Economics Commons^™

Six Key Components Of A Farm Or Ranch Business Plan, Jay Parsons

Cornhusker Economics

Developing a good farm or ranch business plan can have many benefits. In an earlier Cornhusker Economics article, I outlined six good reasons to develop a business plan (Parsons 2015). It helps to get your business organized and moving in the right direction. It lets your lender know you have a plan to succeed, which opens up your access to capital. It also helps you organize your thoughts, clarifying the goals and objectives you wish to achieve. In summary, putting together a written business plan increases the likelihood of your business achieving success (Scarborough 2011).

Jerome Powell Is Not The Bad Guy, Tim L. Meyer

Cornhusker Economics

One of the maxims often heard in economics, agriculture, and politics is that those who do not learn from history are bound to repeat it. At first glance, this is a pessimistic view of human behavior. However, I believe that in some part it is a reflection of the positive spirit exhibited by many Americans. While it is true some have not bothered to learn from history, others have simply emphasized the positive times while simultaneously limiting the memory of more challenging experiences.

Assessing Rice Consumers’ Preferences And Willingness To Pay In Haiti, Cleeford Pavilus

Graduate Theses and Dissertations

In the last 30 years, rice has become the number one food staple in Haiti, and rice imports have outpaced domestic production to supply the country’s increasing rice demand. Policy makers support the claim that increasing local rice supply will not only reduce the dependency on imported rice but also upheave the national economy. However, there is a lack of information on Haitian consumers’ preferences for rice to aid the development of the local rice supply chain. This research aims to bridge that gap by assessing Haitian consumer preferences and willingness to pay for selected rice quality characteristics. The results …

Risk And Return Comparisons Of Pre-Harvest Marketing Strategies, John Leander Turner V

Graduate Theses and Dissertations

This paper analyzes risk and returns associated with pre-harvest corn grain marketing strategies for the state of Arkansas. Farming is characterized by a volatile environment. Numerous risks are taken by producers in order to provide commodities that are bought and sold by various parties in the supply chain. Price, yield, and production costs vary daily and can have large variation between years. Risk and Return Comparisons of Pre-harvest Marketing Strategies examines the effectiveness of using pre-harvest marketing strategies to enhance returns and to mitigate inherent price risk in the Memphis cash corn market. Thirteen strategies are compared to the October …

Do We Need More Futures Contracts In Commodity Markets?, Fabio Mattos

Cornhusker Economics

In the last couple of months, there has been news about a new futures contract for soybeans. The Financial Times and Reuters, among others, reported that the CME Group, the world’s largest futures exchange, is considering launching a futures contract based on Brazilian soybeans. The discussion seems to have started after trade issues between the United States and China resulted in a 25 percentage-point tariff on U.S. soybeans exported to China. As Chinese buyers try to avoid the tariff by purchasing grain from other suppliers, notably Brazil, a new price dynamics between U.S. and Brazilian soybeans could be emerging. This …

Agricultural Production From The High Plains Aquifer Is Worth Over $3 Billion Per Year, Richard K. Perrin, Lilyan E. Fulginiti, Federico Garcia

Cornhusker Economics

Recent research (Garcia, Fulginiti and Perrin, 2018) has shown the that the extra agricultural production from irrigation across the High Plains Aquifer (HPA) was worth about $3.5 billion in 2007, $2 billion of which was produced in Nebraska. The aquifer water is valuable!

The Economics Of The Capitalization Rate For Farmland, Jeff Stokes, Jim Jansen

Cornhusker Economics

There are three approaches that real estate appraisers use to value real property, namely, the market or sales comparison approach, the income approach, and the cost approach. The sales comparison approach is the primary way that residential real estate is appraised with the cost approach thrown in for good measure. For income producing properties, which includes commercial real estate as well as farm real estate, all three approaches are frequently used. When there are minimal improvements on farmland, the sales comparison and income approaches often provide competing estimates of value that must be reconciled so that an appraiser can render …

Initiative 427: Nebraska Medicaid Expansion, J. David Aiken

Cornhusker Economics

This article summarizes information regarding Initiative 427–the Medicaid expansion question on the November 6, 2018 ballot. It reprints the actual ballot language and the Nebraska Secretary of State’s summary of arguments for and against Initiative 427.

