2018
Peel, Derrel S.; Riley, John Michael
The cattle industry consists of a complex set of production and marketing activities across unrelated market participants widely dispersed in time, place and form (Peel, 2015). The industry relies on market prices and signals to coordinate these diverse activities. Feeder cattle markets collectively represent the principal point of market contact between all production sectors of the industry (Peel, 2011). Feeder cattle markets provide the market venue for the sale of calves from the cow-calf sector; the source of feeder cattle purchased by feedlots for finishing; and, in between, stocker and back grounding activities that arbitrage feeder cattle across weights, space and time to provide an efficient set of market prices (Peel, 2011).
Tompson, Nathanael M.
Commercial genetic testing services targeted at the beef industry have become quite common in recent years, with many in the beef industry promoting the benefits they provide. However, economic considerations of financial feasibility are limited. What little work that has been done has focused on the use of genetic information to improve feedlot management decisions for commercial cattle. Generally, this work was unable to substantiate positive economic returns. Despite the lack of current economic rationale, the potential for this technology remains strong. In this article, we provide a brief overview of the work that has been done with respect to economics of genetic testing in the beef industry as well as a discussion of future opportunities and challenges. Mainly, this revolves around what is needed to achieve a scenario of cost-effective genetic testing Ð either increasing the value of genetic information or decreasing the cost of the test. While animal scientists are working to provide more accurate tests that have the potential to increase the value of genetic information, producers seeking to use this technology have no control over the rate at which these new variations are released. Therefore, at present, increasing the value of genetic information will require additional vertical coordination or cooperation among different sectors of the beef industry as well as more efficient price signaling. On the other hand, reducing the cost of the test could also help in achieving cost-effective implementation of genetic testing. Two specific scenarios are discussed: (i) offering reduced profiles of genetic information relevant to a specific decision at a reduced cost and (ii) randomly sampling a subset of a group of cattle for genetic testing to measure the genetic potential of the group.
Wilder, Brett; Tejeda, Hernan; Johnson, Aaron
Basis variability in live cattle markets has substantially grown over the past few years. Since the beginning of the new cattle cycle (2014), volatility1 experienced by the live2 cattle futures market has grown by more than 150% in comparison to previous years. This new scenario has considerable implications for participants in the futures markets, both hedgers and speculators. We review the changing live cattle market conditions from the implementation of the Livestock Marketing Reporting (LMR) up to date. Additionally, we document and interpret changes to live cattle basis while providing examples of how basis volatility impacts profitability.
Schulz, Lee L.; Boetel, Brenda L.; Dhuyvetter, Kevin C.
Selasco, Eric J.; Hungerford, Ashley E.
Drought represents one of the main risk factors in ranching in the Western United States. To assist in mitigating against the impacts of drought, the pasture, rangeland, and forage (PRF) insurance product was developed by the Risk Management Agency (RMA) and first offered in 2007 as a pilot product. Recent changes to PRF, including (1) increased availability, (2) changing the index from vegetative to rainfall in several states, and (3) updating the prices, have led to an increase in both acreage and participation since 2015. The number of insured acres has increased by 79.7 percent from 54.7 million acres in 2015 to 98.3 million acres1 in 2018. The number of policies sold has also increased from 24,693 in 2015 to 32,761 in 2018, amounting to a 32.7 percent increase. Results demonstrate support for PRF loss ratios being close to RMA objectives, while policy selections have resulted in insured months not always aligning with months where rainfall is critical for forage production.
Tejeda, Hernan; Glaze, Benton; Jensen, K. Scott
Bull expected progeny differences (EPD) and actual performance data were examined along with their auction prices in order to identify the significant impact of different traits on the resulting bullÕs price, in specific regions of the Pacific Northwest. The objective was to determine the characteristics most valued by bull purchasers for this region of the country, which receives less precipitation and has higher elevation when compared to the Plains or the Midwest, where most similar studies have been focused in the past. Auction catalog information of bull sales and final sale price, from two different regions in Idaho, are used to estimate hedonic models, with price as a function of their simple performance measurements (SPMs), EPDs and value indexes. For the north central region of Idaho, the catalog provided SPMs Ð birth weight (BW), 205-day weight (205 WT) and 365-day weight (365 WT) Ð had a significant positive effect on the price paid by cow/calf producer. In addition, EPDs for milk (MILK), docility (DOC) and birth weight (BEPD) were significant, though BEPD had a negative effect on the bullÕs price. For the southwest region of Idaho, the only SPM provided in all the catalogs Ð birth weight (BW) Ð was found to have a significant negative effect on price. The yearling age EPD (YEPD) was found to have a significant positive effect on price. In this southern region of Idaho, both the index of weaned calf value ($W) and of cow energy value ($EN) were found to have a significant positive effect on prices. Some results corroborate previous study findings, though others appear to be related to the geographic region of the U.S. More data are being sought to provide further insights and measure their robustness.
