Annual/Termination Reports:

[11/18/2009] [11/30/2010] [11/15/2011] [12/26/2012] [12/18/2013]

Report Information

Participants

Brief Summary of Minutes

Accomplishments

Accomplishments<br /> <br /> NC-1014 has had four objectives for the last five years:<br /> 1. Determine the effects of changes in international competitive balance and federal and state policies affecting agriculture on the financial and economic performance of farms, agribusinesses and rural financial markets;<br /> 2. Determine the effects of market, policy, and structural change in the agricultural and financial market sectors on the financial soundness, safety, and management of financial institutions that supply capital to agriculture;<br /> 3. Evaluate the management strategies, capital needs, and financial performance required for the long-term sustainability of firms in the food and agribusiness sector;<br /> 4. Social Capital and Rural Entrepreneurship.<br /> <br /> The project produced a great deal of knowledge regarding the various objectives related to financing agriculture and rural America. Project members addressed the objectives through a variety of collaborations. Much of the research addressed individual objectives. Collectively the group has generated more than 100 peer-reviewed publications during the five years of the NC-1014 project. It has also sought and secured additional funding of research. <br /> <br /> Objective 1<br /> With regard to the first objective, the members of NC-1014 have completed analysis related to several national and international policies that impact world agricultural competitiveness. Domestic issues included market structure, patents in agribusiness, and crop and revenue insurance programs among others. International issues included the performance of food and agriculture markets abroad as well as the impact of domestic agricultural subsidies on trade negotiations. <br /> <br /> With regard to agribusiness competitiveness, market structure was evaluated for several subsectors of the food and agriculture industries. For example researchers found evidence that the behavior of potato-processing firms is much closer to price taking than to collusion. The researchers also noted that price distortions due to oligopsony in the purchase of potatoes are smaller than oligopoly price distortions in either the potato chips or the frozen French fries sectors. <br /> <br /> Another important investigation of market structure was with regard to the segmentation of corn based on the need for non-genetically-modified grains to meet European demand. The discovery of StarLink corn in U.S. food products caused considerable disruption in corn markets in 2000 and 2001. Segregation costs were incurred by the U.S. grain-handling system in order to ensure that domestic and export sales of food corn and export sales of non-food corn to Japan meet stringent tolerance levels. These costs reduced the revenue that U.S. corn producers would have received in the absence of StarLink. Researchers estimated that revenue loss at between $26 and $288 million. <br /> <br /> Researchers also found evidence that optimal intellectual property protection is greater than intellectual property protection in the U.S. seed corn market, but lower than the intellectual property protection that could be attained with genetic use restriction technologies. Optimal intellectual property protection is much higher than intellectual property protection achieved under open-pollinated crops or where legal intellectual property protection is limited.<br /> <br /> Given that the federal government has shown interest in encouraging participation in crop insurance, many members have evaluated these programs. One project found that simpler internal business structures and more dominant farmertenant leasing position can increase the probability of submitting a prevented planting claim. Another project found evidence that, depending on farmer risk aversion, federal risk management programs can either decrease optimal fertilizer application rates. Another study considered holistic health insurance as an alternative. The results indicated that farmers prefer higher levels of coverage and are price sensitive. A sample of farmers did not prefer the subsidy switch. However, the subsidy switch is preferred by older farmers, those with higher health care spending, and farmers who have experienced major health problems.<br /> <br /> Several important issues regarding international competitiveness were considered. Evaluation of some international agricultural market structures was undertaken. Researchers used data from case studies, interviews, and surveys are used to explore the emergence, growth, and likely consequences of new agricultural operators (NAOs) in Russia. The case studies suggested that entry motives and patterns vary widely, but most NAOs are responding to real profit opportunities. Another case study of Telesignos, a fruit producer and exporter in Guayaquil, Ecuador considered the vertical integration opportunities with an American firm to deliver fresh cut pineapple. <br /> <br /> In addition, because of the sensitive nature of agriculture subsidies in trade discussions, the decoupling of production decisions from subsidies was considered. Members have found additional evidence that any effects of direct payments on acreage are likely to be modest. Furthermore, there is evidence that farmers who previously were unable to adjust production due to credit constraints are able to move to more optimal means of production after receiving the payments.<br /> <br /> Several other projects considered specific agriculture programs. Members found that the governments allocation of country-guarantees is risk-inefficient, and make recommendations for allocations based on the size of the program. Members also found that the peanut quota in the 2002 Farm Act had small impacts on inefficiency likely because of limitations in the transferability of the quota to more productive areas. <br /> <br /> Objective 2<br /> The financial strength and performance of agricultural lenders is important in ensuring a healthy rural credit market. The efficient performance of commercial banks, the associations of the farm credit system, and federal government loan programs has always been of interest to the NC-1014 membership. In the recent years researchers have evaluated the implementation of the New Basel Accord in agriculture, the profitability of lending relationships, the default probability of agricultural borrowers, and the performance of international lending institutions. <br /> <br /> The results show that the necessary capital for agricultural lenders under the New Basel Accord varies substantially depending on the riskiness of the portfolio, which is not surprising. Grouping borrowers together based on their riskiness, however, can improve the lenders understanding of how much capital is necessary. Such successful practices typically permeate a financial system with modifications to fit institutional size and resource base. Vendors offering fee-based capital services, further consolidations among financial institutions, data sharing arrangements, and experience gained by the industry and its regulators will hasten the permeation process and enable community banksas well as the internationally active onesto utilize internal ratings-based approaches and economic capital concepts in their risk management.<br /> <br /> In order to improve the ability of agricultural lenders to implement many of the New Basel Accord guidelines, a better understanding of the agricultural lending relationships is needed. In particular lenders need greater detail on the default risk of borrowers, loss when default occurs, and in general the profitability of agricultural lending relationships. Many lenders have defaults infrequently, making the assignment of default probabilities and incidences difficult. Greater access to computing technology has helped to overcome this hurdle, but has not eliminated it. <br /> <br /> Researchers have identified several datasets that can help in aggregating the default occurrences among many borrowers. Furthermore, members also proposed methodology that could incorporate the extent of agricultural borrower market segmentation and factors affecting agricultural mortgage terminations in new loan products. It is likely that this has resulted in improved understanding of defaults in rural and agricultural lending. Researchers found credit scores are often not the best predictors of default risk and that agricultural lenders will need to consider character, capacity, and collateral in the lending decision. Furthermore, researchers found evidence of size economies in agricultural lending, though only to a certain point. As loan relationships became very large, the concentration of risk may have begun to outweigh the benefits of size. <br /> <br /> An interesting event occurred in the agricultural credit markets during the life of the NC-1014 project. Rabobank International, a privately-held commercial bank, offered to buy one of the largest Farm Credit Associations. Members evaluated this proposed buy-out as well as raised some issues that became apparent as a result of the offer; not least of which was the need for government intervention to improve competitiveness of the rural market in an era of modern communications technology. The Farm Credit System is government sponsored enterprise operating in a manner similar to Fannie Mae and Freddie Mac before their buyouts. In addition, The Farm Service Agency (FSA) direct farm loan program provides credit to family-sized farms including those operated by beginning farmers and socially disadvantaged applicants. Approximately 37% of all U.S. farms are estimated to be eligible for FSA direct loans when farm size, credit needs, farming experience, and occupation are taken into account. Despite the efforts of the government, researchers identified room for more of both farm and nonfarm lending in the rural Midwest. <br /> <br /> NC-1014 research helps improve the design of FSA programs using evaluation of USDA Farm Loan Program aspects including cost effectiveness and lender participation in FSAs direct and guaranteed loan programs as well as the use of FSA commercial bank interest assistance. The group evaluated the performance of the Loan Programs for the Farm Service Agency and Non-Traditional Financial Institutions. Policy recommendations were made regarding program performance and efficiency. <br /> <br /> Researchers have found that FSA market penetration rates for various borrower cohorts range from 0.8% to 4.6%. In general, beginning farmers have weaker financial characteristics than non-beginning farmers. Yet, the same result is not found when comparing socially disadvantaged farmers with non-socially disadvantaged farmers, such that there are few significant differences or the differences in financial characteristics are mixed. Overall, results indicate FSA direct farm loan borrowers have weaker financial characteristics than eligible, non-FSA direct farm loan borrowers, implying FSA is serving farmers likely to be denied credit by commercial lenders. In another study, results found that there was no convincing evidence that the FSA engaged in racial discrimination in response to a 1997 lawsuit. Members of the group assessed the factors that influence financing choices among agricultural producers. In particular, researchers found that female borrowers are more likely to submit successful applications to the Farm Service Agency.<br /> <br /> Researchers also evaluated the performance of microfinance institutions in developing countries. The results indicate that performance-based compensation of managers is not associated with better-performing MFIs. There was also evidence that lower wages suggested for mission-driven organizations worsen outreach, while managers experience improves performance. The results provide strong support for independent boards with limited employee participation. In the study region, external governance mechanisms seemed to play a limited role.<br /> <br /> Objective 3<br /> The members of NC-1014 have a long history of investigating the borrowing and financial behavior of agricultural producers and agribusinesses. Researchers have considered the access and use of agricultural credit important for a healthy rural economy. Thus, understanding the producers use of credit is important when evaluating the success of government sponsored lending programs and the competitiveness of the rural credit market. <br /> <br /> Researchers have found evidence that gross farm income, risk management strategies, and operator's age and risk aversion had significant influences on the likelihood of farm credit use by rural residence, intermediate, and commercial farms. Researchers also found weak evidence graduates of counseling had lower default hazard, but that their default behavior was more optimal. Overall, credit counseling seems to affect lenders profits, but the net effect should be evaluated both in terms of prepayment and default.<br /> <br /> Another study considered the types of management approaches in the production of cash-grains. Exploratory factor analysis identified three groups of managers: price negotiation, long-term cost control, and input adjustment. Farm operators using the price-negotiation approach are generally older, well-educated, risk-averse, and fulltime farmers who operate the largest and most specialized farms. Long-term cost control is adopted more typically by younger producers that are risk takers that farm diversified operations. Input adjustment was adopted by either older retiring producers or young producers trying alternative enterprises. <br /> <br /> Researchers also considered profitability and its variability for agricultural producers. Results indicate that regional profitability of agriculture production can have important policy implications. For example, there is evidence that farms and ranches are more likely to disappear from areas in which agriculture is more important in the local economy. In areas where agriculture is a small-part of the economy there are relatively more abundant opportunities to supplement farm profits with off-farm income and capital gains. Results of another study were also tempered by regional considerations. Researchers found that overall higher government payments would lessen wealth dispersion, though in two of ten regions the opposite was true. <br /> <br /> Members of the group identified opportunities for financial improvement among producers by eliminating risk in their operations. Specifically, researchers evaluated the usefulness of economic forecasts in decision making and the impact of reducing business risk on the financial-risk bearing capacity of a firm. In another research project researchers found evidence that diversified crop/livestock farms had a diversification discount of 5.8% in comparison with specialized crop or livestock farms from 1999 to 2001. Commodity diversified farms had a diversification discount of 9.4% in comparison with commodity specialized farms.<br /> <br /> Of interest to the members of NC-1014 is how off-farm income influences on farm behavior and profitability. One study found that producers with more off-farm income were more likely to adopt new technologies such as herbicide-resistant soybeans. Research also found that farms with non-farm business income had higher, non-farm net-worth and higher total household incomes. Many of these types of producers are beginning farmers with less than $100,000 gross farm sales, suggesting that they are successful business owners considering agriculture as an additional enterprise. <br /> <br /> Objective 4<br /> Of course the value of rural land is of great importance to agriculture given that it is the largest asset on the agricultural balance sheet. As a results, many NC-1014 members spend time considering rural land value, social capital, and rural entrepreneurship. <br /> <br /> Always of interest is the impact exogenous variables have on the value of rural lands. One research project found that Illinois farmland values decline with parcel size, ruralness, distance to Chicago and large cities, and swine farm density, and increase with soil productivity, population density, and personal income. Another group identified the positive impact that ethanol plants and the rise in housing prices have on rural land values. <br /> <br /> Members also assessed the value of rural social capital producers. In one study, there was evidence that when inputs were purchased locally and social capital was generated, the distribution of year-end funds has a slightly lower mean and longer left tail. The longer left tail results from additional borrowing arising from credit forbearance. If this forbearance were not available, the firm would be bankrupt. Members of the group identified the impacts capital moving from rural areas to urban areas. In particular, evidence showed that rural growth would benefit from an inflow of capital.