Background. Originally Medicaid covered the elderly, the disabled, children in low-income families, and low-income pregnant women. In 2010 Medicaid coverage was expanded by Congress to include the working poor. In 2012 the U.S. Supreme Court ruled that the provision of the Affordable Care Act (ACA) requiring states to expand Medicaid was unconstitutional. This made it a state option whether or not to expand Medicaid. …

Farm Programs, Payments And Prospects, Bradley D. Lubben

Cornhusker Economics

The USDA Farm Service Agency (FSA) began issuing payments to producers in October for Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) programs for the 2017 crop year. While these farm program payments had provided substantial cash flow to help buffer falling market price and farm income projections in the past three years, the current programs will provide relatively little cash flow for now and for the coming year. Only the ad hoc trade assistance payments and the outlook for new farm programs and decisions in 2019 may provide potential relief from the current outlook.

Applying Interconnected Game Theory To Analyze Transboundary Waters: A Case Study Of The Kura-Araks Basin, Marianna Khachaturyan, Karina Schoengold

Cornhusker Economics

A number of environmental problems are international in nature, including many water management issues. Rivers, for example, do not recognize political boundaries. Therefore, pollution generated in one country can affect neighboring countries, while water extraction in an upstream country can affect water flow and water availability in a downstream country. The situation creates an interdependency among countries, which might lead to disputes over the management of transboundary water. Therefore, coordination among the countries is necessary for effective management of these transboundary resources.

The focus of a recently published study (Khachaturyan and Schoengold, 2018) is the transboundary Kura-Araks Basin (see Figure …

Doing Well By Doing Good In The Fight Against Malnutrition And Hunger, Konstantinos Giannakas, Amalia Yiannaka

Cornhusker Economics

Technological innovation and the conduct of innovating firms are key weapons in the fight against hunger and the pursuit of food security around the world. Agricultural biotechnology seems uniquely equipped, if not destined, to spearhead the effort to combat malnutrition and hunger around the world by conferring significant agronomic benefits to producers and by having the ability to enhance both the resistance of plants to environmental stresses and the quality and nutritional value of food. Research that was recently published by the Center of Agricultural and Food Industrial Organization- Policy Research Group at the University of Nebraska Lincoln analyzes the …

Market Facilitation Program: Impact On Nebraska Corn And Soybean Producers, Anil Giri, Wes Peterson

Cornhusker Economics

In July 2018, President Trump imposed a first round of 25-percent tariffs on Chinese electronics and high-tech equipment including automobiles, computer hard drives, and LEDs. The tariffs were imposed on roughly $34 billion worth of imported goods. In August 2018 additional 25-percent tariffs were imposed on $16 billion worth of Chinese exports to the United States and in September tariffs on $200 billion worth of Chinese exports to the United States were added. (Bradsher, 2018). The Trump Administration has also imposed automobile, steel and aluminum tariffs on imports from Canada, the European Union and other countries.

In response to the …

Farm Location Influence On The Optimal Crop Insurance And Pre-Harvest Hedging Level, Cory Walters

Cornhusker Economics

Improving farm financial health can come from improving the understanding of the market forces influencing the optimal crop insurance contract and preharvest hedging risk management tools. The biggest challenge for farmers is the difficulty of assessing risk since experiencing risk, is by default, rare. Additionally, farmers receive advice about which crop insurance plan they should purchase or how much pre-harvest hedging they should do from sources, such as farm magazines, that likely do not consider the differences in individual risk exposure. Following the advice of such sources could result in producers being inadvertently exposed to more risk. A producer’s location …

The Corn/Soybean Rotation And Profitability, Matt Stockton, Devin Broadhead

Cornhusker Economics

One of the most basic questions farmers must answer on an annual basis is what to plant. In some cases this is simply a choice among cultivars in others it is a choice among different crop types. In Nebraska the choice may vary considerably since many different crop types are grown. This discussion focuses on the factors that affect profitability, which are created by both biology and economics, and how that might be used to make the best crop rotation selection between corn and soybean cropping systems.

Importance Of Being Digital Ready – What Does That Mean?, Charlotte Narjes

Cornhusker Economics

Communities often determine if they are digital ready on whether or not high speed internet is available. The conversation then focuses on who has high speed internet and who does not. Hence, the divide. High speed internet is an important factor on whether or not a community can be competitive in a global market. But, it is not the only digital-ready factor necessary to compete in a global economy. One challenge of focusing on the divide is that assumptions are made that individuals do not have skills in rural areas to use technology and, that these rural residents may not …

The Evolution Of Nebraska Corn Basis, Jessica J. Groskopf, Amanda Silva

Cornhusker Economics

In 2018 Nebraska farmers planted 9.7 million acres of corn, the most of any crop in the state. The primary uses for corn in the state are cattle feed and ethanol production. Nebraska currently has 25 ethanol plants producing around 2 billion gallons of ethanol annually. This capacity consumes approximately 40% of Nebraska’s annual corn production.

