Volume 18, Issue 2, December 1993

This section includes: Editors' Report for 1992-93; Reviewers, July 1992-June 1993; WAEA 1992 Award Winners; Past Presidents, Western Agricultural Economics Association, 1927-93; Past Editors, Western Journal of Agricultural Economics, 1977-91; Guidelines for Submitting Manuscripts; Membership Information; Back Cover
By: Choe, Young Chan; Koo, Won W.
This study examines the long-run neutrality of money and the short-run dynamics of farm and nonfarm prices to the monetary shock, using Johansen's approach. Results find a long-run equality of prices, but not neutrality. In the short-run, farm prices adjust faster than nonfarm prices to a monetary shock.
By: Brester, Gary W.; Lhermite, Pascale; Goodwin, Barry K.; Hunt, Melvin C.
Low-fat ground beef (LFGB) is a new product designed to be as palatable as beef products that contain significantly higher levels of fat. A hedonic model shows that each unitary increase in the leanness of ground beef products carries a price premium of $.0206/lb. If LFGB garners a 10% share of the ground beef market, the retail price of all ground beef products will increase by $.01/lb. and consumption will increase by 39.75 million lbs. The price of commercial cows will increase by $.56/cwt. Price quantity, and welfare measures are magnified as the market share captured by LFGB increases.
By: Shumway, C. Richard; Lim, Hongil
Because so much agricultural policy analysis utilizes estimates of supply and demand elasticities, it is crucial to obtain the most reliable estimates possible. Where reliability cannot be adequately assessed, the sensitivity of elasticities to equally plausible a priori specifications should at least be ascertained. In this article, the sensitivity of U.S. output supply and input demand elasticities to choice of functional form. Considerable sensitivity is found to choice of functional form. Although most frequently used, the translog is generally the outlier and is the least preferred among the alternatives.
By: Baker, Gregory A.; Crosbie, Peter J.
Conjoint analysis was used to estimate individual preference functions for food safety attributes. Consumer segments were constructed by using cluster analysis to form groups which were homogeneous with respect to preferences regarding food safety. Although substantial differences existed among the three distinct groups, consumers in all segments were willing to pay a moderate amount to ensure that apples met established safety standards. However, a policy which restricts pesticide use would likely result in substantial consumer dissatisfaction, unless it could be achieved with little impact on price or quality.
By: de Gorter, Harry; Fisher, Eric O’N.
This article analyzes the dynamics effects of the farm subsidies in the United States. The subsidies a farmer receives are based upon historical plantings, also called based acreage. It is sometimes optimal for a farmer temporarily not to participate in a program in order to increase future subsidies. The farmer's optimal policy is the solution to a deterministic dynamic program. Farmers with low base acreage opt out of these programs, whereas those with high base acreage participate in them. The article examines aggregate data involving corn, cotton, rice, and wheat during 1987. It shows that these programs increase the output of each of these crops and represent an annual deadweight loss of more than $2 billion.
By: Collins, Robert A.; Karp, Larry S.
This article reviews various models that may be used to explain optimal leverage choice for the proprietary farmer in a stochastic dynamic environment and develops a new model that highlights the risk of failure rather than the usual concept of risk as the variability of wealth. The model suggests that in addition to the usual factors, farm financial leverage is affected by age, wealth, and the opportunity cost of farming.
By: Buhr, Brian L.; Hayes, Dermot J.; Shogren, Jason F.; Kliebenstein, James B.
A split-valuation method is developed and implemented to elicit the willingness to pay to consume- or avoid consuming- a product of ambiguous quality. The split-valuation method uses experimental auction markets to separate and value the positive and negative attributes of the ambiguous good. The results show that the method can be used to successfully value a good ambiguous quality. Our application reveals that for a sample of students at a midwestern land-grant institution, the average respondent is willing to pay a premium for meat produced with the use of a genetically engineered growth enhancer that has 30% to 60% fewer calories and is 10% to 20% leaner.
By: Unnevehr, Laurian J.; Bard, Sharon K.
A nationwide retail survey is used to estimate hedonic prices of fat characteristics in beef table cuts. Results show that consumers consistently place a negative value on external fat for all table cuts and on seam fat in chuck and round cuts, but do not consistently value intramuscular fat. These consumer preferences are not transmitted to cattle feeders through price signals, even though the current beef grading system can distinguish carcasses with undesirable fat characteristics.
By: Thompson, Sarahelen R.; Eales, James S.; Seibold, David
The objectives of this study were to: (a) quantify differences in liquidity costs between Kansas City and Chicago wheat futures contracts, and (b) identify the factors which influence liquidity in these two markets. Regression results suggest that there are significant differences in liquidity costs between Chicago and Kansas City which are in part due to the lower trading volume at Kansas City. However, there appears to be a significantly higher cost of doing business at Kansas City which is independent of trading volume. The implications of these findings to traders is that transacting is more expensive in Kansas City than in Chicago.
By: Caputo, Michael R.; Lynch, Lori
In the spirit of Leamer's commitment to sensitivity analysis, we employ Farrell's nonparametric efficiency methodology and compare our results with those of Sexton, Wilson, and Wann. Testing the implicit assumption of technical efficiency in the methodology employed by Sexton, Wilson, and Wann, we find that the lack of technical efficiency is the cotton gins' main cause of overall inefficiency. We extend the nonparametric methodology by subjecting the shadow prices of technical efficiency to nonparametric statistical tests to draw stronger conclusions. In addition, the nonparametric methodology permits us to make gin-specific recommendations to improve the performance of the gins.
By: Johnson, D. Demcey; Wilson, William W.
This article presents a mathematical programming model of wheat cleaning and blending decisions at a country elevator. Simulations are performed to illustrate the sensitivity of cleaning to selected variables, including the value of screenings, transportation costs, and market discounts for excess dockage. In addition, the model is used to assess the impact of including dockage in the grade standards for wheat.
By: Featherstone, Allen M.; Schurle, Bryan W.; Duncan, Steven S.; Postier, Kevin D.
The ultimate loss financial institutions bear for foreclosed loans is determined by their success in liquidating their acquired property portfolios. This study examines the price received for land sold by private individuals and financial institutions from 1977 through 1990. After adjusting for quality differences, financial institutions received on average 9.2% less than private individuals. Further analysis reveals that commercial banks received a discount of 5.8%, the Farm Credit System (FCS) a 9.2% discount, and Farmers Home Administration (FmHA) a 14.7% discount. For this sample of 13,375 Kansas sales, it is estimated that the sum of the transfers from financial institutions to land buyers amounted to $9.2 million.