Publications

<br /> Hennings, E., and A.L. Katchova. Growth Strategies of Farm Businesses: A Quantile Regression Approach. The Journal of American Academy of Business, Cambridge 13(2008):31-37.<br /> <br /> Katchova, A.L. A Comparison of the Economic Well-Being of Farm and Nonfarm Households. American Journal of Agricultural Economics 90(2008):733-747.<br /> <br /> Zhao, J., P.J. Barry, and A.L. Katchova. Signaling Credit Risk in Agriculture: Implications for Capital Structure Analysis. Journal of Agricultural and Applied Economics 40(2008), in press.<br /> <br /> Zhang, Z., L. Lohr, C.L. Escalante, and M.E. Wetzstein. Mitigating Volatile U.S. Gasoline Prices: A Win-Win Fuel Portfolio. American Journal of Agricultural Economics, 90(2008) forthcoming.<br /> <br /> Escalante, C.L. and R.M. Rejesus. Risk Balancing Decisions under Constant Absolute and Relative Risk Aversion. Review of Business Research 8,1(2008): 50-61.<br /> <br /> Boumtje, P.I., W. Florkowski, G. Landry, and C.L. Escalante. Determinants of Profitability Under Different Golf Business Ownership Structures: The Case of Golf Courses in Georgia. Southwestern Economic Review 35,1(Spring 2008): 113-129.<br /> <br /> Rejesus, R. M., B.J. Sherrick, G.D. Schnitkey, and C.L. Escalante. Factors Influencing Producers Perceptions about the Importance of Government Support Programs in Agriculture: Application of a Semi-Parametric Ordered Response Model. Applied Economics, forthcoming.<br /> <br /> Byrd, M. M., C.L. Escalante (share in senior authorship), E.G. Fonsah, and M.E. Wetzstein. Feasible Fumigant-Herbicide System Alternatives to Methyl Bromide for Bell Pepper Producers. Journal of Agribusiness 25,1 (2007) 31-46.<br /> <br /> Deng, X., C.L. Escalante (share in senior authorship), P.J. Barry, and Y. Yu. Markov Chain Models for Farm Credit Risk Migration Analysis. Agricultural Finance Review 67,1(Spring 2007): 99-117.<br /> <br /> Nganje, W., R. Hearne, C. Gustafson, and M. Orth. Farmers Preference for Alternative Crop and Health Insurance Subsidy Review of Agricultural Economics 30:2(Summer 2008):333-51. <br /> <br /> Friedrichsen, M., W. Nganje, and C. Gustafson. Marginal Impact of Sales Consultant Visits and Financing Opportunties on the Adoption of Variable Rate Fertilizer Application Agricultural Finance Review 67:2(Fall 2007):295-310. <br /> <br /> Gustafson, C. 2006 Engaging Producers in Risk Management Education, Journal of Extension, 44,2(April 2006):4pgs. <br /> <br /> Gustafson, C. and W. Nganje. 2006 Value of Social Capital to Mid- Sized Northern Plains Farms Canadian Journal of Agricultural Economics, 54(2006):421-38. <br /> <br /> Gustafson, C., G. Pederson, and B. Gloy, Credit Assessment Agricultural Finance Review, 65,2(Fall 2005):201-17. <br /> <br /> Hartarska V. and D. Nadolnyak, (December 2008) An impact Analysis of Microfinance in Bosnia, World Development.<br /> <br /> Hartarska, V. and Thompson H. (2008) Foreign Investment and Neoclassical Growth: A Look at Central and Eastern Europe in Transition, Applied Econometrics and International Development Vol.8-2 <br /> <br /> Hartarska, V., and Nadolnyak, D. (2008) Does rating help microfinance institutions raise funds? Cross-country evidence. International Review of Economics and Finance (2008), 17 558571.<br /> <br /> Chantarat, S ,C. G. Turvey, A. G. Mude and C. B. Barrett (2008) Improving Humanitarian Response To Slow-Onset Disasters Using Famine Indexed Weather Derivatives Agricultural Finance Review 68(1):forthcoming<br /> <br /> <br /> Kong, R and C.G. Turvey (2009) Relationship of Farmers Business Risk and Credit Choices Faced by Chinese Farmers Households: Cases from Shaanxi Province World Economic Policy Forthcoming (in Chinese)<br /> <br /> Power, GJ and CG Turvey (2008/9) Long-run Resource Prices: A Wavelette Approach Empirical Economics Letters , forthcoming, <br /> <br /> Power, GJ and CG Turvey (2008) U.S. Rural Land Value Bubbles Applied Economic Letters October<br /> <br /> Power, GJ and CG Turvey (2008) On the Exit Value of a Forward Contract The Journal of Futures Markets, Vol. 28, No. 8, 118 <br /> <br /> Power, GJ and CG Turvey (2009) "Long-Run Trends in Natural Resource Prices: Evidence Across Time Horizons". Empirical Economics Letters forthcoming<br /> <br /> Turvey, C.G and J. Stokes (2008) Market Structure and the Value of Agricultural Contingent Claims Canadian J. Agric Econ. March<br /> <br /> Turvey, C.G. and M. Norton (2008) An Internet-Based Tool for Weather Risk Management J. Ag and Res. Econ. Spring 2008<br /> <br /> Turvey, C.G. and R. Kong (2009) Business and Financial Risks of Small Farm Households in China China Agricultural Economic Review (Spring)<br /> <br /> Turvey, C.G. (2008) The Pricing, Structure and Function of Weather-Linked Bonds, Mortgages and Operating Credit Agricultural Finance Review 68(1):forthcoming Spring<br /> <br /> Zhang, W.. R. Kong and C.G.Turvey (2009)  Study on the Trustworthy Mechansim of Rural Microcredit in China Business Research (in Chinese) forthcoming<br /> <br /> Hyde, J. and B.A. Gloy. "Dynamic Strategic Responses Among Advertisers: the Case of Meat Products." Economics Bulletin, 13:3(2007):1-14. <br /> <br /> Stokes, J.R. and B.A. Gloy. Mortgage Delinquency Migration: An Application of Maximum Entropy Econometrics. Journal of Real Estate Portfolio Management, 13:2(2007):153-160. <br /> <br /> Stokes, J.R. and B.A. Gloy. Delinquency and Default on Agricultural Mortgages. Agricultural Finance Review, 67:1(2007):75-85. <br /> <br /> Henderson, J.R. and B.A. Gloy. The Impact of Ethanol Plants on Cropland Values in the Great Plains. Working Paper 1(2008). 23 pages. Department of Applied Economics and Management, Cornell University. <br /> <br /> Briggeman, Brian C., Charles A. Towe, and Mitchell J. Morehart, Credit Constraints: Their Existence, Determinants, and Implications for U.S. Farm and Non-Farm Sole-Proprietors, American Journal of Agricultural Economics, 2008, Forthcoming<br /> <br /> Lusk, Jayson L. and Brian C. Briggeman, Food Values, American Journal of Agricultural Economics, 2008, Forthcoming<br /> <br /> Briggeman, Brian C. and Philip Kenkel, Customer Segmentation Perceptions of Farm Credit Associations, Agricultural Finance Review, 68(2008): 227-236<br /> <br /> Briggeman, Brian C., Allan W. Gray, and Joshua D. Detre, Using Limited Information to Support the Decision to Launch a New Product in the Fruit Juice Market: A Teaching Case Study, Review of Agricultural Economics, 30(2008): 370-378<br /> <br /> Dixon, Bruce L., Bruce L. Ahrendsen, O. John Nwoha, Sandra J. Hamm, Diana D. Danforth. FSA Direct Farm Loan Program Graduation Rates and Reasons for Exiting. Journal of Agricultural and Applied Economics 39,3(December 2007):471-487.<br /> <br /> Posters<br /> <br /> Hartarska V., Parmeter, C., and Mersland R., Scope economies of lending and collecting savings: evidence from rated MFIs, Selected Poster, special award, Boulder-Bergamo Forum on Access to Financial Services: Expanding the Rural Frontier, Bergamo, Italy, September 18-20, 2008. <br /> <br /> Hartarska V., Parmeter, C., and Mersland R., Efficiency of financial institutions in developing countries: a semiparametric scope analysis, Selected Poster presented at the Annual Meetings of the American Agricultural Economists Association, Orlando, July 27-29, 2008.<br /> <br /> Extension<br /> <br /> Wolfe, K. and C. L. Escalante. Feasibility Study for Crenshaw Fish Farm. Center for Agribusiness and Economic Development, University of Georgia, 2008.<br /> <br /> Escalante, C.L. Custom Farm Machinery Rates in Georgia, 2008. Department of Agricultural and Applied Economics. AGECON 08-03 (2008).<br /> <br /> Escalante, C.L. Financial Outlook for Georgia Farms Georgia Farm Outlook and Planning Guide for 2007-2008. Department of Agricultural and Applied Economics. University of Georgia, 2007.<br /> Escalante, C.L. Farm Financial Outlook Georgia Economic Outlook. Selig Center for Economic Growth. University of Georgia, 2007.<br /> <br /> Escalante, C.L. Cash Rents Paid for Georgia Farmland in 2007. Department of Agricultural and Applied Economics. AGECON 07-05 (2007).<br /> <br /> Escalante, C.L. Georgia Farmland Values in 2007. Department of Agricultural and Applied Economics. AGECON 07-06 (2007).<br /> <br /> Escalante, C.L. The Drought Status Report. in The Georgia Economic Issues Newsletter, C. L. Escalante, ed., 24,1 (September 2008): 1.<br /> <br /> Escalante, C.L. Fuel Price Alerts. in The Georgia Economic Issues Newsletter, C. L. Escalante, ed., 24,1 (September 2008): 2.<br /> <br /> Escalante, C.L. Georgia Farms and the Drought of 2007. in The Georgia Economic Issues Newsletter, C. L. Escalante, ed., 23,1 (December 2007): 1.