A Model For Farmer Support In Zimbabwe – Opportunity For Change, Brierly Kuhudzayi, Daniela Mettos

Cornhusker Economics

Community development refers to the collective action of a group of people to improve their quality of life or to fix a problem they face. It involves active participation by the people facing the problem. Input subsidy programs (ISPs) are commonly used in Sub-Saharan Africa as a strategy to achieve several development goals. They generally aim to improve the lives of poor subsistence-level farmers, improve agricultural output, and stimulate the economy. However, ISPs are not technically a community development tool because they are typically centrally planned and top-down in nature.

Economics Of Experimental Design: Finding The Optimal Design Of A Whole Field Randomized Experiment, Taro Mieno, David S. Bullock, Aolin Gong

Cornhusker Economics

An April 2017 Cornhusker Economics article Getting to Know Your Yield Response Better through Whole-field Randomized Experiments discussed a case study detailing a whole-field randomized agronomic experiment (nitrogen and seed rate). The study was conducted in Kentucky and funded through the USDA-NIFA Data Intensive Farm Management (DIFM) project. The project has so far resulted in more than 50 experiments across several states, including Illinois, Nebraska, Kansas, and Washington. The overarching goal of the project is to provide agricultural producers with the best input rate, variable or uniform, which maximizes their farm profits. This involves statistically estimating the crop response function …

2018 Cash Lease Adjustments On Irrigation Equipment For Cropland Rental Arrangements In Nebraska, Jim Jansen, Jeff Stokes

Cornhusker Economics

The Nebraska Farm Real Estate Market Highlights Report 2017-2018 provides recent trends on land values and rental rates for landowners, tenants, and stakeholders. Each year the special feature section covers topics on new or emerging issues related to agricultural land in Nebraska. These topics reflect interest expressed by panel members and readership of the Nebraska Farm Real Estate Market Highlights Report. The special feature section in 2018 focuses on cash lease adjustments on irrigation equipment for cropland rental arrangements in Nebraska. Results from this special feature section of the survey are summarized in this article.

Financial Impact Of The Tax Cuts And Jobs Act On Ag Producers, Tina N. Barrett

Cornhusker Economics

The dust still hasn’t completely settled from the changes made in December of 2017 to the tax code by the Tax Cuts and Jobs Act (TCJA), but we are starting to dig through the law to make some sense of what this will look like for ag producers. What we know for sure is that the changes are far reaching and complex. We also know that for most producers, the changes will result in a lower tax liability. The largest unknown is exactly how the new 199a deduction (20% passthrough) will need to be implemented. We are currently still waiting …

Toxic Effects Of Lead Disposal In Water: An Analysis Of Tri Facility Releases, Patrick Koval

Economics Department Working Papers

Using county-level TRI data from 2003 to 2016, I find evidence that lead emissions in water adversely affect birth weights within the emitting county, especially with respect to the percentage of births considered low birth weight within that county (less than 2,500 grams). I find that a one percent increase in lead emissions per square mile increases the proportion of low birth weights by 0.27 percentage points. For a county with an average number of births in a particular year, this one percent increase in lead per square mile translates to an additional $475,000 in hospitalization costs from complications with …

2018 Nebraska Farm Custom Rates Statewide Survey Summary, Glennis Mcclure

Cornhusker Economics

Many Nebraska agricultural producers hire custom operators to perform machinery services for their farms and ranches across the state. The 2018 Nebraska Custom Rates Survey Report summarizes the current rates charged for specific machinery operations and other on farm or ranch custom services. Prices paid for these services become more critical as profit margins tighten because of lower commodity prices.

