IDEAS home Printed from https://ideas.repec.org/a/ags/joaaec/48761.html
   My bibliography  Save this article

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

Author

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
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/48761/files/jaae197.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.48761?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Harvey, A C, 1976. "Estimating Regression Models with Multiplicative Heteroscedasticity," Econometrica, Econometric Society, vol. 44(3), pages 461-465, May.
    2. Richard E. Just & Quinn Weninger, 1999. "Are Crop Yields Normally Distributed?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(2), pages 287-304.
    3. Langemeier, Michael R. & Schroeder, Ted C. & Mintert, James R., 1992. "Determinants Of Cattle Finishing Profitability," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 24(2), pages 1-7, December.
    4. Keith H. Coble & Thomas O. Knight & Rulon D. Pope & Jeffery R. Williams, 1996. "Modeling Farm-Level Crop Insurance Demand with Panel Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 439-447.
    5. Alan P. Ker & Barry K. Goodwin, 2000. "Nonparametric Estimation of Crop Insurance Rates Revisited," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 463-478.
    6. Octavio A. Ramirez & Sukant Misra & James Field, 2003. "Crop-Yield Distributions Revisited," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 108-120.
    7. Joseph Atwood & Saleem Shaik & Myles Watts, 2003. "Are Crop Yields Normally Distributed? A Reexamination," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 888-901.
    8. Lawrence, John & Wang, Zhi & Loy, Dan, 1999. "Elements of Cattle Feeding Profitability in Midwest Feedlots," ISU General Staff Papers 199901010800001486, Iowa State University, Department of Economics.
    9. Lawrence, John D. & Wang, Zhi & Loy, Dan, 1999. "Elements of Cattle Feeding Profitability in Midwest Feedlots," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 31(2), pages 349-357, August.
    10. Alan P. Ker & Keith Coble, 2003. "Modeling Conditional Yield Densities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 291-304.
    11. Carl H. Nelson & Paul V. Preckel, 1989. "The Conditional Beta Distribution as a Stochastic Production Function," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(2), pages 370-378.
    12. Lawrence, John D. & Wang, Zhi & Loy, Dan, 1999. "Elements of Cattle Feeding Profitability in Midwest Feedlots," Staff General Research Papers Archive 2039, Iowa State University, Department of Economics.
    13. Lawrence, John D. & Wang, Zhi & Loy, Daniel D., 1999. "Elements Of Cattle Feeding Profitability In Midwest Feedlots," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 31(2), pages 1-9, August.
    14. Mark, Darrell R. & Schroeder, Ted C. & Jones, Rodney D., 2000. "Identifying Economic Risk In Cattle Feeding," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 18(3), pages 1-14.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Christopher N. Boyer & Karen L. DeLong & Andrew P. Griffith & Charles C. Martinez, 2024. "Factors influencing United States cattle producers use of livestock risk protection," Agricultural Economics, International Association of Agricultural Economists, vol. 55(4), pages 677-689, July.
    2. Boyer, Christopher N. & DeLong, Karen L. & Griffith, Andrew P. & Martinez, Charles, 2024. "Examining how Risk Preferences and Information Affect Livestock Risk Protection Use," 2024 Annual Meeting, July 28-30, New Orleans, LA 343568, Agricultural and Applied Economics Association.
    3. 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.
    4. repec:ags:aaea22:335429 is not listed on IDEAS
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chen, Shu-Ling & Miranda, Mario J., 2006. "Modeling Yield Distribution In High Risk Counties: Application To Texas Upland Cotton," 2006 Annual meeting, July 23-26, Long Beach, CA 21392, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Forristall, Cody & May, Gary J. & Lawrence, John D., 2002. "Assessing The Cost Of Beef Quality," 2002 Conference, April 22-23, 2002, St. Louis, Missouri 19060, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    3. Maples, Joshua G. & Coatney, Kalyn T. & Riley, John M. & Karisch, Brandi B. & Parish, Jane A. & Vann, Rhonda C., 2015. "Comparing Carcass End-Point And Profit Maximization Decision Rules Using Dynamic Nonlinear Growth Functions," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 47(1), pages 1-25, February.
