Journal 2003

2003 Letter from the Editor/Editorial Committee [July 31, 2003]

Real Reconciliation

By R.H. Holstein, III, A.R.A.

There are three classical approaches to market value, but only one market value. Reconciliation in the appraisal process would be more meaningful if it were first directed to reconciliation of the application of the approaches when the results are widely variant. 

Costs of Producing for an Identity-Preserved (IP) Grain Market: A Case Study 

By Dr. Cole R. Gustafson

Demand for identity-preserved (IP) crops produced by Northern Plains farmers is increasing. Buyers are willing to pay a premium for grains that can be guaranteed to possess a unique characteristic. IP crop production often requires several unique management practices. These include greater investment in segregated storage facilities, more meticulous production, isolation, added cleaning/ sorting, documentation, greater testing, additional marketing, and risks of liability. To illustrate the economics involved, a case study on producing certified wheat seed for sale to other farmers is used as an example of IP grain production. Many of the concepts and specific practices of certified seed production are applicable to most IP crops raised. 

Profits and Risk: Fitting an Old Framework to a New Agriculture 

By Cheryl J. Wachenheim and David Saxowsky

The traditional list of resources used in production agriculture is redefined by replacing entrepreneurial ability with information and risk-bearing capacity. Equity diversification is identified as a means for farmers to improve risk-bearing capacity. By bearing (rather than shifting) risk, farm owners become entitled to accrue profits. 

Replacing Summer Fallow with a Summer Grazed Legume Crop in Rotation with Wheat or Wheat-Sunflower-Millet 

By Andrew A. Haag, Larry J. Held, James M. Krall, Ronald H. Delaney, Stephen D. Miller, and David Claypool

Profitability and risk, 1988-2001, are examined for lamb-grazed field pea as a fallow replacement with a wheat-fallow rotation, or extended wheat-sunflower-millet wheat-sunflower-millet-pea rotations. Switching from a conventional wheat-fallow to an extended rotation with grazed-peas increases the rate of return to farmland (2.3% to 7.3%), and reduces downside risk with losses in only two versus seven of fourteen years). 

Farmland Leasing Decisions and Successful Debt Repayment Strategies

By Cesar L. Escalante and Peter J. Barry

Risk-return and cash flow profiles of farmland leasing options determine effectiveness of debt repayment plans. Cash- leasing farms set higher farm income benchmarks in making leasing decisions; thus they benefit more from revenue enhancement strategies. Risk- sharing and favorable cash-flow arrangements provide share- leasing farms with flexibility in setting benchmarks and choosing alternative debt repayment strategies. 

An Economic Analysis of Occupational Benefits Among Nevada Cattle Ranch Employees 

By Don Breazeale, Rangesan Narayanan, and Rodney Torell

The major purpose of this study was to develop an economic analysis for producers concerning the extent and use of fringe benefits for their ranch employees. Nevada ranch managers were found to be providing a sizable number of fringe benefits, the most prevalent being housing, utilities, and health insurance. Results indicated that occupational differences did not explain variations in a benefits/salary ratio, however they did constitute approximately one-third of the salary for all occupations. Furthermore, as ranch size increased, there was an increase in the value of the benefits package and number of ranch employees. 

Innovative Production Methods on Wet Clay Soils for Rice and Soybean

By Michael P. Popp, Terry C. Keisling, Lanny O. Ashlock, Larry C. Purcell, Paul A. Counce, David C. Annis Jr., Patrick M. Manning, and Eddie Gordon

Clayey soils have properties that can make conventional, early-season planting difficult. Several experiments on alternatives to conventional planting showed that airplane seeding can be successful, but that varying soil surface conditions and post-planting weather make it risky. High floatation tires showed promising, weather-dependent returns of -$4.69/acre to $36.07/acre. 

What French Farmers are Doing That May be of Interest to U.S. Farmers 

by George Flaskerud and Jean-Paul Nicoletti

Production in France is highly diversified, although wheat is the dominant crop. The total cost of producing wheat is higher per acre but lower per bushel than in South Central North Dakota. Efficiencies are achieved through alliances, and in some cases through associations. They also have a process for consolidating land into efficient operating units. Expansion is tempered by land and subsidy policies. They generally sell crops for the elevator seasonal average price. An international farm show is featured at field days. Their production practices and policies need to be assessed by U.S. producers seeking to compete in a global economy. 