<br /> <br /> Gloy, B.A. Creating Renewable Energy from Livestock Waste: Overcoming Barriers to Adoption. Extension Bulletin 2 (2008). 17 pages. Department of Applied Economics and Management, Cornell University. <br /> <br /> Enahoro, D.K. and B.A. Gloy. Economic Analysis of Anaerobic Digestion Systems and the Financial Incentives provided by the New York State Renewable Portfolio Standard (RPS) Customer-Sited Tier (CST) Anaerobic Digester Gas (ADG)-to-Electricity Program. Extension Bulletin 4 (2008). 23 pages. Department of Applied Economics and Management, Cornell University. <br /> <br /> Gloy, B.A. Inputs for Biogas Economic Assessment. Extension Bulletin 3 (2008). 10 pages. Department of Applied Economics and Management, Cornell University. <br /> <br /> Briggeman, Brian C. and Jayson L. Lusk, Should the Supply Chain Play Fair?  Part Two, AgriMarketing, April 2008.<br /> <br /> Briggeman, Brian C. and Jayson L. Lusk, Should the Supply Chain Play Fair?  Part One, AgriMarketing, March 2008.<br /> <br /> Briggeman, Brian C., Shida Henneberry, and F. Bailey Norwood, Personal Interview Matters Most, Feedstuffs, December 31, 2007, page 17<br /> <br /> Klinefelter, Danny and Brian C. Briggeman, Grain Prices, Lending Woes, Complicate Ag Production, The Farmer-Stockman, January 2008, page 16.<br /> <br /> Griffin, Terry, Bruce Ahrendsen, Brad Watkins, and Jeffrey Hignight. "Trends in Arkansas Farmland Values: The 2008 Update. Farm Management and Marketing Newsletter. University of Arkansas, Division of Agriculture. 16,3(September 2008):5-7. www.aragriculture.org/News/farmmgmt/2008/September2008.pdf<br /> <br /> Dixon, Bruce L., and Bruce L. Ahrendsen. "Is Another Agricultural Financial Crisis Looming?  Farm Management and Marketing Newsletter. University of Arkansas, Division of Agriculture. 16,2(June 2008):2-4.<br /> <br /> Dixon, Bruce L., Bruce L. Ahrendsen, and Monica A. Foianini. "Macroeconomic Impacts on Agriculture. Farm Management and Marketing Newsletter. University of Arkansas, Division of Agriculture. 16,1(March 2008):3-6.<br /> <br /> Conference Papers and Abstracts<br /> <br /> Escalante, C.L. and C. Neely. Settling where the jobs are, thriving where the grass grows. Journal of Agricultural and Applied Economics (Proceedings Issue for the 2008 SAEA Annual Meeting) 40,2(August 2008): 738.<br /> <br /> Ziehl, A., C. Dunn, C.L. Escalante, C. Lacy, D. Franklin, and J. Gaskin. Analyzing the Costs of Improving Water Quality on Farms in the Southeastern Piedmont Region of Georgia. Journal of Agricultural and Applied Economics (Proceedings Issue for the 2008 SAEA Annual Meeting) 40,2(August 2008): 740.<br /> <br /> Plattner, K., E.G. Fonsah, C.L. Escalante, G. Krewer, P.C. Anderson, O. Liburd, and M. Tertuliano. Plan for Economic Evaluation of Organic Blueberry Production in Georgia. Journal of Agricultural and Applied Economics (Proceedings Issue for the 2008 SAEA Annual Meeting) 40,2(August 2008): 733.<br /> <br /> Escalante, C.L., J.E. Epperson and U. Raghunathan. Is There Gender Bias in U.S. Federal Farm Lending Decisions? Proceedings of the International Conference on Business and Information, Seoul, South Korea. July 2008.<br /> <br /> Koenig, Steven and Charles Dodson. The Pricing of Federally Guaranteed Agricultural Loans: What Does it Indicate About Market Competition? Selected paper presented at the Agricultural Economics Association Annual meeting, Orlando, FL, July 27-29, 2008 29 pp. <br /> <br /> Goel, A.B., et al, Economic Feasibility of Supplementing Corn Ethanol Feedstock <br /> With Fractionated Dry Peas: A Risk Perspective Transition to a Bioeconomy: Risk, Infrastructure & Industry Evolution, Farm Foundation, Berkely, CA, June 24, 2008, 19pgs. http://www.farmfoundation.org/news/articlefiles/365-Goel.pdf <br /> <br /> Gustafson, C. Financing Growth of Cellulosic Ethanol Transition to a Bioeconomy: Environmental and Rural Development Impacts, Farm Foundation, St. Louis, MO Oct 15-16, 2008. forthcoming <br /> <br /> Gustafson, C. How the Wall Street Meltdown Affects Crop Insurance Crop Insurance Today, National Crop Insurance Today, November 2008., forthcoming <br /> <br /> Gustafson, C., W. Wilson, and B. Dahl. Malt Barley Risk Management Strategies Western Economics Forum, 5,2(Fall 2006):9-14. <br /> <br /> Elliot V., V. Hartarska, C. Bailey, 2007 Economic Growth and Resource Allocation in Alabama: Is there a Dutch Disease, proceedings from the PAWC Annual Meeting, Dec. 4-6, 2006.<br /> <br /> Caudill, S, Gropper D, and Hartarska V., (forthcoming) Which Microfinance Institutions Are Becoming More Cost-Effective With Time? Evidence from a Mixture Model, paper to be presented at the Annual Meetings of the Southern Finance Association, Key West, Fl November 20-22, 2008.<br /> <br /> Hartarska V., Parmeter, C., and Mersland R., Economies of scope in microfinance, paper presented at the annual meetings of the NC1014-Agricultural Financial Markets in Transition, Kansas City, Kansas September 25-26, 2008.<br /> <br /> Hartarska V., and R. Mersland, What governance mechanisms promote efficiency in reaching poor clients? Evidence from leading MFIs paper presented at the First International Workshop on Microfinance Management and Governance, Kristiansand, Norway 2-3 June, 2008.<br /> <br /> Mai C., Hartarska, V, Financing Constraints and the Family Farm: How do Families React? Selected Paper Presented at the Annual Meetings of the Southern Agricultural Economics Association, Houston, February 4-6, 2008.<br /> <br /> Elliott II V., V Hartarska, and C. Bailey, Natural Resources Endowment and Economic Growth in the Southeastern United States, Selected Paper Presented at the Annual Meetings of the Southern Agricultural Economics Association, Houston, February 4-6, 2008.<br /> <br /> Ahrendsen, Bruce L. What Does It Take to Make a Living on Cotton: The Last 50 Years. Invited presentation at the 50th Anniversary of the Northeast Research and Extension Center, Keiser, AR, 2007.<br /> <br /> Chavez, Eddie C., E.J. Wailes, B.L. Ahrendsen, and B.L. Dixon. 2008. Financial Characteristics of Rice Farms Relative to Other Selected Crop Farms, U.S., 2005. Abstract in Proceedings of the 32nd Rice Technical Working Group Meeting, San Diego, California, Presented February 18-21, 2008. Forthcoming.<br /> <br /> Grants Received<br /> <br /> Escalante, Caesar. Foreign Travel Grant (Seoul, Korea), $1,596.81. University of Georgia Research Foundation, April 2007.<br /> <br /> Escalante, Caesar. Labor Input Substitution Decisions and Business Sustainability Strategies under Changing Farm Labor Market Conditions: Comparative Economic Viability Analyses of Organic and Conventional Farming Systems. $120,000. Principal Investigator, Southern Sustainable Agriculture Research and Education (SARE).<br /> <br /> Escalante, Caesar. United States Department of Agriculture (USDA). Assessing Georgia Agriculture Through Applying USDAs Agricultural Resource Management Survey (ARMS) Datasets $25,000, 2007-2009.<br /> <br /> Gustafson, Cole. USDA. Ethanol, Corn and Gasoline Price Volatility. $20,000. 2007-2008.<br /> <br /> Gustafson, Cole. Incremental SARE funds for Graduate Assistantship funding from project Profitable Alternatives to Improve Water Quality from High Nutrient Status Farms $12,200. 2007-2008<br /> <br /> Gustafson, Cole. Canola-based Epoxy Resins for Bio-based Plastic Composites National Canola Research Program, $81,450, Co-PI, 33%. <br /> <br /> Gustafson, Cole. Synergy of Using Peas as Ethanol Feedstock APUC, $42,420, Co- PI, 33%. <br /> <br /> Gustafson, Cole. Malt Barley Risk Management Education, Billings Region USDA/RMA, $10,000, PI, 100% <br /> <br /> Gustafson, Cole. Williston Corn Feasibility Study, Williston Econ. Dev. Part., $5,650, PI, 100% <br /> <br /> Hartarska, V (Principal Investigator) and Wilbert Golden, Healthier Finances for Healthier Lifestyles Agricultural Initiative Grant Proposal, Alabama Agricultural Experimental Station, duration October 2007-September, 2008, $61,700. <br /> <br /> Developing an Internet Agricultural Bank Simulation Game, funded through USDA/CSREES/HEC, for $62,498. Project PI: Brian C. Briggeman and Co-PIs: Notie Lansford, Damona Doye, and Joshua D. Detre, 2008.<br /> <br /> Consumer Preferences for Fairness and Distribution of Outcomes across the Agricultural Supply Chain and within the Farm Sector, funded through USDA/CSREES/NRI, for $205,379. Project PI: Jayson L. Lusk and Co-PI: Brian C. Briggeman, 2007.<br /> <br /> Pilot Project to Study a Data Enclave for ARMS, funded through USDA/ERS Cooperative Agreement, for $15,000. Project PI: Brian C. Briggeman, 2007.<br /> <br /> Farm Household Decision-Making Behavior, funded through USDA/ERS Cooperative Agreement, for $10,000. Project PI: Brian C. Briggeman, 2007.<br />

