Journal 2011

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2011 Letter from the Editor / Editorial Committee [June 10, 2011]

The readers of the 2011 Journal of the ASFMRA will find papers addressing a wide diversity of topics, theories, and methodologies that are sure to meet their interests. Keep reading – there are many new things for you to consider in the following papers. (Read More)

View the list of Editorial Committee Members who helped make this Journal possible.


Estimating the Cost of Producing Selected Ornamental Crops in Plant Hardiness Zones 8 and 9  [June 10, 2011]

By Roger A. Hinson, Randall D. Little, Ken E. Hood, Allen Owings, Richard Harkess, and John Black

The “Green Industry” is a large and growing segment of production agriculture. As such, cost of production information is critical to successful management decision making. The research reported in this article estimated the cost of producing selected container-grown woody ornamental plant and perennials in Plant Hardiness Zones 8 and 9. (Vol. 74, No.1, Pg 3-22) [more]

Contribution of Wildlife to the Value of U.S. Southern Forestland  [June 10, 2011]

By Thomas J. Straka and Tyler S. Greiner

Rural appraisers should be aware of the important contribution wildlife values and hunting leases make to forestland value. Many rural appraisals take place on small family holdings that constitute about 62 percent of private forestland in the United States. Roughly 12 percent of these small forest holdings are leased for hunting or some other recreational use, producing significant annual revenue. The methodology to value these contributions is described. Using southern hunting lease revenues and a six percent real discount rate, hunting leases increased forestland values by $184.00 per acre on average, certainly a significant contribution to value. (Vol. 74, No.1, Pg 23-32) [more]

Forage plus Grain Wheat versus Grain-Only Wheat  [June 10, 2011]

By Jason C. Duke, Francis M. Epplin, Jeffrey D. Vitale, and Derrell S. Peel

Winter wheat may be grown in the Southern Plains either to produce grain only, or as a dual-purpose crop to produce both fall-winter forage and grain. The objective of the research is to determine expected net returns for both production systems. The estimated expected net value of the dualpurpose system stocked with steers with an initial weight of 450 pounds is from $38 to $92 per acre greater than that of the grain-only system. The economic success of dual-purpose wheat depends on a number of management factors including stocking density. (Vol. 74, No.1, Pg 33-41)[more]

Hybrid Rice Production Possibilities in the Southern Rice Producing Region  [June 10, 2011]

By Michael A. Deliberto and Michael E. Salassi

Hybrid rice represents a new and increasing popular variety option for rice producers. This study examines the acreage diversification among long grain rice varieties in the southern rice region and presents estimates of thedifferences in expected costs and returns among the production of conventional, Clearfield®, and hybrid rice varieties. Breakeven yield increases required to cover additional hybrid rice production costs are estimated over a range of rough rice market prices for both owner and tenant rental situations. Rough rice market price adjustments resulting from grade differences from milling yields are also discussed. (Vol. 74, No.1, Pg 42-52) [more]

What Our Students Should Know: Perspectives from California – Revisited  [June 10, 2011]

By Wayne Howard and Lindy Wilson

California farm managers and rural appraisers were surveyed in Fall 2009 to rank the importance of several skills pertaining to their profession. Additional questions included age, income, years of experience, professional designations and affiliations, and whether the Valuation Code of Conduct (VCC) had affected their appraisal activities. On average, California rural appraisers were 52 years old, over half had incomes of $100,000 or greater, and the VCC has had little impact on their practice. Similar to previous studies, communication skills are thought more important than personal or technical skills. (Vol. 74, No.1, Pg 53-59) [more]

Using Options: The Role of Declining Time Value  [June 10, 2011]

By Katie King and Carl Zulauf

Farmers and other buyers and sellers of commodities use options in their marketing strategies. A cost of buying put and call options is the decay in option premium that occurs from the time an option position is established until the time the option position is closed out. This article finds that the average option premium decay cost associated with buying December corn and November soybean put and call options is relatively small if the option position is closed out before mid-to-late June. After this date the average option premium decay cost begins to accelerate, resulting in and increasing cost of using options to market corn and soybeans. (Vol. 74, No.1, Pg 60-65) [more]

An Environmental Trade Case Study: Agricultural Conservation Easement Pays Off Environmental Penalty  [June 10, 2011]

By Donald A. Fisher, ARA, MAI

Agricultural conservation easements have been traditionally used to transfer or extinguish development rights on farm and ranch land in order to preserve open space and conservation and natural resources. These transfers are typically made with governmental agencies or Internal Revenue Service qualified land trusts. Usually this process is initiated because the property owner wants to ensure future agricultural use as well as conserve natural resources in exchange for financial benefits in either payments and/or tax credits. (Vol. 74, No.1, Pg 66-76) [more]

The Local Economic Impacts of Ethanol Plant Expansion: A Missouri Case Study [June 10, 2011]

By Ira J. Altman, Dwight R. Sanders, and Tom G. Johnson

Utilizing an input-output approach, this paper reports the local economic impacts from the expansion of an ethanol plant in Missouri. With the expansion ofthe U.S. ethanol industry in the form of both new and expandingplants both types of growth should be taken into account. This research estimates local economic impacts from an expanding ethanol plant as an example of what local impacts can be expected from the on-going growth in the U.S. ethanol industry. The results can have important ramifications for local businesses, grain producers, and property values.
(Vol. 74, No.1, Pg 77-82) [more]

