Dahl, Bruce L.

April, 2008

Procurement Strategies to Improve Quality Consistency in Wheat Shipments

By: Wilson, William W.; Dahl, Bruce L.
Consistency of functional characteristics in wheat is a concern confronting buyers and sellers. This research analyzes the cost and risk of different procurement strategies for importers. A stochastic simulation model is used to determine the probability of functional characteristics being satisfied subject to quality targets and costs for alternative purchase strategies. Stochastic efficiency was employed to identify purchase strategies that dominate others and to determine the extent of preference. As more specific characteristics are incorporated into a contract, results indicate that the probabilities of meeting end-use requirements increase
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April, 2007

Grower Response to Contracts and Risk in Genetically Modified (GM) Crops

By: Wilson, William W.; Dahl, Bruce L.; Maxwell, Brett J.
Contract strategies can resolve some of the challenges that exist for property rights conformance of genetically modified (GM) crops. The purpose of this research is to determine how contract terms impact adoption decisions related to GM grain production and marketing. A simulation model was developed for prospective GM introduction in hard red spring (HRS) wheat, and distributions of net returns for growers were analyzed using stochastic dominance and stochastic efficiency. Results illustrate that contracts can be designed to induce desired behavior. Technology fees, probabilities of detection, and the level of non-GM premiums were the most notable factors influencing adoption decisions. In addition, point-of-delivery pricing and premiums for non-GM production impact adoption decisions.
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April, 2004

Stochastic Dominance in Wheat Variety Development and Release Strategies

By: Dahl, Bruce L.; Wilson, William W.; Nganje, William E.
Variety development and release decisions involve tradeoffs between yields and characteristics valued by end-users, as well as uncertainties about agronomic, quality, and economic variables. In this study, methods are developed to determine the value of varieties to growers and end-users including the effects of variability in economic, agronomic, and quality variables. The application is to hard red spring (HRS) wheat, a class of wheat for which these tradeoffs and risks are particularly apparent. Results indicate two experimental varieties provide improvements in grower and end-user value, relative to incumbents. Stochastic dominance techniques and statistical tests are applied to determine efficient sets and robustness of the results. A risk-adjusted portfolio model, which simultaneously incorporates correlations between grower and end-use characteristics, is also developed to compare the portfolio value of varieties.
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December, 1999

OPTION VALUES FOR PROVISIONS IN EXPORT CREDIT GUARANTEES

By: Dahl, Bruce L.; Wilson, William W.; Gustafson, Cole R.
All major exporting countries of agricultural commodities have some form of credit guarantee program. As the importance of credit programs escalates, it is incumbent on policy makers to examine the value of their program relative to those of competitors. In this study, a model based on option pricing theory was developed to estimate the value of credit guarantees extended to importers and applied to U.S. and competing countries' programs. The Canadian guarantee has the lowest implicit value, followed by the U.S., Australian, and French guarantees. French guarantees had the highest implicit value due to higher coverage for interest and freight and insurance.
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December, 1998

FORWARD SHIPPING OPTIONS FOR GRAIN BY RAIL: A STRATEGIC RISK ANALYSIS

By: Wilson, William W.; Priewe, Steven R.; Dahl, Bruce L.
In the late 1980s, grain-hauling railroads began offering alternatives that have made shipping decisions more strategic. Shippers now confront alternatives ranging from nearby and unguaranteed ordering to various durations of forward and guaranteed shipment. Each has varying penalties for cancellation and payments from the railroad for nonperformance, and differing risks and payoffs. Because of the configuration of choices, shippers confront a portfolio of shipping alternatives. A dynamic stochastic simulation model was developed to analyze alternative strategies. The model includes the effects of uncertainties in tariff rate changes, car premiums, basis levels, forward and spot grain purchases, and receiving railcars under each of three alternatives. Shipping demand is determined by inter-month commodity price differences, carrying costs, transport costs, and storage capacity. Considering these factors, the shipper chooses grain sales and shipping strategies that maximize net payoffs and confronts a tradeoff between expected profits and risk.
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