Impact Statements

1. Continued to provide evaluations of the Farm Service Agencys Loan Guarantee Program that provides 2% of all production agricultural funds to underserved, deserving borrowers. This included evaluating graduation rates into other lending programs, success in serving underrepresented minorities, and factors that were strongly correlated with graduation.
2. Evaluated the impact of fluctuations in commodity prices on agricultural producers. In particular, as these fluctuations impacted production, crop insurance, marketing, and financing decisions.
3. Analyzed the impact of the fluctuations of commodity prices and the financial crisis on agricultural lenders financial health.
4. Evaluated the impact of increasing demand for corn ethanol and its impact on production agriculture. Specifically, noting the impact on rural communities, land values, and cropping decisions.
5. Assessed the impact of Cap and Trade on dairy farms and other farm policy programs on farm financial health.

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Participants

Allen Featherstone Kansas State University Manhattan KS;
Ashok Mishra LSU Baton Rouge LA;
Brent Gloy Purdue University West Lafayette IN;
Brian Briggeman Federal Reserve Bank-Omaha Branch Omaha NE;
Bruce Ahrendsen University of Arkansas Fayetteville AR;
Bruce Dixon University of Arkansas AEAB-Div of Ag Fayetteville AR;
Bruce Sherrick University of Illinois Champaign IL;
Calum Turvey Cornell University Ithaca NY;
Charles Moss Food and Resource Economics Gainesville FL;
Christine Wilson Kansas State University Wamego KS;
Cole Gustafson North Dakota State University Fargo ND;
Eric Micheels University of Illinois Urbana IL;
Jaclyn Kropp Clemson University Clemson SC;
Jason Henderson Federal Reserve Bank-Omaha Branch Omaha NE;
Jean-Philippe Gervais Farm Credit Canada Apex NC;
Jonathan Dressler Cornell University Ithaca NY;
Joseph Atwood Montana State University Bozeman MT;
Joshua Detre LSU AgCenter Zachary LA;
Linping Wang Cornell University Ithaca NY;
Maria Akers Federal Reserve Bank-Omaha Branch Omaha NE;
Matthew Diersen South Dakota State University Brookings SD;
Michael Gunderson University of Florida Gainesville FL;
Nick Paulson University of Illinois Champaign IL;
Rong Nie Cornell University Ithaca NY;
Ryan Larsen North Dakota State University Fargo ND;
Sergio Lence Iowa State University Ames IA;
Shannon Woodard University of Illinois Urbana-Champaign Middleville MI;
Steven Hanson Michigan State University East Lansing MI;
Todd Kuethe Economic Research Service Washington DC;
Valentina Hartarska Auburn University Auburn AL;

Brief Summary of Minutes

The 2010 NC-1177 meetings were held September 30th and October 1st at the Federal Reserve Bank of Kansas City. A part of the meeting was held jointly with the National Ag Credit Committee. During the meeting, members presented completed and ongoing research. Presentations were organized in four sessions aligned with the following objectives:
1) Examine the impact of recent fluctuations in capital and commodity markets on the performance, management, and regulation of agricultural financial institutions.
2) Evaluate the management strategies, capital needs, and policy impacting the financial performance and long-term sustainability of firms in the food and agribusiness sector.
3) Identify financial institutions and services that benefit agricultural producers and rural communities and expand agricultural markets, especially those producers that are beginning, young, from socially disadvantaged groups, and/or involved in producing specialty crops.
4) Investigate capital structure, financial performance, and investment strategies of firms producing renewable energy in context of long term climate change. Implications of these findings for agriculture and rural communities will be delineated.

Accomplishments

Accomplishments: <br /> <br /> The newly formed NC-1177 Agricultural and Rural Finance Markets in Transition had a productive year. A new approach was adopted for the structure of the 2010 meeting. A large emphasis was placed the projects new four objectives. That is, each paper presented during the meeting is grouped under each of the four objectives. This format was well received and was very productive as it highlighted the work the group is doing towards completing/addressing each objective and stimulated discussion around the objective with the group. This annual report will summarize some of the work that is just beginning in completing our four objectives. As such, progress toward the NC-1177 objectives is discussed in turn.<br /> Objective 1. Examine the impact of recent fluctuations in capital and commodity markets on the performance, management, and regulation of agricultural financial institutions <br /> Given recent market fluctuations, it is important for the group to consider the impact of capital and commodity market volatility on the performance, management and regulation of agricultural financial institutions. Initial work in this area has considered the implications of evolving regulatory capital requirements on the Farm Credit System. These implications were assessed through a simulation model that considered the impact of various regulatory changes including potential changes stemming from Basel III. Other work has considered the impact of changes of land values on the financial health of commercial banks and Farm Credit Associations. Moreover, this work has explored the drivers of change in farmland values, including commodity prices influence on farmland values. In addition, risk management for financial institutions is critical during times of market volatility. However, it is also important for lenders to consider ways to help their borrowers mitigate risk. Additional work has started considering the benefits of coupling options (to mitigate a producers price risk) with a dairy loan. <br /> 2. Evaluate the management strategies, capital needs, and policy impacting the financial performance and long-term sustainability of firms in the food and agribusiness sector. <br /> Work towards completing objective two has also started. Research has started considering the implications of fluctuating cash rents on farm profitability. Examination of cash rents of a nationally representative survey has started among a couple of land grant universities. Another collaborative effort has started with determining the financial health of farms by using a multi-state and nationally representative data sets. This research is unique in that it is developing a set of credit risk ratings for producers. Off-farm income is important for most farm households, but what impact does it have on farmland values? Work has started considering the role of off-farm income on changes in farmland values or the most important asset on a farmers balance sheet.<br /> 3. Identify financial institutions and services that benefit agricultural producers and rural communities and expand agricultural markets, especially those producers that are beginning, young, from socially disadvantaged groups, and/or involved in producing specialty crops. <br /> Work towards completing objective three is well underway. Work is considering the importance of debt usage and access in growing the farm business, especially with regard to beginning and young farmers. Research was also conducted that considered the effect of direct farm payments on the credit access for beginning farmers. Also, a national survey was conducted that assessed agricultural lenders perspectives of the skill gap between new employee hires and expectations of what skills these new employees should have. This survey will benefit agricultural finance professors in ensuring the skills taught in the classroom meet expectations of employers that will hire students. Other work used a propensity scoring model to assess the impact of input procurement and marketing strategies on producers profits. Also, research on the implications of the non-farm unemployment rate on a farmers creditworthiness was started.<br /> 4. Investigate capital structure, financial performance, and investment strategies of firms producing renewable energy in context of long term climate change. Implications of these findings for agriculture and rural communities will be delineated. <br /> Group members continue to work on the financial performance and investment in ethanol and cellulosic ethanol plants. This work includes working with private industry. In addition, cap and trade climate work was started on the potential supply of carbon dioxide offsets from anaerobic digestion of livestock waste.<br />

Publications

Impact Statements

1. Examination of surging farmland values: drivers of change and potential impact on producers, agricultural lenders and landlords.
2. Evaluation of the impact of Renewable Identification Numbers on the ethanol market and its ability to meet the Renewable Fuel Standard mandates.
3. Continued to provide evaluations of the Farm Service Agencys Loan Guarantee Program that provides 2% of all production agricultural funds to underserved, deserving borrowers.
4. Evaluated the impact of crop insurance on producers ability to mitigate risk.
5. Researched the impact of the financial crisis on the financial viability of producers and agricultural lenders.

