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Probabilistic Models of Yield, Price, and Revenue Risks for Fed Cattle Production

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Listed:
  • Belasco, Eric J.
  • Taylor, Mykel R.
  • Goodwin, Barry K.
  • Schroeder, Ted C.

Abstract

Cattle feeding enterprises operate amid variability originating in prices and production. This research explicitly models yield risks related to cattle feeding by relating the mean and variance of yield performance factors to observable conditioning variables. The results demonstrate that pen characteristics, such as entry weight, gender, placement season, and location influence the mean and variability of yield factors, defined as dry matter feed conversion, average daily gain, mortality, and animal health costs. Ex ante profit distributions, conditional on cattle placement characteristics, are derived through simulation methods to evaluate the effects of price or yield shocks on the distributional characteristics of expected profits.

Suggested Citation

  • Belasco, Eric J. & Taylor, Mykel R. & Goodwin, Barry K. & Schroeder, Ted C., 2009. "Probabilistic Models of Yield, Price, and Revenue Risks for Fed Cattle Production," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 41(1), pages 1-15, April.
    • Handle: RePEc:ags:joaaec:48761
    DOI: 10.22004/ag.econ.48761
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    Cited by:

    1. Kumar, Anjani & Kumar, Pramod & Sharma, Alakh N., 2012. "Crop Diversification in Eastern India: Status and Determinants," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 67(4), pages 1-17.
    2. Boyer, Christopher N. & Park, Eunchun & Griffith, Andrew P. & DeLong, Karen L. & Martinez, Charles, 2023. "Impact of Subsidy on Livestock Risk Protection for Fed and Feeder Cattle," 2023 Annual Meeting, July 23-25, Washington D.C. 335429, Agricultural and Applied Economics Association.
    3. McKendree, Melissa G.S. & Tonsor, Glynn T. & Schulz, Lee, 2017. "Feedlot operators’ decision making regarding price and animal health risk," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258462, Agricultural and Applied Economics Association.
    4. Watten, Asa & Hennessy, David A. & Zhao, Jinhua, 2018. "Insurance and American Options in Intra-season Cropping Choices with Applications," 2018 Annual Meeting, August 5-7, Washington, D.C. 274480, Agricultural and Applied Economics Association.
    5. Belasco, Eric J. & Cheng, Yuanshan & Schroeder, Ted C., 2015. "The Impact of Extreme Weather on Cattle Feeding Profits," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(2), pages 1-21, May.
    6. Braelyn Moltz & Mark Yu & Edward Osei & W. Brandon Smith & Brant Poe, 2019. "The Economic Analysis of Corn Grain Optimization and Price Variation for Cattle on Feed in Texas," Agriculture, MDPI, vol. 9(7), pages 1-12, July.
    7. Yu, Chin-Hsien & Park, Seong Cheol & McCarl, Bruce A. & Amosson, Stephen H., 2012. "Feedlots, Air Quality and Dust Control-Benefit Estimation under Climate Change," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124736, Agricultural and Applied Economics Association.

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    More about this item

    Keywords

    Agribusiness; Livestock Production/Industries; Production Economics; Productivity Analysis; Risk and Uncertainty;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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