Stehle, Anna; Breedlove, Derrell S. Peel; Riley, John Michael
Hoag, Dana; Zilberman, David
Zilberman, David; Gordon, Ben
Ward, Frank A.; Hurd, Brian H.; Sayles, Sarah
This article describes a series of water issues and policy choices for adapting to climate-stressed river and stream systems. It addresses issues that are important both in New Mexico and internationally for which economic analysis can inform and guide ongoing policy debates. Economic analysis is needed both in New Mexico and overseas to guide plans for efficient, equitable, and sustainable water use and for reducing costs of adapting to climate-stressed river and aquifer systems. Special attention is given to three current water issues in New Mexico: climate-stress adaptation through water trading and banking, adaptation through transboundary aquifer sharing, and adaptation through headwater flow capture. All three of these measures face design and implementation challenges both in New Mexico and internationally for adapting to growing evidence of climate-stressed river systems.
Torrell, Gregory; Stevens, Reid
The severe Texas droughts of the 1950s prompted the development of a comprehensive planning framework to guide the stateÕs water policy and investments. The Texas State Water Plan has been regularly updated since the first plan in 1961 and has developed into a system of regional water plans that define the statewide strategies to mitigate the impact of future severe droughts. In this paper, we describe the history of the Texas State Water Plan, some of its shortcomings, and provide recommendations for its improvement. We recommend that the plan include linkages between demands and supplies, allow for flexibility in regional planning, and expand its scope to allow a more holistic approach to water management.
Yoder, Jonathon
Washington State has been in fiscal gridlock because a recent court case Ð the Hirst Decision (Hirst)— would require counties to show legal availability of groundwater to issue permits for new rural residential wells that would be in connectivity with surface water. Many argued that this requirement would halt rural residential development in the state. This article examines the context and potential consequences of Hirst through an economic lens. For context, the characteristics of exempt wells and recent legal precursors are discussed. A qualitative assessment of the likely impacts of Hirst and the conditions that might alleviate its effects is provided, followed by potential institutional innovations that may emerge because of or in response to Hirst. These developments in Washington State illustrate some of the complexities of exempt wells common to many of the Western United States.
Colby, Bonnie; Young, Ryan
This article highlights examples of innovative approaches in regional water problem-solving contained in tribal settlements, providing readers with a sense of the possibilities that tribal participation brings to western water management. Many tribal settlements use economic incentives in ways useful to consider in a broader water management context. The article highlights economic components of several specific settlements and concludes by summarizing ways in the economic principles and incentives they illustrate can be more broadly applied in addressing water challenges. Figure 1 lists the tribal nations that are referred to in this article and shows the area where these tribesÕ reservations are located.
Schoengold, Karina; Brozovic, Nicholas
Common groundwater management concerns that are driving policy change worldwide include aquifer depletion, surface water-groundwater interaction, and water quality degradation. This article discusses recent innovations in groundwater quantity management from around the northern and central High Plains region of the United States, where much of the policy change has occurred at a local level. There are several principles underlying the development of new groundwater management tools. Local and stakeholder input are common, generally effective, and are often more politically feasible than top-down regulations. Evidence is emerging that the behavioral and signaling aspects of policy have been effective in changing producer behavior.
Hoag, Dana LK; Goemans, Chris; Orlando, Anthony
Rules about water use in the West evolved independently from those meant to improve water quality. Sometimes rules governing use have a negative effect on water quality and vice versa. We look at the interaction of use and quality rules in the Lower Arkansas River Valley (LARV) in Southeast Colorado. The adoption of water-saving sprinkler irrigation systems has lagged behind adoption in similar regions. The lag is primarily because the LARV has unique use rules that require replacing water savings to the river when a more efficient system is adopted. At the same time, several studies have found that sprinklers can help with pollution problems from nitrogen, selenium and salinity. We show that economists, working with other sciences, can make sophisticated estimates about the impacts conservation systems. However, it is difficult to present those complex results in a way that helps stakeholders examine the options. An example is presented that allows farmers and others to compare the impacts of different conservation systems across multiple objectives in a simple and meaningful way. Researchers are now better equipped than ever to work with local stakeholders to evaluate conservation systems and address multiple objectives.