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Report Information

Participants

Bruce Ahrendsen University of Arkansas Fayetteville AR;

Joe Atwood Montana State University Bozeman MT;

Brady Brewer Kansas State University Manhattan KS;

Brian Briggeman Kansas State University Manhattan KS;

Jeremy D'Antoni Louisiana State University Baton Rouge LA;
Sierra Enlow University of Kentucky Lexington KY;
Allen Featherstone Kansas State University Manhattan KS;
Doug Gibson MetLife Agricultural investments West Des Moines IA;
Brent Gloy Purdue University west lafayette IN;
Mike Gunderson University of Florida Gainesville FL;
Cole Gustafson North Dakota State University Fargo ND;
Steve Hanson Michigan State University East Lansing MI;
Valentina Hartarska Auburn University Auburn AL;
Nate Kauffman Iowa State University Ames IA;
Barrett Kirwan University of Illinois Urbana IL;
Rong Kong Northwest AF University Yangling;
Jaclyn Kropp Clemson University Clemson SC;
Todd Kuethe NC-1177 Washington DC;
Ryan Larsen North Dakota State University Fargo ND;
Mindy Mallory University of Illinois Champaign IL;
Nick Paulson University of Illinois Champaign IL;
Bruce Sherrick University of Illinois Urbana IL;
Calum Turvey Cornell University Ithaca NY;
Christine Wilson Kansas State University Wamego KS;
Josh Woodard Cornell University Ithaca NY;
Ya Wu University of Georgia San Jose CA;
Amy Jin Xu Texas AM University Bryan TX;

Brief Summary of Minutes

The 2011 NC-1177 meetings were held October 3rd and 4th at the Denver Branch of the Federal Reserve Bank of Kansas City. A part of the meeting was held jointly with the National Agricultural Credit Committee (NACC). The NACC is comprised of agricultural lenders from throughout the U.S. The meeting allowed members of NC-1177 to interact with these representatives and better understand how the groups research intersects with the issues faced by agricultural and rural lenders. Several members made presentations of their NC-1177 research to NACC meeting. The joint component of the meeting included presentations on crop insurance, implications of Chinese Growth for U.S. agriculture, macro-economic updates, and farmland values. During the NC-1177 only meeting, members discussed the groups research projects and progress and presented completed and ongoing research. Presentations and sessions were organized in four sessions aligned with the following objectives:

Accomplishments

Agricultural and Rural Finance Markets in Transition has had a productive year. The project has four objectives and progress has been made toward addressing each of these objectives. This annual report provides a summary of some of the work that has taken place toward each objective. <br /> <br /> Progress toward Objectives:<br /> The group has 4 primary objectives. Each will be discussed in turn.<br /> 1. Examine the impact of recent fluctuations in capital and commodity markets on the performance, management, and regulation of agricultural financial institutions<br /> <br /> Members have been actively involved in helping to understand how market volatility is impacting the performance, management, and regulation of financial institutions. Work in progress has examined the technical and economic efficiency of financial institutions as well as developing models to identify banks that may experience financial stress. Members also developed a simulation program that allows one to educate students and bankers on sound bank management practices. <br /> <br /> Other work has focused on examining how new products such as weather derivatives and crop insurance might be used to manage risk in agriculture. Because savings and off-farm income are strategies that can be used to mitigate risk in agriculture, other projects have sought to understand these behaviors and how these factors influence risk. Finally, work was conducted to better understand the factors influencing the dramatic increases in farmland values. This included a special issue of the publication Choices which was edited by group members and included contributions from several members of the group. <br /> <br /> 2. Evaluate the management strategies, capital needs, and policy impacting the financial performance and long-term sustainability of firms in the food and agribusiness sector. <br /> <br /> The group also made progress toward objective two. Some of the work investigated on the impact of changes in the seasonal farm labor market resulting from the stricter implementation of immigration policies, with a focus on labor-intensive organic farms versus larger, more mechanized conventional farms. The work determined strategic responses of organic and conventional farms to radical changes in the seasonal farm labor market conditions. It also identified efficient mulching and fumigation methods for vegetable farms when the traditional reliable fumigant methyl bromide is completely phased out from the market. <br /> <br /> Other efforts evaluated increased land values and rental rates, and their impact on producers and landlords. Other work examined using strategies such as direct marketing, use of alternative busienes structures, marketing strategies, and the adoption of genetically modified crops, influenced farm profitability. The impact of various government policies on farm income was also addressed. <br /> <br /> 3. Identify financial institutions and services that benefit agricultural producers and rural communities and expand agricultural markets, especially those producers that are beginning, young, from socially disadvantaged groups, and/or involved in producing specialty crops. <br /> <br /> Work toward objective three examined issues related to business succession planning, how beginning farmers adopt technology, and beginning farmer financial performance. Other work examined the impact of farm program payments for established and beginning farmers. Efforts also addressed how communities recover from natural disasters. <br /> <br /> <br /> 4. Investigate capital structure, financial performance, and investment strategies of firms producing renewable energy in context of long term climate change. Implications of these findings for agriculture and rural communities will be delineated. <br /> <br /> Work on objective four considered evaluated of the impact of Renewable Identification Numbers on the ethanol market and its ability to meet the Renewable Fuel Standard mandates. It also considered the impact of carbon policies on livestock producers. Additionally, work was conducted to understand the economic feasibility of alternative energy production systems. <br /> <br /> <br /> Project members secured several grants as a result of the their work on project objectives. The titles and funding sources for some of these activities included the following: <br /> <br /> Southern SARE. "Organic Farms' Credit Access and Farm Lenders' Assessment of Organic Farms' Credit Risks" (August 2011-July 2014).<br /> <br /> Southern SARE. Labor Input Substitution Decisions and Business Sustainability Strategies under Changing Farm Labor Market Conditions: Comparative Economic Viability Analyses of Organic and Conventional Farming Systems. (2007-2010).<br /> <br /> A Common Field A Whole Farm Management Education Program for Beginning Farmers. PI: A.L. Meyer, Co-PI: S. Isaacs, G. Halich, A. Katchova, and J. Hunter. USDA-NIFA, Beginning Farmer and Rancher Development Program, 2009-2012. <br /> <br /> Measuring the Relative Financial Vulnerability of Municipal Governments to Tropical Natural Disaster Risk, Mississippi-Alabama Sea Grant Consortium/GOM Regional Research Competition 02/01/2012-01/31/2014, Project Director Dr. J. Matthew Fannin, LSU AgCenter; Co-Project Director Dr. Ashok K. Mishra, LSU AgCenter; Co-Project; Director Dr. Joshua D. Detre LSU AgCenter & Louisiana State University; and Co-Project Director Dr. Carol Franz, LSU AgCenter<br /> <br /> Paulson, N.D. (PI), B. Kirwan, G. Schnitkey, and C. Gundersen. Gap Analysis of Data Currently Collected to Evaluate the Sustainability Performance of Commodity Agriculture. United Soybean Board, 2011-2012. <br /> <br /> Paulson, N.D. Strategic Planning to Offer Research-Based Extension Programs within a New Organizational Structure and Under New Directives. College of ACES Office of Research competitive planning grants program, Dec. 2010-Sep. 2011.<br /> <br /> Energy Beet Research APUC. <br /> <br /> Energy Beet Impact Ozbun Economic Development Award.<br /> <br /> Education and Training for Next Generation Feedstock Managers A Planning Grant Proposal USDA HEC Challenge.<br /> <br /> Producing Hydrogen in North Dakota to Lower Carbon Footprint and<br /> Economic Costs of Corn Production North Dakota Corn Growers, <br /> <br /> <br /> The members of the group have also been active in developing outreach materials and presentations. The following are some of these contributions. <br /> <br /> <br /> Escalante, C.L. Custom Farm Machinery Rates in Georgia, 2011. Department of Agricultural and Applied Economics. AGECON 11-0003 (August 2011).<br /> <br /> Escalante, C.L. Cash Rents Paid for Georgia Farmland in 2010. Department of Agricultural and Applied Economics. AGECON 10-004, July 2010.<br /> <br /> Escalante, C.L. Georgia Farmland Values in 2010. Department of Agricultural and Applied Economics. AGECON 10-005, July 2010.<br /> <br /> Santos, F.I. and C. L. Escalante. Farm Labor Management Decisions of Organic and Conventional Farms: A Survey of Southeastern Farm Businesses. Department of Agricultural and Applied Economics, University of Georgia, AGECON-10-001, January 2010.<br /> <br /> Santos, F.I. and C. L. Escalante. Farmers Business Expectations and Strategies under Immigration-Related Changes in Farm Labor Market Conditions: A Survey of Southeastern Organic and Conventional Farm Businesses. Department of Agricultural and Applied Economics, University of Georgia, AGECON-10-002, January 2010.<br /> <br /> Bain, Rod and Cesar Escalante. Impacts of Regulation on Farm Labor. USDA Daily Radio Newsline, USDA Office of Communications. August 10, 2011. Audio interview can be accessed at http://audioarchives.oc.usda.gov/radnewsdetail.asp?ID=15884<br /> <br /> Bain, Rod and Cesar Escalante. Challenges in Hiring Farm Labor. USDA Daily Radio Newsline, USDA Office of Communications. August 10, 2011. Audio interview can be accessed at http://audioarchives.oc.usda.gov/radnewsdetail.asp?ID=15897<br /> <br /> Escalante, C.L. Actuality: On Farm Labor Hiring Challenges. USDA Daily Radio Newsline, USDA Office of Communications. August 10, 2011. Audio interview can be accessed at http://audioarchives.oc.usda.gov/radnewsdetail.asp?ID=15898<br /> <br /> Presentations<br /> Contributed Paper Session, International Conference on Business and Information, Kitakyushu, Japan. The Farm Labor Hiring Predicament of Organic and Conventional Farm Operators in the Southeast. July 2010.<br /> <br /> Selected Poster Session. AAEA 2010 Annual Meeting, Denver, CO Foreign Workers and the Organic Farms Demand for Seasonal Unskilled Labor. July 2010<br /> <br /> Selected Poster Session. AAEA 2010 Annual Meeting, Denver, CO Differentiation in Farm Labor Complement Profiles of Organic and Conventional Farms in the Southeast. July 2010<br /> <br /> Selected Paper Session. AAEA 2010 Annual Meeting, Denver, CO The Relative Cost Efficiencies of Commercial Banks, Rural Financial Institutions, and Microfinance Institutions in China. July 2010<br /> <br /> Earth Day Poster Session. Food vs. Fuel: The Missing Links Poster Session Earth Day, Georgia Institute of Technology, Atlanta, Georgia, April 2010.<br /> <br /> Selected Poster Session. SAEA 2010 Annual Meeting, Orlando, FL Hiring Unskilled Workers for Conventional and Organic Farm Labor: Who Gets Hurt When the (Unskilled Foreign) Workers are Gone? February 2010.<br /> <br /> Selected Paper Session. SAEA 2010 Annual Meeting, Orlando, FL Profitability Efficiency Analysis of Methyl Bromide Fumigants and Mulch Systems Alternatives for Pepper Production in Georgia. February 2010.<br /> <br /> Enlow, S.J., and A.L. Katchova. The Impact of the Financial Crisis on the Agribusiness Firms Performance. Selected paper, NC-1177 Agricultural and Rural Finance Markets in Transition Meeting, Denver, CO, 3-4 October 2011.<br /> <br /> Enlow, S.J., and A.L. Katchova. Agribusiness Firms Performance during the Global Economic and Financial Crisis. Selected symposium paper, International Food and Agribusiness Management Association World Forum and Symposium, Frankfurt, Germany, 20-21 June, 2011.<br /> <br /> 2012 Farm Bill Proposals for Farm Credit Services Crop Insurance Congress, November 2011<br /> <br /> The Cases for and Against a County-Level ACRE Program for IL FBFM Fall Conference, August 2011<br /> <br /> Illinois Land Values and Rental Rates for Stark County Farm Bureau, August 2011<br /> <br /> Ag Outlook: Prices, Inputs, Land, and Policy. 2011 Top Producer Summer Seminar. Bettendorf, IA.<br /> <br /> Illinois Farmland Rent Factors and Trends. Illinois Farm Economics Summit Meetings, December, 2010. <br /> <br /> Understanding RINs Markets 2011 NC-1177 Meetings. Denver, CO<br /> <br /> Policy Concerns of Midwestern Grain Producers for the 2012 Farm Bill. With Gary Schnitkey. 2011. Part of an invited session at the AAEA Annual Meetings, Pittsburgh, PA.<br /> <br /> Risk and Incentives: A Not-So-Tenuous Tradeoff. With Barrett Kirwan. 2011. Selected paper at the AAEA Annual Meetings, Pittsburgh, PA. <br /> <br /> Spatial Estimates of Incidence Rates for Illinois Agricultural Cash Rents. Paper co-authored with Woodard, S., K. Baylis, and J.D. Woodard. Department of Agricultural Economics, University of Kentucky. May 6, 2011, Lexington, KY.<br /> <br /> Crop Insurance and U.S. Farm Exit Rates With Barrett Kirwan. 2011 SCC-76 Meetings, Atlanta, GA.<br /> <br /> Spatial Approaches to Panel Data in Agricultural Economics: A Climate Change Application. Paper co-authored with K. Baylis and G. Piras. Part of an invited session at the 2011 annual meetings of the Southern Agricultural Economics Association, February 5-8, Corpus Christi, TX.<br /> <br /> GHG Trading and the Potential for Livestock Production. Greenhouse Gases and Animal Agriculture Conference, Banff, Alberta, Canada. October 4, 2010. Invited presentation with Kathy Baylis.<br /> <br />