Agricultural Market Liberalization And Household Food Security In Rural China, Lia Nogueira, Kathy Baylis, Linlin Fan

Cornhusker Economics

Recent World Trade Organization (WTO) disputes have brought China’s agricultural trade policy back into the spotlight. In November 2008, China issued the nation’s first Outline of Medium and Long-term Plan for National Food Security (China Central People’s Government, 2008), in which they stipulate that the country will seek to stabilize the area sown to grain and achieve more than 95% grain self-sufficiency. Trade restrictions are argued to support implementing this plan because increased imports of grains and soybeans will lower prices, causing grain and soybean farmers to leave farming, thereby generating food insecurity (Wong and Huang, 2012). Others suggest that …

Trade Wars, E. Wesley F. Peterson

Cornhusker Economics

Current United States trade policies are in line with an old economic doctrine known as mercantilism which calls for protectionist policies to reduce imports and expand exports with the goal of generating large trade surpluses. This doctrine has been discredited for over 200 years following the analyses of Adam Smith, David Ricardo and other late eighteenth- and early nineteenth century economists. Mercantilist policies by one country not only lower well-being in that country through harm to consumers and industries relying on imported inputs but also almost always lead to trade wars with that country’s trading partners. This is precisely what …

Role Of Information And Communication On Spatial Conservation Auction Performance: Evidence From A Laboratory Experiment, Simanti Banerjee, Marc Conte

Cornhusker Economics

Policy makers such as the USDA are interested in producers voluntarily adopting pro-environmental land use practices on their properties as these land uses deliver various ecosystem service benefits. As a result, they have implemented incentive based policies such as the Conservation Reserve Program (CRP) (Hellerstein et al., 2015). The CRP involves a reverse auction in which producers submit bids for adopting different land use practices. In running these auctions, agencies are interested in both cost-effectiveness i.e. procuring land use projects which yield the highest level of ecosystem service benefits for the money spent and specific environmental goals. One key goal …

Salary Negotiation And Graduates From The Department Of Agricultural Economics, Larry W. Van Tassell

Cornhusker Economics

To better serve our students, one skill set that we as a department have considered incorporating more amply in our curriculum is negotiation skills. Negotiation can be defined as, “[a] give and take process between two or more parties (each with its own aims, needs, and viewpoints) seeking to discover a common ground and reach an agreement to settle a matter of mutual concern or resolve a conflict.” (http:// www.businessdictionary.com/definition/ negotiation.html) One of the first opportunities our students have to experience the negotiation process is in obtaining their first employment out of college and negotiating a fair market wage.

Thinking About The Corn Market, Fabio Mattos

Cornhusker Economics

It was twenty years ago today, in the late 1990s, that the United States was the dominant corn producer and exporter in the world, producing about 240 million metric tons (40 percent of the world total) and exporting close to 50 million metric tons (65 percent of the world total). Brazil, on the other hand, was a minor player in the corn market, producing approximately 25 million metric tons (4 percent of the world total) and exporting barely anything. Many changes have happened and we have a different corn market today. For the 2018/19 crop year, USDA projections show the …

Livestock Production Value And Economic Impact For Nebraska Counties, Glennis Mcclure, Bradley Lubben

Cornhusker Economics

Livestock production provides a significant economic impact in Nebraska. In 2016, 56 percent of all agriculture commodity sales in Nebraska were attributed to livestock and the industry accounted for over 50 percent of agricultural commodity sales each year since the 2012. This article provides an analysis of livestock production value and corresponding direct economic impact per county. The analysis estimates the direct economic impact of livestock production is $8.5 billion and the total impact of livestock production in Nebraska is $13.8 billion.

Consumer Response To Fraudulent Producer Behavior In The Agri-Food Marketing System, Syed Imran Ali Meerza, Christopher Gustafson

Cornhusker Economics

Over the last decade, food fraud scandals, such as the adulteration of Chinese milk with melamine, the discovery of horse-meat in many European meat products, and the mislabeling of Italian olive oils, have increased the attention of the media, consumers, and governments about the vulnerability of the food system to intentional adulteration or misrepresentation of product ingredients or products themselves based on economic motives (Lotta and Bogue 2015). Food fraud is defined as the intentional substitution, addition, tampering, or misrepresentation of food products for economic gains (Spink and Moyer 2011). Food fraud is motivated by economic gain and is enabled …

Syngenta Gmo Settlement Claims Due October 12, 2018, J. David Aiken

Cornhusker Economics

The federal judge presiding over the Syngenta class action lawsuit granted preliminary approval for the $1.51 billion Syngenta GMO corn lawsuit settlement on April 10, 2018. Written settlement notices have been mailed to corn producers, crop-share and some variable cash rent landlords, grain handling faculties and ethanol production facilities beginning on May 11, 2018. This newsletter focuses on the claims process for corn producers and eligible landlords.