IDEAS home Printed from https://ideas.repec.org/p/ags/nddaae/95751.html
   My bibliography  Save this paper

Contracting for Canola in the Great Plains States

Author

Listed:
  • Wilson, William W.
  • Dahl, Bruce L.

Abstract

Canola has become an important crop in the last decade in the U.S. Production of canola is risky and competes with other crops which have a range of risk reduction mechanisms. Alternative contracting strategies were evaluated by comparing returns to labor and management for growers and gross margins for processors. Alternative contracting strategies included no contract, fixed price with and without act of god provisions, and an oil premium contract. Grower returns and processor gross margins were simulated and resulting distributions were evaluated using stochastic efficiency with respect to a function. We estimated certainty equivalents and ranked contract preferences for both growers and processors by region in North Dakota. Grower and processor risk preferences varied by region. Producers and processors preferences differed for contract alternatives in the Northwest, Northeast and Eastcentral regions and were in agreement in the Northcentral region. This suggests that development of a single contract that would be widely adopted across the state would likely have to be altered by region to be acceptable to growers and processors.

Suggested Citation

  • Wilson, William W. & Dahl, Bruce L., 2010. "Contracting for Canola in the Great Plains States," Agribusiness & Applied Economics Report 95751, North Dakota State University, Department of Agribusiness and Applied Economics.
    • Handle: RePEc:ags:nddaae:95751
    DOI: 10.22004/ag.econ.95751
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/95751/files/AAE663.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.95751?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. Wilson, William W. & Dahl, Bruce L., 2009. "Grain Contracting Strategies to Induce Delivery and Performance in Volatile Markets," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 41(2), August.
    2. J. Brian Hardaker & James W. Richardson & Gudbrand Lien & Keith D. Schumann, 2004. "Stochastic efficiency analysis with risk aversion bounds: a simplified approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(2), pages 253-270, June.
    3. McCarl, Bruce A. & Bessler, David A., 1989. "Estimating An Upper Bound On The Pratt Risk A Version Coefficient When The Utility Function Is Unknown," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 33(1), pages 1-8, April.
    4. William W. Wilson & Bruce L. Dahl, 2011. "Grain contracting strategies: the case of durum wheat," Agribusiness, John Wiley & Sons, Ltd., vol. 27(3), pages 344-359, June.
    5. MacDonald, James M. & Perry, Janet E. & Ahearn, Mary Clare & Banker, David E. & Chambers, William & Dimitri, Carolyn & Key, Nigel D. & Nelson, Kenneth E. & Southard, Leland W., 2004. "Contracts, Markets, and Prices: Organizing the Production and Use of Agricultural Commodities," Agricultural Economic Reports 34013, United States Department of Agriculture, Economic Research Service.
    6. William Wilson & Cole Gustafson & Bruce Dahl, 2009. "Crop insurance in malting barley: a stochastic dominance analysis," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 69(1), pages 98-112, May.
    7. Wilson, William W. & Dahl, Bruce L., 2008. "Procurement Strategies to Improve Quality Consistency in Wheat Shipments," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(1), pages 1-17, April.
    8. William W. Wilson & Bruce Dahl, 2014. "Contracting for Canola in the Great Plains States," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 62(1), pages 89-106, March.
    9. Wilson, William W. & Dahl, Bruce, 2009. "Grain Contracting Strategies to Induce Delivery and Performance in Volatile Markets," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 41(2), pages 363-376, August.
    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. Dahl, Bruce & Wilson, William W., 2018. "Risk premiums due to Fusarium Head Blight (FHB) in wheat and barley," Agricultural Systems, Elsevier, vol. 162(C), pages 145-153.
    2. William W. Wilson & Bruce Dahl, 2014. "Contracting for Canola in the Great Plains States," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 62(1), pages 89-106, March.
    3. Wilson, William W. & McKee, Greg & Nganje, William & Dahl, Bruce & Bangsund, Dean, 2017. "Economic Impact of USWBSI’s Scab Initiative to Reduce FHB," Agribusiness & Applied Economics Report 264672, North Dakota State University, Department of Agribusiness and Applied Economics.