Publications

Mishra, Ashok K. and H.H. Chang. Tax-Deferred Retirement Savings of Farm Households: An Empirical Investigation. Journal of Agricultural and Resource Economics Vol. 36(1), 2011: 160-176.<br /> <br /> <br /> Mishra, Ashok K., and K. Paudel. Estimating Permanent Income and Wealth of U.S. Farm Households. Applied Economics, Vol. 43(12), 2011: 1521-1533.<br /> <br /> <br /> Jette-Nantel, S., D. Freshwater, A.L. Katchova, and M. Beaulieu. Farm Income Variability and Off-Farm Diversification in Canadian Agriculture. Agricultural Finance Review 71(2011), forthcoming.<br /> <br /> <br /> Collier, B., A.L. Katchova, and J. Skees. Loan Portfolio Performance and El Nino, an Intervention Analysis. Agricultural Finance Review 71(2011):98-119.<br /> <br /> <br /> Leatham, D. "Structural Change in Stock Price Volatility in Asian Financial Markets. Journal of Economic Research, 15(2010):1-27.<br /> <br /> <br /> Woodard, J.D., N.D. Paulson, D. Vedenov, and G. Power. 2011. Estimation Efficiency in the Modeling of Dependence Structures: An Application of Alternative Copulas to Insurance Rating. Agricultural Economics, forthcoming.<br /> <br /> <br /> Paulson, N.D., C.E. Hart, and D.J. Hayes. 2010. A Spatial Bayesian Approach to Weather Derivatives. Agricultural Finance Review 70(1): 79-96.<br /> <br /> <br /> Gloy, B.A., M.D. Boehlje, C.L. Dobbins, C. Hurt, and T.G. Baker. Are Economic Fundamentals Driving Farmland Values? Choices, 26:2(2011).<br /> <br /> <br /> Henderson, J.R. and B.A. Gloy, Farmland Values. Editors, Special Theme Edition of Choice Magazine. Choices, 26:2(2011).<br /> <br /> <br /> Briggeman, B.C. The Role of Debt in Farmland Ownership. Choices, 26:2(2011).<br /> Schnitkey, G.D. and B.J. Sherrick. Income and Capitalization Rate Risk in Agricultural Real Estate Markets. Choices, 26:2(2011).<br /> <br /> <br /> Kuethe, T.H., J. Ifft, and M. Morehart. The Influence of Urban Areas on Farmland Values. Choices, 26:2(2011).<br /> <br /> <br /> Yu, Y., C.L. Escalante, J. Houston, L. Gunter, and X. Deng. Analyzing scale and scope specialization efficiencies of U.S. agricultural and non-agricultural banks using the Fourier Flexible Functional Form Applied Financial Economics, 21,15(August 2011): 1103-1116.<br /> <br /> <br /> Uematsu, H., and Ashok K. Mishra. Use of Direct Marketing Strategies by Farmers and Its Impact on Farm Business Income. Agricultural and Resource Economics Review, Vol. 40(1), 2011: 1-19.<br /> <br /> <br /> Detre, J., H. Uematsu, Ashok K. Mishra. The Influence of GM Crop Adoption on the Profitability on Farms Operated by Young and Beginning Farmers. Agricultural Finance Review, Vol. 71(1), 2011:41-61.<br /> <br /> <br /> Chang, H.H., Ashok K. Mishra. Does the Milk Income Loss Contract Program Improve the Technical Efficiency of US Dairy Farms? Journal of Dairy Science, Vol. 94, 2011: 2945-2951.<br /> <br /> <br /> Detre, J. T. B. Mark, Ashok K. Mishra, and A. Adhikari. Linkage between Direct Marketing and Farm Income: Double Hurdle Approach. Agribusiness: an International Journal, Vol. 27(1), 2011:19-23.<br /> <br /> <br /> Mishra, Ashok K, R. P. Williams, and J. D. Detre. Internet Access and Internet Purchasing Patterns of Farm Households Agricultural and Resource Economics Review, Vol. 38(2), 2009: 1-10.<br /> <br /> <br /> Thompson, W., Ashok K. Mishra, and J. Dewbre. Farm Household Income and Transfer Efficiency: An Evaluation of U.S. Farm Program Payments. American Journal of Agricultural Economics, Vol. 91(5), 2009: 1296-1301.<br /> <br /> <br /> Mishra, Ashok K., Livanis, G.T., Moss, C.B. Did the Federal Agriculture Improvement and Reform Act of 1996 Affect Farmland Values? Entropy, Vol. 13, 2011:668-682.<br /> <br /> <br /> D'Antoni, J., Ashok K. Mishra., A. Barkley. Feast or Flee: Government Payments and Labor Migration from Agriculture. Forthcoming, Journal of Policy Modeling, 2011.<br /> <br /> <br /> Durguner, S., and A.L. Katchova. Credit Risk Models by Type of Business. The Business Review 17(2011), forthcoming.<br /> <br /> <br /> Detre, Joshua D., Michael A. Gunderson, Christine A. Wilson, and Brian C. Briggeman, Ag Lending: The Next Generation, Agricultural Finance Review. Vol. 71, No. 3, 2011.<br /> <br /> <br /> Gunderson, M.A., J.D. Detre, B.C. Briggeman, C.W. Wilson. Ag Lending: The Next Generation, Agricultural Finance Review, 71(3)(2011): In press. <br /> <br /> <br /> Escalante, C.L., S.L. Perkins, and F.I. Santos. When the Seasonal Foreign Farm Workers Are Gone. Journal of the American Society of Farm Managers and Rural Appraisers,74,1(2011): 83-96.<br /> <br /> <br /> Ferrer, M.C., E.G. Fonsah, and C.L. Escalante. Risk Efficient Fumigant-Mulching System Alternatives for Bell Pepper Production. Journal of the American Society of Farm Managers and Rural Appraisers,74,1(2011): 162-174.<br /> <br /> <br /> Dressler, Jonathan B. and Loren W. Tauer, Revealing an Equitable Income Allocation among Dairy Farm Partnerships, Presentation at the Agricultural and Applied Economics Meetings, Pittsburgh, Pennsylvania, July 24-26, 2011.<br /> <br /> <br /> Paulson, N.D., G.D. Schnitkey, and B.J. Sherrick. 2010. Rental Arrangements and Risk Mitigation of Crop Insurance and Marketing: Impacts in the Corn-Belt. Agricultural Finance Review 70(3): 399-413. <br /> <br /> <br /> Paulson, N.D., A.L. Katchova, and S.H. Lence. 2010. An Empirical Analysis of the Determinants of Marketing Contract Structures for Corn and Soybeans. Journal of Agricultural and Food Industrial Organization 8(1): Article 4.<br /> <br /> <br /> Mishra, Ashok K, H.S. El-Osta, S. Shaik. Succession Decisions in U.S. Family Farm Businesses. Journal of Agricultural and Resource Economics 35(1), 2010:133-152.<br /> <br /> <br /> Detre, J., Ashok K. Mishra, A. Adhikari. Factor Affecting the Adoption of Genetically Modified Crops by Young and Beginning U.S. Farmers and Rancher Journal of the American Society of Farm Managers and Rural Appraisers Vol. 71 (1), 2010: 130-144.<br /> <br /> <br /> Mishra, Ashok K, C. H. Wilson, and R. P. Williams. Factors Affecting the Financial Performance of New and Beginning Farmers. Agricultural Finance Review, 69(2), 2009: 160-79.<br /> <br /> <br /> Detre, J., H. Uematsu, Ashok K. Mishra. The Influence of GM Crop Adoption on the Profitability on Farms Operated by Young and Beginning Farmers. Agricultural Finance Review, Vol. 71(1), 2011:41-61.<br /> <br /> <br /> Gillespie, J. and Ashok K. Mishra. Off-farm Employment and Reasons for Entering Farming as Determinants of Production Enterprise Selection in US Agriculture. The Australian Journal of Agricultural and Resource Economics, 55, 2011: 411-428. <br /> <br /> <br /> Kropp, J. D. and A. L. Katchova. The Effects of Direct Payments on Liquidity and Repayment Capacity of Beginning Farmers, Agricultural Finance Review, 71, 3(2011) forthcoming.<br /> <br /> <br /> Ahrendsen, B.L., and A.L. Katchova. Financial Ratio Analysis using ARMS Data. Agricultural Finance Review, forthcoming. <br /> <br /> <br /> Kropp, J., and A.L. Katchova. The Effect of Direct Payments on Liquidity and Repayment Capacity for Beginning Farmers. Agricultural Finance Review 71(2011), forthcoming.<br /> <br /> <br /> Meyer, L., J. Durguner, S., and A.L. Katchova. Repayment Capacity of Farmers: A Balanced Panel Data Approach. Journal of Applied Economics and Policy 30(2011):14-30.<br /> <br /> <br /> Hunter, A.L. Katchova, S. Lovett, D. Thilmany, M. Sullins, and A. Card. Approaching Beginning Farmers as a New Stakeholder for Extension. Choices 26(2011), 5: 1-7.<br /> <br /> <br /> Fannin, J. Matthew, Joshua D. Detre, Jeanne St. Romain, and Laura Falgoust, Municipal versus County Government Financial Health following a Natural Disaster: Does Size Matter? Evidence from Louisiana following the 2005 Hurricane Season, Southern Regional Science Association Annual Meeting (New Orleans, LA, March 23-27, 2011).<br /> <br /> <br /> Fannin, J. Matthew, John D. Barreca, and Joshua D. Detre, The Role of Public Wealth on Recovery and Resiliency to Natural Disasters in Rural Communities Agricultural and Applied Economics Association and Northeastern Agricultural Economics and Resource Association Joint Annual Meeting (Pittsburg, PA; July 24-26, 2011).<br /> <br /> <br /> Detre, Joshua D., Hiroki Uematsu, and Ashok K. Mishra, "Adoption of Technology and Its Impact on Profitability of Young and Beginning Farmers: A Quantile Regression Approach," Agricultural Finance Review. Vol. 71, No. 1, 2011 (41-61).<br /> <br /> <br /> Paulson, N.D. and G.D. Schnitkey. 2012. Policy Concerns of Midwestern Grain Producers for the 2012 Farm Bill. American Journal of Agricultural Economics, forthcoming<br /> <br /> <br /> Noland, K., J. Norvell, N.D. Paulson, and G.D. Schnitkey. 2011. The Role of Farmland in an Investment Portfolio: Analysis of Illinois Farmland. Journal of the American Society of Farm Managers and Rural Appraisers 74(1): 149-161.<br /> <br /> <br /> Paulson, N.D. and G.D. Schnitkey. 2010. Expected Payments and Considerations <br /> for the New ACRE Program. Journal of the American Society of Farm Managers and Rural Appraisers 73(1): 218-229. <br /> <br /> <br /> Raghunathan, U., C.L. Escalante, J.H. Dorfman, J. Houston, and G. Ames. The Effect of Agriculture on Repayment Efficiency: A look at MFI borrowing groups. Agricultural Economics,42,4(July 2011): 465-474.<br /> <br /> <br /> Jacobsen, K.L., C.L. Escalante, and C.F. Jordan. Economic Analysis of Experimental Organic Agricultural Systems on a Highly Eroded Soil of the Georgia Piedmont, USA. Journal of Renewable Agriculture and Food Systems, 25,4(2010): 296-308.<br /> <br /> <br /> Chang, H.H., Ashok K. Mishra, and M. Livingston. Agricultural Policy and Its Impact on Fuel Usage: Empirical Evidence from Farm Household Analysis. Applied Energy, Vol. 88, 2011:348-353.<br /> <br /> <br /> Darby, Paul, Tyler B. Mark, Joshua D. Detre, and Michael Salassi, Advanced Biofuel Production in Louisiana Sugar Mills: an Application of Real Options Analysis Agricultural and Applied Economics Association and Northeastern Agricultural Economics and Resource Association Joint Annual Meeting (Pittsburg, PA; July 24-26, 2011).<br /> <br /> <br /> Detre, Joshua D., and Michael A. Gunderson, "The Triple Bottom Line: What is the Short Run Impact on the Returns to Agribusiness Stocks," International Food and Agribusiness Management Review. Vol. 14, No. 4, 2011 (41-61).<br /> <br /> <br /> Gloy, B.A. The Potential Supply of Carbon Dioxide Offsets from the Anaerobic Digestion of Dairy Waste in the United States. Applied Economic Perspectives and Policy, 33:1(2011):59-78. <br /> <br /> <br /> Baylis, K., N.D. Paulson, and G. Piras. 2011. Spatial Approaches to Panel Data in Agricultural Economics: A Climate Change Application. Journal of Agricultural and Applied Economics 43(3): 325-338. (senior authorship is shared) <br /> <br /> <br /> Gloy, B.A. and J.B. Dressler. Financial Barriers to the Adoption of Anaerobic Digestion on U.S. Livestock Operations. Agricultural Finance Review, 70:2(2010):157-168. <br /> <br /> <br /> Roberts, K.G., B.A. Gloy, S. Joseph, N.R. Scott, and J. Lehmann. Life Cycle Assessment of Biochar Systems: Estimating the Energetic, Economic and Climate Change Potential. Environmental Science and Technology, 44:2(2010):827-833.<br /> <br /> <br /> Maung TA, Gustafson CR, The economic feasibility of sugar beet biofuel production in central North Dakota, Biomass and Bioenergy (2011), http://dx.doi.org/10.1016/j.biombioe.2011.05.022<br /> <br /> <br /> Maung T. et. al. Market Information on Sourcing Cellulosic Feedstock for Biofuel Production in the Northern Plains Region of the United States Journal of Agricultural Science and Technology. 2011, forthcoming<br /> <br /> <br />