    4. Ozaki, Vitor & Campos, Rogério, 2017. "Reduzindo a Incerteza no Mercado de Seguros: Uma Abordagem via Informações de Sensoriamento Remoto e Atuária," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 71(4), December.
    5. Lewis, Karen & Griffith, Andrew & Boyer, Christopher & Rhinehart, Justin, 2015. "Returns to Retained Ownership through Finishing for Beef Cattle Originating from Tennessee," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196620, Southern Agricultural Economics Association.
    6. Maples, Joshua G. & Harri, Ardian & Riley, John Michael & Tack, Jesse B., 2013. "Marketing Margins and Input Price Uncertainty," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150604, Agricultural and Applied Economics Association.
    7. Lanoue, Christopher & Sherrick, Bruce J. & Woodard, Joshua D. & Paulson, Nicholas D., 2010. "Evaluating Yield Models for Crop Insurance Rating," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61761, Agricultural and Applied Economics Association.
    8. Perry, William R. & Marsh, Thomas & Jones, Rodney & Sanderson, M.W. & Sargeant, J.M. & Griffin, D.D. & Smith, R.A., 2007. "Joint product management strategies for E. coli O157 and feedlot profits," Food Policy, Elsevier, vol. 32(5-6), pages 544-565.
    9. Tang, Minfeng & Lewis, Karen E. & Griffith, Andrew P. & Boyer, Christopher N., 2016. "Identifying Factors that Impact Returns to Retained Ownership of Cattle," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229766, Southern Agricultural Economics Association.
    10. 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.
    11. Gerlt, Scott & Thompson, Wyatt & Miller, Douglas, 2014. "Exploiting the Relationship between Farm-Level Yields and County-Level Yields for Applied Analysis," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 39(2), pages 1-18.
    12. Avent, R. Keith & Ward, Clement E. & Lalman, David L., 2002. "Asymmetric Value Of Preconditioning Programs For Feeder Cattle," 2002 Annual Meeting, July 28-31, 2002, Long Beach, California 36559, Western Agricultural Economics Association.
    13. Janzen, Matthew & Coatney, Kalyn T. & Rivera, Daniel & Harri, Ardian & Riley, John Michael & Busby, Darrell & Groves, Matt, "undated". "Fed Cattle Marketing: A Field Experiment," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252844, Southern Agricultural Economics Association.
    14. Zheng, Qiujie & Wang, H. Holly & Shi, Qinghua, 2008. "Estimating Farm Level Multivariate Yield Distribution Using Nonparametric Methods," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6509, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. Gerlt, Scott & Westhoff, Patrick, 2013. "Analysis of the Supplemental Coverage Option," 2013 AAEA: Crop Insurance and the Farm Bill Symposium 156704, Agricultural and Applied Economics Association.
    16. Agarwal, Sandip Kumar, 2017. "Subjective beliefs and decision making under uncertainty in the field," ISU General Staff Papers 201701010800006248, Iowa State University, Department of Economics.
    17. Gerlt, Scott & Westhoff, Patrick, "undated". "Comparison of County ARC and SCO," 2014 AAEA: Crop Insurance and the 2014 Farm Bill Symposium: Implementing Change in U.S. Agricultural Policy, October 8-9, 2014, Louisville, KY 184289, Agricultural and Applied Economics Association.
    18. Vitor A. Ozaki & Sujit K. Ghosh & Barry K. Goodwin & Ricardo Shirota, 2008. "Spatio-Temporal Modeling of Agricultural Yield Data with an Application to Pricing Crop Insurance Contracts," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(4), pages 951-961.
    19. Vitor Ozaki, 2009. "Pricing farm-level agricultural insurance: a Bayesian approach," Empirical Economics, Springer, vol. 36(2), pages 231-242, May.
    20. Belasco, Eric J., 2020. "WAEA Presidential Address: Moving Agricultural Policy Forward: Or, There and Back Again," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 45(3), September.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:joaaec:48761. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/saeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.