    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. Dahl, Bruce & Wilson, William W., 2018. "Risk premiums due to Fusarium Head Blight (FHB) in wheat and barley," Agricultural Systems, Elsevier, vol. 162(C), pages 145-153.
    2. Wilson, William W. & McKee, Greg & Nganje, William & Dahl, Bruce & Bangsund, Dean, 2017. "Economic Impact of USWBSI’s Scab Initiative to Reduce FHB," Agribusiness & Applied Economics Report 264672, North Dakota State University, Department of Agribusiness and Applied Economics.
    3. Prithviraj Lakkakula & David W. Bullock & William W. Wilson, 2022. "Asymmetric information and blockchains in soybean commodity markets," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(1), pages 273-298, March.
    4. Aymeric Ricome & Arnaud Reynaud, 2022. "Marketing contract choices in agriculture: The role of price expectation and price risk management," Agricultural Economics, International Association of Agricultural Economists, vol. 53(1), pages 170-186, January.
    5. Donnelly, Kallie & Noel, Jay E., 2006. "Optimal Market Contracting in the California Lettuce Industry," 2006 Annual meeting, July 23-26, Long Beach, CA 21461, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Schumann, Keith D. & Richardson, James W. & Lien, Gudbrand D. & Hardaker, J. Brian, 2004. "Stochastic Efficiency Analysis Using Multiple Utility Functions," 2004 Annual meeting, August 1-4, Denver, CO 19957, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Athanasios Triantafyllou & George Dotsis & Alexandros Sarris, 2020. "Assessing the Vulnerability to Price Spikes in Agricultural Commodity Markets," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 631-651, September.
    8. Gustafson, Cole R. & Wilson, William W. & Dahl, Bruce L., 2006. "Production Risk And Crop Insurance In Malting Barley: A Stochastic Dominance Analysis," 2006 Annual meeting, July 23-26, Long Beach, CA 21095, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Anissa Chaibi & Maria-Lenuta Ciupac-Ulici & Mircea-Cristian Gherman, 2014. "Do Recent Stochastic Tools Help to Better Understand Investors Preference and Asset Allocation?," Working Papers 2014-130, Department of Research, Ipag Business School.
    10. Yangxuan Liu & Michael R. Langemeier & Ian M. Small & Laura Joseph & William E. Fry & Jean B. Ristaino & Amanda Saville & Benjamin M. Gramig & Paul V. Preckel, 2018. "A Risk Analysis of Precision Agriculture Technology to Manage Tomato Late Blight," Sustainability, MDPI, vol. 10(9), pages 1-19, August.
    11. Rokhania & Rondhi, Mohammad & Kuntadi, Ebban Bagus & Suwandari, Anik & Yanuarti, Rizky & Khasan, Ahmad Fatikhul & Mori, Yasuhiro & Kondoca, Takumi, 2023. "Impact of Contract Farming on the Technical Efficiency of Broiler Farmers in Indonesia," Economia agro-alimentare / Food Economy, Italian Society of Agri-food Economics/Società Italiana di Economia Agro-Alimentare (SIEA), vol. 25(1), April.
    12. Vassalos, Michael & Dillon, Carl R. & Coolong, Tim, 2012. "Choice of Optimal Planting and Marketing Decisions for Fresh Vegetable Producers: A Mathematical Programming Approach," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama 120016, Southern Agricultural Economics Association.
    13. Li, X. & Guo, H. & Li, L., 2018. "Do Product Attributes affect Farmer's Contract Farming Participation? Evidence from Vegetable Production in China," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277154, International Association of Agricultural Economists.
    14. Watkins, K. Bradley & Mane, Ranjitsinh U. & McClung, Anna, 2018. "Economic Risk Analysis of Rice Cultivars under Organic and Conventional Management," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266587, Southern Agricultural Economics Association.
    15. Wu-Yueh Hu, 2015. "The role of risk and risk-aversion in adoption of alternative marketing arrangements by the US farmers," Applied Economics, Taylor & Francis Journals, vol. 47(27), pages 2899-2912, June.
    16. Lyman, Nathaniel & Nalley, Lawton Lanier, 2013. "Stochastic Valuation of Hybrid Rice Technology in Arkansas," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 142505, Southern Agricultural Economics Association.
    17. Frikkie Maré & Bennie Grové & Johan Willemse, 2017. "Evaluating the long-term effectiveness of crop insurance products to provide cost effective and constant cover for maize producers under stochastic yields and prices," Agrekon, Taylor & Francis Journals, vol. 56(3), pages 233-247, July.
    18. Hristovska, Tatjana & Watkins, K. Bradley & Anders, Merle M., 2012. "An Economic Risk Analysis of No-till Management for the Rice-Soybean Rotation System used in Arkansas," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama 119676, Southern Agricultural Economics Association.
    19. Sebastian Kunte & Meike Wollni & Claudia Keser, 2017. "Making it personal: breach and private ordering in a contract farming experiment," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 44(1), pages 121-148.
    20. Rachael Goodhue & Leo Simon, 2016. "Agricultural contracts, adverse selection, and multiple inputs," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 4(1), pages 1-33, December.

    More about this item

    Keywords

    Agricultural Finance; Crop Production/Industries;

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:nddaae:95751. 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/dandsus.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.