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The Pricing Performance of Market Advisory Services in Corn and Soybeans over 1995-2003

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Listed author(s):
  • Good, Darrel L.
  • Irwin, Scott H.
  • Martines-Filho, Joao Gomes
  • Hagedorn, Lewis A.

Abstract

The purpose of this research report is to evaluate the pricing performance of market advisory services for the 1995-2003 corn and soybean crops. Four basic indicators of performance are applied to advisory program prices and revenues over 1995-2003. Test results provide little evidence that advisory programs as a group outperform market benchmarks, particularly after considering risk. The evidence is somewhat more positive with respect to the farmer benchmark, even after taking risk into account. For example, the average advisory return relative to the farmer benchmark is $7 per acre with only a negligible increase in risk. While this return is small it nonetheless represents a non-trivial increase in net farm income per acre for grain farms in Illinois. Test results also suggest that it is difficult to usefully predict the year-to-year pricing performance of advisory programs based on past pricing performance. However, there is some evidence that performance is more predictable over longer time horizons, particularly at the extremes of performance rankings.

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File URL: http://purl.umn.edu/14775
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Paper provided by University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics in its series AgMAS Project Research Reports with number 14775.

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Date of creation: 2005
Handle: RePEc:ags:uiucrr:14775
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Keywords: Marketing;

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Cited by:

  1. Klumpp, Joni M. & Brorsen, B. Wade & Anderson, Kim B., 2005. "The Impact of Marketing Strategy Information on the Producer's Selling Decision," 2005 Conference, April 18-19, 2005, St. Louis, Missouri 19036, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  2. Zhang, Tong & Brorsen, B. Wade, 2006. "Heterogeneity in Producer's Marketing Strategy," 2006 Annual Meeting, February 5-8, 2006, Orlando, Florida 35299, Southern Agricultural Economics Association.
  3. Franken, Jason R.V. & Garcia, Philip & Irwin, Scott H., 2006. "Do Interest Rates Explain Disaggregate Commodity Price Growth?," 2006 Annual meeting, July 23-26, Long Beach, CA 21319, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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