Agricultural Economics & Economics
Permanent URI for this communityhttps://scholarworks.montana.edu/handle/1/7
Situated jointly within MSU's College of Agriculture and College of Letters and Sciences, our department offers a unique opportunity for students with diverse interests to learn skills in critical analysis, logical problem solving, data and policy analysis, written and oral communication, business management. We train individuals who will make a big difference in the world by applying solid critical thinking skills. Our award-winning faculty has expertise in a wide variety of fields. We conduct cutting-edge research and teach a myriad of courses.
Browse
9 results
Search Results
Item Don't Judge a Wine by Its Closure: Price Premiums for Corks in the U.S. Wine Market(2019-02-19) Bekkerman, Anton; Brester, Gary W.For many purchases, consumers often possess only limited information about product quality. Thus, observable product characteristics are used to determine expected quality levels when making purchase decisions. We use more than 1 million weekly scanner-level observations from grocery stores across ten U.S. markets between September 2009 and August 2012 to examine how consumers value a wine bottle\'s closure type (i.e., cork or screw cap). We focus on lower-priced wines—those with sale prices less than $30 per 750 milliliter bottle—to more accurately evaluate decisions of consumers for whom seeking additional information about wine quality is likely more costly than the benefits derived from that information. Using both pooled ordinary least squares and quantile regressions to estimate price premiums for bottles with corks or screw caps, we find that U.S. consumers are willing to pay, on average, approximately 8% more (about $1.00) for a bottle of wine that has a cork closure. In addition, we show that the size of this premium increases as wine prices decline. (JEL Classifications: D81, M31, Q11)Item The Basel accords, capital reserves, and agricultural lending(2018-05) Brester, Gary W.; Watts, Myles J.Purpose The safety and soundness of financial institutions has become a leading worldwide issue because of the recent global financial crisis. Historically, financial crises have occurred approximately every 20 years. The worst financial crisis in the last 75 years occurred in 2008–2009. US regulatory efforts with respect to capital reserve requirements are likely to have several unintended consequences for the agricultural lending sector—especially for smaller, less-diversified (and often, rural agricultural) lenders. The paper discusses these issues. Design/methodology/approach Simulation models and value-at-risk (VaR) criteria are used to evaluate the impact of capital reserve requirements on lending return on equity. In addition, simulations are used to calculate the effects of loan numbers and portfolio diversification on capital reserve requirements. Findings This paper illustrates that increasing capital reserve requirements reduces lending return on equity. Furthermore, increases in the number of loans and portfolio diversification reduce capital reserve requirements. Research limitations/implications The simulation methods are a simplification of complex lending practices and VaR calculations. Lenders use these and other procedures for managing capital reserves than those modeled in this paper. Practical implications Smaller lending institutions will be pressured to increase loan sector diversification. In addition, traditional agricultural lenders will likely be under increased pressure to diversify portfolios. Because agricultural loan losses have relatively low correlations with other sectors, traditional agricultural lenders can expect increased competition for agricultural loans from non-traditional agricultural lenders. Originality/value This paper is novel in that the authors illustrate how lender capital requirements change in response to loan payment correlations both within and across lending sectors.Item The Influence of Genetic Modification Technologies on U.S. and EU Crop Yields(2019-01) Brester, Gary W.; Atwood, Joseph; Watts, Myles J.; Kawalski, AnitaOver 90% of U.S. corn and soybeans are planted with genetically modified (GM) seed varieties. We use a flexible, nonlinear functional form to investigate yield differences for corn, soybeans, and wheat between the United States and the European Union (which bans the use of GM technologies). U.S. corn and soybean yields increased relative to EU yields since the introduction of GM technologies. EU wheat yields (for which GM technologies are not commercially available in either region) continue to increase relative to the United States. Thus, the EU ban on GM technologies has likely increased the difference between corn and soybean yields between the two regions.Item The 2007 Farm Bill: Montana Producer Preferences for Agricultural, Food, and Public Policy(2007-02) Johnson, James B.; Haynes, George W.; Brester, Gary W.The Farm Security and Rural Investment Act of 2002 provides the direction for federal agricultural, food, and public policy through September of 2007. The 2002 Act is the most recent in a series of comprehensive farm bills that have authorized federal farm programs. When the 2002 Act expires, new legislation will