examine the importance of character on the loan approval decision. Character was important to lenders in both states, although the FICO score was more important in Indiana and Kansas. A study examined the effects of decoupling agricultural policies on agricultural production. The results indicated that empirical effect on the mean and variability of production was small. A study was completed that examined the effect of closeness to cities had on agricultural land values. Results indicate that the effect of being close to Kansas City decayed slower than being close to Wichita. A study was completed that examined the effects of structural breaks and agricultural asset allocation. Before the structural break in the early 1950s, agricultural assets offered much more diversification benefits than they do after the structural break.
Impacts
Understanding the importance of character in the credit decision will help farmers better understand the loan approval process. Character continues to play a more important role in the decision than does the financial variables. The current WTO negotiations are considering the importance of farm program payments in distorting the markets. Results indicate that while distortion of the markets is theoretical possible, the empirical effects are small.
Publications
- Tsoodle, L.J., A.M. Featherstone, and B.B. Golden. 2007 Combining Hedonic and Negative Exponential Techniques to Estimate the Market Value of Land. Agricultural Finance Review, Fall. In Press.
- Pendell, D.L. and A.M. Featherstone. 2007. Structural Breaks and Agricultural Asset Allocation. Agricultural Finance Review, Fall. In Press.
- Featherstone, A.M. and M..W. Woolverton. 2007. Biofuels Production in the United States. New Zealand Journal of Primary Industry Management. 10(September): 7-11.
- Featherstone, A.M. and L.M. Brummett. 2007. Using Distance Education in Graduate Programs. Journal of Agricultural and Applied Economics, 39(August):285-99.
- Featherstone, A.M., C.A. Wilson, T.L. Kastens, and J.D. Jones. 2007. Factors Affecting the Agricultural Loan Decision-Making Process. Agricultural Finance Review, 67(Spring):13-33.
- Christopher I. Carver. 2007. Online Transaction Fees and Their Impact on Conversion, MAB Thesis, May.
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Progress 01/01/06 to 12/31/06
Outputs
A data set was obtained from Kansas Farm Management Association was used to examine the default risk over time. Results found that the measure of default risk was stable over time. A study was conducted in Indiana and Kansas to examine the importance of character on the loan approval decision. Character was important to lenders in both states, although the FICO score was more important in Indiana than Kansas. A study examined the effects of decoupling agricultural policies on agricultural production. The results indicated that empirical effect on the mean and variability of production was small. A study was undertaken to examine cooperative productivity. Results suggest that policies that raise the prices of grain and fertilizer will enhance cooperative productivity growth. Given the current price patterns, productivity growth in farm supply and marketing cooperatives is expected to be high. A study was undertaken to estimate the effect of social capital on land
valuation. Results indicate that social capital is very important in the price of land transactions. Because of this, capital gains taxes on land transactions can be effected.
Impacts
The importance of this work rests in the ability to more accurately assess the financial situation of Kansas farms. Being able to communicate the financial vulnerability of Kansas farms in a credit rating framework will allow farmers to better understand the credit markets and more accurately price the risk of their operation. Understanding the differences between alternative modeling approaches allows us to assess the robustness of the results. The results are also important to estimating likely policy effects on farms and firms with in the agricultural supply chain.
Publications
- Abaru, B.M., A.W. Mugera, D.W. Norman, and A.M. Featherstone. 2006. The Uganda Rural Farmer Scheme: Womens Accessibility to Agricultural Credit. Agricultural Finance Review, 66(Fall): In Press.
- Serra, T., D. Zilberman, B.K. Goodwin, and A.M. Featherstone. 2006. Effects of Decoupling on Agricultural Output Mean and Variability. European Review of Agricultural Economics, 33(September):269-288.
- Ariyaratne, C.B., A.M. Featherstone, and M.R. Langemeier. 2006. What Determines Productivity Growth of Agricultural Cooperatives? Journal of Agricultural and Applied Economics, 38(April):47-59.
- Dong, Fengxia and A.M. Featherstone. 2006. Technical and Scale Efficiencies for Chinese Rural Credit Cooperatives: A Bootstrapping Approach in Data Envelopment Analysis. Journal of Chinese Economic and Business Studies, 4(February):57-75.
- Tsoodle, L.J., B.B. Golden, and A.M. Featherstone. 2006. Factors Influencing Kansas Agricultural Farm Land Values. Land Economics, 82:(February):124-139.
- Featherstone, A.M., L.M. Roessler, and P.J. Barry. 2006. Determining the Probability of Default and Risk Rating Class for Loans in the Seventh Farm Credit District Portfolio. Review of Agricultural Economics, 28(Spring):4-23.
- Diego Lozano Cifuentes. 2006. Developing a Coffee Venture Capital Investment Fund in Columbia, MAB Thesis, December.
- Shannon Grapes-Kelly. 2006. Improving Efficiency in the Chappell/Lodgepole Branch of Adams Bank & Trust, MAB Thesis, August.
- James E. Zook. 2006. Chicago Board of Trade Ethanol Contract Efficiency, MAB Thesis, May.
- Mark Winger. 2006. Financial Ratio Benchmarks for Kansas Farms 1995 to 2004, MAB Thesis, April.
- Essien Ita. 2006. Lessons Learned in Operating a Niche Aroma Chemical Distribution Company, MAB Thesis, April.
- Walden Hodges. 2006. Analysis of Toll Blending Industrial Bakery Mixes and the Effect to Firm Value, MAB Thesis, January.