Impact Statements

1. Evaluation of increased land values and rental rates, and their impact on producers and landlords.
2. Evaluation of the potential impact of carbon policies on livestock producers.
3. Evaluation of the impact of Renewable Identification Numbers on the ethanol market and its ability to meet the Renewable Fuel Standard mandates.
4. Evaluation of current policy proposals for the 2012 farm bill and their potential impacts on farm income and risk exposure for Midwestern commercial grain producers.
5. Continued to provide evaluations of the Farm Service Agencys Loan Guarantee Program that provides 2% of all production agricultural funds to underserved, deserving borrowers. This included evaluating graduation rates into other lending programs, success in serving underrepresented minorities, and factors that were strongly correlated with graduation.
6. Evaluated the impact of fluctuations in commodity prices on agricultural producers. In particular, as these fluctuations impacted production, crop insurance, marketing, and financing decisions.
7. Analyzed the impact of the fluctuations of commodity prices and the financial crisis on agricultural lenders financial health.
8. Evaluated the impact of increasing demand for corn ethanol and its impact on production agriculture. Specifically, noting the impact on rural communities, land values, and cropping decisions.
9. Assessed the impact of Cap and Trade on dairy farms and other farm policy programs on farm financial health.
10. Analyzed technical and scale efficiencies of agricultural and non-agricultural banks, including surviving and bankrupt banking institutions operating from 2007-2010.
11. Developed early warning (bank failure prediction) models for U.S. agricultural and non-agricultural banks
12. Investigated on the impact of changes in the seasonal farm labor market resulting from the stricter implementation of immigration policies; focus of analyses has been on labor-intensive organic farms versus larger, more mechanized conventional farms
13. Determined strategic responses of organic and conventional farms to radical changes in the seasonal farm labor market conditions.
14. Identified efficient mulching and fumigation methods for vegetable farms when the traditional reliable fumigant methyl bromide is completely phased out from the market.
15. Evaluated the technical effectiveness and economic efficiency of alternative cropping systems on the enhancement of soil quality among organic and conventional farms in the Piedmont area.
16. Evaluated the social outreach and financial sustainability goals of Indian microfinance institutions
17. Analyzed the effectiveness of the borrowing group paradigm employed by Indian microfinance institutions

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Report Information

Participants

2012 meeting minutes and participant list attached.

Brief Summary of Minutes

The 2012 NC-1177 meetings were held October 25th and 26th in Washington DC. A part of the meeting was held jointly with the National Agricultural Credit Committee (NACC). The NACC is comprised of agricultural lenders from throughout the U.S. The meeting allowed members of NC-1177 to interact with these representatives and better understand how the groups research intersects with the issues faced by agricultural and rural lenders. NC-1177 members Professor Allen Featherstone (Kansas State University) and Jennifer Ifft (USDA-ERS) presented some of their current research on the impacts of the 2012 drought during the joint NACC sessions. The joint component also included presentations on the agricultural lending environment, agricultural risk management, and agricultural policy. Speakers represented the Farm Credit Administration, the CME Group, CHS, Inc., and the National Council of Farmer Cooperatives. During the NC-1177 portion of the meeting, members discussed the groups research projects and progress and presented completed and ongoing research.

