A Multivariate Evaluation of Ex-ante Risks Associated with Fed Cattle Production
Abstract
The purpose of this study is to evaluate the risks faced by fed cattle producers. With the development of livestock insurance programs as part of the Agricultural Risk Protection Act of 2000, a thorough investigation into the probabilistic measures of individual risk factors is needed. This research jointly models cattle production yield risk factors, using a multivariate dynamic regression model. A multivariate framework is necessary to characterize yield risk in terms of four yield factors (dry matter feed conversion, averaged daily gain, mortality, and veterinary costs), which are highly correlated. Additionally, a conditional Tobit model is used to handle censored yield variables (e.g., mortality). The proposed econometric model estimates parameters that influence the mean and variance of each production yield factor, as well as the covariance between variables. Following the model fitting using a maximum likelihood approach, simulation methods allow for profits, revenue, and gross margins to be evaluated given different assumptions concerning volatility among other shocks. The profit function is composed of random draws, based on conditioning variables, as well as parameter estimates. Shocks to variability, yield factors, or prices allow for a visual representation of the vulnerability of cattle feeder profits to these shocks.Download Info
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.Bibliographic Info
Paper provided by SCC-76: Economics and Management of Risk in Agriculture and Natural Resources in its series SCC-76 Meeting, March 15-17, 2007, Gulf Shores, Alabama with number 9382.
Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF
Length:
Date of creation: 2007
Date of revision:
Handle: RePEc:ags:sccsgs:9382
Contact details of provider:
Web page: http://www.auburn.edu/academic/agriculture/agrisk
More information through EDIRC
For corrections or technical questions regarding this item, or to correct its listing, contact: (AgEcon Search).
Related research
Keywords: Livestock Production/Industries;References
No references listed on IDEASYou can help add them by filling out this form.
Citations
Lists
This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.Statistics
Access and download statisticsCorrections
When requesting a correction, please mention this item's handle: RePEc:ags:sccsgs:9382For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.

