Author
Wilson, William W.
This study compares purchasing strategies for meeting essential amino acid (EAA) requirements for soybeans in the Pacific Northwest export market. The analysis shows that specifying minimum EAA requirements in purchase contracts is the most reliable and cost-effective strategy and instills a sense of security and trust in meeting high-quality EAA end-user requirements. Additionally, purchasing based on minimum protein and oil specifications meets EAA requirements about 80% of the time, with the odds increasing to 93% when targeting origins based on soybean quality survey reports, albeit with added testing costs.
The response of U.S. soybean export basis (Gulf and Pacific Northwest) to changes in supply and demand (domestic and international), transportation costs, logistics conditions, and export activity variables was examined from both a market-year average and seasonal analog perspective. The market-year average results indicated that basis at both locations were highly correlated and influenced primarily by international and domestic competition. The seasonal analog results indicated a wide variation in seasonality across marketing years for both locations with transportation costs, logistic conditions, and export activity having the greatest influence on the seasonal analog grouping.
This paper analyzes spatial arbitrage and vertical integration of a U.S. soybean-trading firm. A risk-constrained optimization model using Monte Carlo simulation and copula joint distributions is specified. Results show that spatial-arbitrage payoffs vary regionally. Sensitivity results indicate that payoffs and risks increase as firms become more vertically integrated.
Commercialization of genetically modified (GM) traits leads to interesting strategic questions for agbiotechnology and seed firms. The purpose of the study is to evaluate equilibrium strategies of agbiotechnology and seed firms regarding commercialization of GM traits. Two game theory models were developed to examine equilibrium strategies. In the first, both agbiotechnology firms have commercialization strategies of licensing or not. In the second, the agbiotechnology firm also has the strategic option to purchase a seed form as a commercialization strategy. Results indicate that the equilibrium strategy would be for each of the agbiotechnology firms to license their traits, and the seed firm would release a stacked trait. However, order of play matters and impacts the equilibrium. Finally, in the second game, the equilibrium is for the agbiotechnology company to purchase a seed firm. Each of these decisions is highly strategic and reflects the current strategic challenges in the agbiotechnology industry.
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
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.
Release of a genetically modified (GM) crop variety would lower prices of competing pesticides used on conventional varieties. This causes an increase in surplus for those farmers who adopt the GM variety, as well as for those who plant the conventional variety. A Cournot model was developed to determine the equilibrium quantities of conventional pesticides. A market with conventional wheat was compared to a market with both conventional and GM wheat varieties to identify price decreases of the conventional pesticide as a result of the GM trait introduction.
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.
A common and noteworthy application of auctions and bidding is that of tendering for imports, used for both price determination and the allocation of purchases among sellers. In this study we develop a model to evaluate bidding strategies and competition and apply it to Egyptian oilseeds imports. Generally, bids could be explained with a relatively high degree of confidence using accessible data. In addition, there appear to be groups of bidders characterized by differences in their bid functions. These statistical results were used to determine optimal bids and evaluate the effects of several critical variables. The results are particularly interesting for understanding sellers’ bidding strategies and competition among rivals, as well as impacts of specific variables on optimal bids and payoffs to sellers.