guide future programs. In the absence of new legislation, federal farm programs could revert to permanent legislation dating from 1949. The presence of permanent legislation helps provide the impetus needed to insure that agriculture, food, and rural policy issues will be addressed by Congress and by United States Department of Agriculture (USDA) programs.Item Genetic Engineering and Risk in the Varietal Selection of Potatoes(2018-02) Fuller, Kate B.; Brester, Gary W.; Boland, Michael A.The objective of this case study is to examine the farm management decision of whether to adopt a new, genetically engineered potato variety. We describe the potato supply chain from seed production to final consumer products and explore how price and production risk interact to influence decision making at each link in that chain. We provide extensive supplemental material as well, including a teaching note with assignment and/or discussion questions, an introduction to and application of stakeholder theory, and a tool that assists students in calculating expected and simulated actual returns from their choice of potato variety.Item Forecasting a Moving Target: The Roles of Quality and Timing for Determining Northern US Wheat Basis(2016-01) Bekkerman, Anton; Brester, Gary W.; Taylor, MykelWhile nearly instantaneous commodity futures price information provides price forecasts for national markets, many market participants are interested in forecasts of local cash prices. Expected basis estimates are often used to convert futures prices into local price forecasts. This study considers basis patterns in the northern U.S. hard red spring and hard red winter wheat markets. Using data on basis values across 215 grain-handling facilities, we empirically test the forecasting capabilities of numerous basis models. Contrary to basis models developed for other U.S. regions, we show that recent futures prices, protein content, and harvest information are more important for accurate basis forecasts than historical basis averages. The preferred basis models are used to develop an automated web-based basis forecasting tool, available at http://wheatbasis.montana.edu.Item Net Returns from Terrain-Based Variable-Rate Nitrogen Management on Dryland Spring Wheat in Northern Montana(2015-04) Long, Dan S.; Whitmus, Jeffrey D.; Engel, Richard E.; Brester, Gary W.Agricultural producers can use variable‐rate application technology to vary N fertilizer within fields. This study was conducted to estimate changes in net returns from implementation of variable‐rate N management (VNM) on hard red spring wheat (Triticum aestivum L.) in a summer‐fallow region in northern Montana. Net return from uniform N management (UNM) traditionally used by producers was compared with that from VNM in eight dryland fields between 1994 and 2004. Field experiments consisted of a replicated series of four to six N rates applied within strips oriented with the length of each field. Management zones (MZs) were created by dividing the fields into upper slopes, south‐facing middle slopes, north‐facing middle slopes, and lower slopes. Nitrogen recommendations for MZs were based on soil N testing and expected yields. Grain yield data were obtained using a production‐size combine equipped with a yield monitor. Mean grain protein and yield were similar between VNM and UNM. Yield differences were <223 kg ha−1 and averaged only 18 kg ha−1. Grain yield did not differ significantly among N rates within MZs. In seven of the eight sites, net returns from VNM were up to US$27.97 ha−1 less than from UNM and were not profitable if Environmental Quality Incentive Program payments of US$6.36 ha−1 were considered as part of net income. Little evidence existed that VNM based on constructed MZs and predetermined N recommendations improves grain yields and profits or reduces N use in water‐limited, summer‐fallow systems of northern Montana.Item Re-opening the U.S./Canadian Border to Live Cattle and Beef Trade: Estimated Impacts on U.S. Beef Producers(MSU Extension, 2005-09) Marsh, John; Brester, Gary W.; Smith, Vincent H.In May 2003, Canadian authorities announced that a Canadian cow had tested positive for bovine spongiform encephalopathy (BSE or mad cow disease). Almost at once, the United States and many other countries banned all imports of Canadian cattle and Canadian beef. The consequences for Canadian cattle prices were severe. Export markets accounted for almost 40 percent of Canadian beef production and 30 percent of live cattle sales between 1995 and 2002. As a result, Canadian fed steer prices declined 55 percent from about $US 83/cwt in March of 2003 to about $US 37/cwt in September of 2003.Item GRP Rangeland Insurance for Montana(MSU Extension, 2006-09) Schumacher, Joel Brent; Johnson, James B.; Brester, Gary W.A new Group Risk Plan (GRP) Rangeland Insurance product is being offered by USDA’s Risk Management Agency (RMA) in 39 Montana counties. For counties in which this insurance product is not offered, USDA’s Farm Service Agency continues to offer the Noninsured Crop Disaster Assistance Program (See Briefing No. 14). The new GRP Rangeland Insurance product is intended to increase ranch managers’ options for managing risk related to the loss of grazing from any of several causes.