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Progress 01/01/05 to 12/31/05
Outputs
A data set was obtained from Agribank and was used to examine the default risk and pricing of agricultural loans. The probability of default was converted into a pricing grid. Results indicate that currently, low probability of default loans are overcharged and high probability of default loans are undercharged. The probability of default was also compared between the U.S. and France. France has a much higher probability of default than the U.S. Finally, a mechanism was used to examine alternative methods for determining the probability of default. A logit, neural network and a neuro-fuzzy inference system were compared. Results suggest that all perform about as equally as well. A study was conducted in Indiana and Kansas to examine the importance of character on the loan approval decision. Character was important to lenders in both states, although the FICO score was more important in Indiana and Kansas. Finally, a study examined the financial performance of the
greenhouse industry in Michigan.
Impacts
The importance of this work rests in the ability to more accurately assess the financial situation of Kansas farms. Being able to communicate the financial vulnerability of Kansas farms in a credit rating framework will allow farmers to better understand the credit markets and more accurately price the risk of their operation. Understanding the differences between alternative modeling approaches allows us to assess the robustness of the results.
Publications
- Featherstone, A.M. G.A. Ibendahl, J.R. Winter, and Aslihan Spaulding. 2005. Farm Financial Structure. Agricultural Finance Review, Forthcoming 65(Fall): In press.
- Abdulkadri, A.O., M.R. Langemeier, and A.M. Featherstone. 2005. Estimating Economies of Scope and Scale under Price Risk and Risk Aversion. Applied Economics, In press.
- Serra, Teresa, B.K. Goodwin, and A,M. Featherstone. 2005. Agricultural Policy Reform and Off-Farm Labour Decisions. Journal of Agricultural Economics, Forthcoming 56(July): In press
- Piana, C.F., A.M. Featherstone, and M.A. Boland. 2005. Vertical Integration in Ecuador: The Case of Fresh-cut Pineapples. Review of Agricultural Economics, 27(Winter):593-603.
- Amelie Jouault. 2005. Cross Country Comparison of the Probability of Default of Agricultural Loans, M.S. Thesis, December.
- John D. Jones. 2005. Factors Affecting the Agricultural Loan Decision Making Process, M.S. Thesis, September.
- Cindy Birchmeier. 2005. Michigan Greenhouse & Nursery Financial Study, MAB Thesis, August.
- Molly D. Brant. 2005. Asymptotically Ideal Model: Applications to Agricultural Economics, Ph.D. Dissertation, August.
- Oluwarotimi O. Odeh, 2005. Credit Rating in an Agricultural Credit Institution: Methods and Issues, Ph.D. Dissertation, August.
- Leah J. Tsoodle, 2005. The Impact of Alternative Assessment of Agricultural Land on the Urban Fringe on Housing Affordability. Ph.D. Dissertation, August.
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Progress 01/01/04 to 12/31/04
Outputs
A data set was obtained from Agribank and was used to begin to examine the default risk and pricing of agricultural loans from a financial institutions perspective. In addition, this data was used to examine the credit quality migration for Kansas farms. Results indicated that from 1980 to 2003 Kansas farms had an average credit rating equivalent to a B, which represents a vulnerable to adequate borrower. An examination of the efficiency of 11 Farm Credit organizations was under taken. The research lends support that economies of scale exist within the various sized organizations. The research shows that larger FCS associations provide better return on equity, lower operating costs, more efficient salary/expense allocation, lower interest rates, and higher capital retention. Off-farm investment decisions of farm households were analyzed using a sample of Kansas farms observed from 1994 through 2000. The central question underlying the analysis is whether farm income
variability influences off-farm investment decisions. Previous analyses on the determinants of non-farm investments have failed to consider the role of income variability. Our results indicate that higher farm income fluctuations increase the relevance of non-farm assets in the farm household portfolio, thus suggesting that these assets are used as farm household income risk management tools.
Impacts
The importance of this work rests in the ability to more accurately assess the financial situation of Kansas farms. Being able to communicate the financial vulnerability of Kansas farms in a credit rating framework will allow farmers to better understand the credit markets and more accurately price the risk of their operation. Understanding the cost structure of financial institutions that deliver credit to farmers is important as is illustrated by the results that suggest that those cooperatives that have lower operating expense offer lower interest rates to there farm borrowers. Understanding farmers use of non-farm investment as a risk management strategy may mitigate the need for additional governmental support mechanisms.
Publications
- Serra, Teresa, B.K. Goodwin, and A.M. Featherstone. 2004. Determinants of Investments in Non-Farm Assets by Farm Households. Agricultural Finance Review, 64(Spring):17-32.
- Jess D. Thompson. 2004. Economies of Scale in the Farm Credit System. MAB Thesis, December.
- Mercedes I. Firpo De Casado Achaval. 2004. Oilseeds Exports from the Americas to China. MAB Thesis, December.
- Kent J. Haverkamp. 2004. Credit Quality Migration for Kansas Farms: 1980-2003. M.S. Thesis, September.
- Anup Menon Nandialath. 2004. Duality Relationships and Testing for Regularity Conditions in Cost Functions under a Bayesian Framework: Evidence from Indian Commercial Banks, M.S. Thesis, June.
- Jeffrey S. Hole. 2004. The Effects of Cleaned Wheat on Milling Performance. MAB Thesis, May.
- Cristina L. Mansfield. 2004. Social Capital and Land Reform in Cambodia. MAB Thesis, May.
- Mohammad Zaher. 2004. Three Essays in Productive Efficiency and Productivity in the Middle East and North Africa Region. Economics Ph.D. Dissertation, April.
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