When the Seasonal Foreign Farm Workers are Gone  [June 10, 2011]

By Cesar L. Escalante, Samuel L. Perkins, and Florence I. Santos

When seasonal foreign farm workers with illegal resident status have left the country, farms experience difficulty in finding “motivated” equally efficient workers to fill in the void. This study’s survey and case study indicate that larger conventional farms usually opt for greater mechanization of their operations, with downsizing as another remedy. These farms also rely heavily on family members’ increased involvement in farm management. Enterprise budget analysis results suggest that when family farm labor inputs are exhausted, business losses could be realized, as yields are significantly reduced due to difficulty or delay in hiring domestic unskilled workers. (Vol. 74, No.1, Pg 83-96) [more]

Economic Potential of Swine Effluent in Intensified Forage Systems in the Southern Plains  [June 10, 2011]

By Seong C. Park, Jeffrey D. Vitale, J. Clemn Turner, Art Stoecker, and Jeffory A. Hattey

The projected long-run increase in corn prices from $2.50 to $3.50 per bushel is expected to have a similar effect on feed prices, pushing up feed costs by as much as 50 percent. With feed costs on the rise, increasing forage production through more intensive management techniques becomes a potentially viable option. This study uses experimental data from a seven-year study in the Oklahoma Panhandle to assess the economic feasibility of intensifying forage production. Four commonly used forage grasses in the region were field tested using two alternative fertilizer sources – swine effluent and urea. The results found that only the two cool season grasses – orchard grass and wheatgrass – generated positive economic returns under intensification. (Vol. 74, No.1, Pg 97-119) [more]

Attitudes Concerning Wind Energy in Central Illinois  [June 10, 2011]

By Sophie Theron, J. Randy Winter, David G. Loomis, and Aslihan D. Spaulding

Energy consumption in the United Sates has been increasing and the cost of fossil fuels has been unstable in recent years. Expanding investment in renewable energy is one way to reduce the nation’s dependence on fossil fuels. However, the Not-In-My-Back- Yard (NIMBY) opposition and various concerns raised at public hearings may inhibit the expansion of wind energy in Illinois. This study aims to characterize the public beliefs and opinions toward wind energy in central Illinois. (Vol. 74, No.1, Pg 120-128) [more]

Valuing Beef Herd Dam Genetic Pedigree Management  [June 10, 2011]

By Jessica Robertson-Carolan, Joe Parcell, Dave Patterson, Roger Eakins, and Jason Franken

An important component of the beef cow herd is the contribution of the dam to herd profitability. Yet, no research has contributed to valuing the dam’s genetic contribution to herd quality performance or profitability. This paper examines how managing for dam genetic pedigree quality grade affected the outcome of calf crop quality, and simulates the economic impact for different levels of quality premium. The results show that managing for dam pedigree genetics beyond three generations in the herd has little economic value for producers. (Vol. 74, No.1, Pg 129-135) [more]

Coordinating Sire Genetics in a Synchronized AI Program  [June 10, 2011]

By Joe Parcell, Jason Franken, Daniel Schafer, David Patterson, Mike John, Monty Kerley, and Kent Haden

Synchronized artificial insemination was used to inseminate cows using different types of sire genetics, including low-accuracy, calving-ease, and high-accuracy. These three sire groups were compared to calves born to cows bred using natural service. We found substantial production efficiency gains, carcass merit improvement, and economic value for calves of cows bred using a synchronized artificial insemination program with highaccuracy semen. The economic advantage of the high-accuracy sire group of calves was computed to be in the neighborhood of $40 to $80/head, relative to the natural service sire group of calves. (Vol. 74, No.1, Pg 136-148) [more]

The Role of Farmland in an Investment Portfolio: Analysis of Illinois Endowment Farms  [June 10, 2011]

By Kevin Noland, Jonathan Norvell, AFM, Nicholas D. Paulson, and Gary D. Schnitkey

The recent financial crisis has renewed interest in alternative asset classes such as farmland. Previous work has shown that farmland may provide expected return premiums while adding little additional risk to a diversified portfolio. However, these studies have been based on relatively short time periods and aggregated data on farmland returns. This analysis contributes to this literature using farm-level data from the University of Illinois endowment farms, providing additional evidence that farmland could play a favorable role within an investment portfolio. The implications of these results extend to the use of farmland within general investment portfolios. (Vol. 74, No.1, Pg 119-161) [more]

Risk-Efficient Fumigant-Mulching System Alternatives for Bell Pepper Production  [June 10, 2011]

By Myra Clarisse Ferrer, Esendugue Greg Fonsah, and Cesar Escalante

As methyl bromide (MB) is phased-out for complete banning for agricultural use, this research evaluates the relative economic efficiency of fumigant alternatives, in combination with mulching methods. Bell pepper production in Georgia was studied in particular because any fumigant system that works for it would also work for other commercial crops. This study employs stochastic dominance techniques to identify the most efficient and preferred production alternatives in terms of gross and net enterprise returns. Based on risk efficiency, mean returns and the decision-maker’s risk aversion considerations, this analysis identified TELV-MS, TEL-MS, and PC250-MS as the most preferred and risk-efficient alternatives. (Vol. 74, No.1, Pg 162-174) [more]