What Our Students Should Know: Perspectives from California 

By Wayne Howard and Jason Tyner

California rural appraisers were surveyed about what they thought should be included in a college-level rural appraisal course. In addition, they were asked their income and age. Results indicate that the average California rural appraiser is 46- 55 years old, has an annual income of $75,000 or more, and is licensed as a Certified General Appraiser. Asked to rank the relative importance of selected topics to be taught in a college-level rural appraisal course, respondents thought that the ability to write effectively was the most important, followed by understanding the unique features of rural properties. 

Appraising Land with Field Tile Drainage 

By Herbert Meyer, A.R.A

This article is about the value discounts that can be identified and extracted from market sales of prime farmland due to poor field drainage. The appraiser has used imperfect matched pairings to extract price adjustments on a per deeded acre, per tilled acre, and on a per productivity unit basis, based on crop yields, for the more extreme cases of wet tilled fields in West Central Illinois. 

Precision Farming and Land Leasing Practices

By Marvin T. Batte

Precision farming practices may influence precision farmers’ preferences for alternative forms of land lease and the contract terms negotiated between landlord and tenant. This article discusses attributes of cash and share leases, the two primary lease types employed in Ohio, and suggests implications of precision farming for the choice of lease type. Evidence from the 1999 Ohio Precision Farming Survey may shed light on how precision farmers are controlling land through lease. 

The Influence of Financial, Production, and Operator Characteristics on Dairy Farm Transfer Plans 

By Christopher A. Wolf

The farm transfer plans of dairy farms were examined. Operator age, specialization in the dairy enterprise, and owner equity were all positively and significantly related to farm transfer plans. The larger, more financially sound, and successful farms were much more likely to have formal farm transfer plans. 

2002 New York Dairy Farm Transition Survey 

By Dan Conable and Maynard Miran

Some dairy industry observers claim that many farmers are about to abandon dairy farming, that older operators are leaving the business without finding anyone to take over, and that land is being converted to other uses. The New York Dairy Farm Transition Survey was designed to gather information related to these concerns. Results support a more optimistic view of the future of the state’s dairy industry, although succession problems and loss of farmland to residential and other non-farm uses will challenge some farming operations. 

Determinants of Technical Efficiency in Louisiana Beef Cattle Production 

By A. N. Rakipova, J. M. Gillespie, and D. E. Franke

Technical efficiency was estimated for a group of beef cattle producers. Producers using straight-bred Bos taurus bulls and mixed-bred Brahman cows were more technically efficient than producers who did not. Those who used a designated hay meadow, used registered cows, were older, and were more highly educated were the more technically efficient producers. 

Improving the Competitiveness of Beef Production in the Northern Contiguous United States and Canada

By D.P. Stonehouse, L. Gao, T.A. Hamilton, J.G. Buchanan-Smith, and A.

Beef cow-calf operations in many northerly regions of North America traditionally calve in the winter (February-March), feed stored feeds in confinement from October through mid-May, and sell offspring as weaned calves. We investigated the alternative management practices of calving in summer (June-July), extending the grazing season into the autumn using stockpiled pasture, and selling offspring as yearlings, feeders or heavy feeders, and compared them with the traditional practices for cost-effectiveness and profitability. Our findings indicated that it was unequivocally more profitable to extend the grazing season into the fall, rather than feed in confinement, because of lower costs of pasture feeding. Summer calving was more cost-effective than winter calving because of savings in bedding, labor, veterinary treatments, and barn amortization, but generated lower revenues and was less profitable than traditional winter calving when offspring were sold as weaned calves. When offspring were retained to heavier marketing weights, summer calving in general became more profitable than winter calving, but only for the case of confinement feeding. Retaining offspring to higher marketing weights did not generally pay. For winter calving, under either confinement feeding or extended fall grazing, it was more profitable to sell offspring as weaned calves. For summer calving with confinement feeding, selling offspring as feeders was “most profitable” (i.e. generated the least net loss), but with extended fall grazing, selling offspring as weaned calves was most profitable. The most profitable combination across all three sets of management practices was winter calving with extended fall grazing with offspring sold as weaned calves. 

Profitability of Variable versus Uniform Rate Nematicide for Sugar Beets 

By Larry J. Held, Tina J. Opp, David W. Koch, Fred A. Gray, and Jeffery W. Flake

The benefit of applying fumigant for control of the sugar beet nematode on a variable versus uniform rate basis is examined. Compared to fumigating an entire field at a uniform rate labeled for nematode suppression, variable rate application provides extra profit ranging from $4/acre (heavily infested field) to $69/acre (lightly infested field). In addition, adverse environmental impacts are minimized by reductions in product usage.