The NC-1177 business meeting included updates on the formation of the Agricultural Finance and Management (AFM) Section of the Agricultural and Applied Economics Association (AAEA), member publication activity in the Agricultural Finance Review, and a new international conference on finance and risk. Members also discussed honoring member Professor Cole Gustafson who passed away in 2012 in a tragic farm accident. The meeting concluded with discussion of the location and dates for the 2013 annual meetings. The group agreed to continue to hold the meetings jointly with the fall meeting of the National Ag Credit Committee. Todd Kuethe (USDA-ERS) was unanimously elected as the new Secretary on the executive committee for 2013. Continuing members are Ryan Larsen (President) and Mindy Mallory (Vice President).

The complete 2012 meeting minutes are attached.

Accomplishments

Agricultural and Rural Finance Markets in Transition has had another productive year. Member activities continue to focus on the projects four objectives. The objectives and activities related to each are provided below. <br /> <p>1. Examine the impact of recent fluctuations in capital and commodity markets on the performance, management, and regulation of agricultural financial institutions.<br /> Members have been actively involved in helping to understand how market volatility is impacting the performance, management, and regulation of financial institutions. Work in progress has examined the technical and economic efficiency of financial institutions as well as developing models to identify banks that may experience financial stress. Work from these modeling efforts has been used by financial institutions in stress testing applications and in updating underwriting procedures. Members also developed a simulation program that allows one to educate students and bankers on sound bank management practices. Other work has focused on examining how new products such as weather derivatives and crop insurance might be used jointly with marketing strategies to better manage risk in agriculture. Because savings and off-farm income are strategies that can be used to mitigate risk in agriculture, other projects have sought to understand these behaviors and how these factors influence risk. Finally, work was conducted to better understand the factors influencing the dramatic increases in farmland values experienced over the past 5 years, and to determine how potential changes in market factors could impact farmland values (i.e. changes in interest rates or commodity prices/farm income levels). <br /> <p>2. Evaluate the management strategies, capital needs, and policy impacting the financial performance and long-term sustainability of firms in the food and agribusiness sector.<br /> <p>Work related to objective two has investigated the impact of changes in the seasonal farm labor market resulting from the stricter implementation of immigration policies, with a focus on labor-intensive organic farms versus larger, more mechanized conventional farms. Strategic responses of organic and conventional farms to radical changes in the seasonal farm labor market conditions were documented. Efficient mulching and fumigation methods for vegetable farms when the traditional reliable fumigant methyl bromide is completely phased out from the market were also identified and disseminated to stakeholder through publications and extension materials. Continued efforts have been made to analyze the impacts of increased land values and rental rates on producers and landlords. Other work evaluated the use of direct marketing, alternative business structures, alternative marketing strategies, and the adoption of genetically modified crops and their impacts on farm profitability. The impact of changes to government policies and subsidy programs proposed for the 2012 Farm Bill on US farm income was also addressed, with work from project members used by Senate and House Ag Committee staff in drafting program proposals, and the Congressional Budget Office in scoring proposed programs. Project participants have also created a number of extension and outreach materials for use in educating producers on new programs proposed for the 2012 Farm Bill. <br /> <p>3. Identify financial institutions and services that benefit agricultural producers and rural communities and expand agricultural markets, especially those producers that are beginning, young, from socially disadvantaged groups, and/or involved in producing specialty crops.<br /> <p>Work toward objective three examined issues related to business succession planning, how beginning farmers adopt technology, and beginning farmer financial performance. Outputs in these areas have included scholarly publications and extension program materials for beginning farmer audiences. Other work examined the impact of farm program payments for both established and beginning farmers. Efforts also addressed how communities recover from natural disasters. <br /> <p>4. Investigate capital structure, financial performance, and investment strategies of firms producing renewable energy in context of long term climate change. Implications of these findings for agriculture and rural communities will be delineated.<br /> <p>Work on objective four has focused on evaluation of the impact of the Renewable Fuel Standard (RFS) mandates and Renewable Identification Numbers on the energy and agricultural markets. This has provided timely policy analysis of the RFS. The impact of carbon policies on livestock producers has also been considered, along with related research to better understand the economic feasibility of alternative energy production systems. Research and extension outputs in these areas have helped to inform related policy decisions, educate producers, and successfully led to business startups. <br /> <p>The following provides a list of more general accomplishments for 2012. Also included with the annual report are impact statements from project members, and a list of selected publications from project members in 2012. <br /> <p>Members coordinated review of the USDAs Agricultural Resource Management Survey (ARMS), publishing 11 articles in a special issue of the Agricultural Finance Review (Volume 72 (2), 2012, link provided below).<br /> <p>http://www.emeraldinsight.com/journals.htm?issn=0002-1466&volume=72&issue=2&PHPSESSID=e86db58i565kmrajkscpccp4e1<br /> <p>Project members successfully created a new section within the Agricultural and Applied Economics Association (AAEA). The new section  Agricultural Finance and Management  provides a stronger linkage to the main professional association in agricultural economics. This will assist project and section members in disseminating results and information from their research and outreach programs to the full membership of the AAEA. Section activities include organized sessions at the annual AAEA meetings, with publication of the papers presented during these sessions as proceedings in the Agricultural Finance Review.<br /> <p>Project members continue to exhibit excellent grantsmanship in securing both internal and external funding for related research and extension efforts. A partial list of the grant activity of members in 2012 is included with the attached list of publications. Funding sources include external sources such as commodity groups, consulting contracts with private businesses, and regional and national government agencies. Funding was also secured from internal sources across the various academic and government institutions in which members hold appointments. Linkages among project members and the Economic Research Service of the USDA also continue to be strong as evidenced by the multiple cooperative agreements in place between ERS researchers and academic faculty and staff who are members of the NC-1177 project.<br /> <p>Project members earned national awards for their research efforts in 2012, including the most outstanding article in Choices and the Gold Quill Award from the Journal of the American Society of Farm Managers and Rural Appraisers.<br /> <p>Project members have also served in numerous leadership roles within the agricultural economics profession. In 2012, members coordinated abstract reviews for multiple national and regional conferences, served as peer reviewers for scholarly journals and experts for major grant reviews. <br /> <br />

Publications

See attached list of selected publications.

Impact Statements

1. Research and consulting work of group members led to development of the yield trend adjustment in the US crop insurance program launched in 2012.
2. Evaluation of increased land values and rental rates and their impact on producers and landlords and to assist with land management decision-making.
3. Evaluation of the impact of Renewable Identification Numbers on the corn and ethanol market and the nations ability to meet the Renewable Fuel Standard mandates.
4. Evaluation of current policy proposals for the 2012 farm bill and their potential impacts on farm income and risk exposure for grain and oilseed producers.
5. Continued to provide evaluations of the Farm Service Agencys Loan Guarantee Program that provides 2% of all production agricultural funds to underserved, deserving borrowers. This included evaluating graduation rates into other lending programs, success in serving underrepresented minorities, and factors that were strongly correlated with graduation.
6. Evaluated the impact of fluctuations in commodity prices on agricultural producers. In particular, as these fluctuations impacted production, crop insurance, marketing, and financing decisions and strategies for farmers.
7. Analyzed the impact of the fluctuations of commodity prices and the financial crisis on agricultural lenders financial health.
8. Evaluated the impact of increasing demand for corn ethanol and its impact on production agriculture. Specifically, noting the impact on rural communities, land values, and cropping decisions.
9. Assessed the impact of Cap and Trade on dairy farms and other farm policy programs on farm financial health and identified characteristics of operations which may adopt GHG reducing technologies
10. Analyzed technical and scale efficiencies of agricultural and non-agricultural banks, including surviving and bankrupt banking institutions operating from 2007-2010.
11. Developed early warning (bank failure prediction) and capital based stress testing models for use in U.S. agricultural and non-agricultural banks
12. Investigated impact of structural labor market changes and determined strategic responses of organic and conventional farms to radical changes in the seasonal farm labor market conditions.
13. Identified efficient mulching and fumigation methods for adoption by vegetable farms when the traditional reliable fumigant methyl bromide is completely phased out from the market.
14. Evaluated the technical effectiveness and economic efficiency of alternative cropping systems which has will continue to enhance soil quality among organic and conventional farms in the Piedmont area.
15. Evaluated the social outreach and financial sustainability goals of Indian microfinance institutions and analyzed the effectiveness of the borrowing group paradigm employed by Indian microfinance institutions, ultimately impacting credit practices in regions of India.
16. Based on the financial feasibility analysis, Green Vision Group has received $1 million of grant funding to develop an energy beet to biofuel plant located in North Dakota. Each plant will produce 20 mgy of ethanol and employ 23 people.
17. Better understanding of tradeoffs among health care benefits, disability insurance, retirement benefits, and household labor decisions in the Gulf Coast and Delta regions.
18. Direct marketing strategies to improve the financial viability of young and small farmers, specifically for fruit and vegetable producers in proximity to metropolitan markets.
19. Examination of the impact of tax incentives on machinery investment in the Northern Great Plains

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Report Information

Participants

Brief Summary of Minutes

The 2013 NC-1177 meetings were held October 11th and 12th in Kansas City, MO. A part of the meeting was held jointly with the National Agricultural Credit Committee (NACC). The NACC is comprised of agricultural lenders from throughout the U.S. The meeting allowed members of NC-1177 to interact with these representatives and better understand how the groups research intersects with the issues faced by agricultural and rural lenders. NC-1177 members Professor Paul Ellinger (University of Illinois), Brian Briggeman (Kansas State University, and Barrett Kirwan (University of Illinois) presented some of their current research on the impacts changing farm policy, land values, and long term perspecives of agricultural finance during the joint NACC sessions. The joint component also included presentations on the agricultural lending environment, agricultural risk management, and agricultural policy. Speakers represented the Farm Credit Administration, MetLife Agricultural Investments, American Bankers Association, and the President of the Federal Reserve Bank of Kansas City. During the NC-1177 portion of the meeting, members discussed the groups research projects and progress and presented completed and ongoing research.

The NC-1177 business meeting included updates on the formation of the Agricultural Finance and Management (AFM) Section of the Agricultural and Applied Economics Association (AAEA), member publication activity in the Agricultural Finance Review, and the continuation of an international conference on finance and risk. The meeting concluded with discussion of the location and dates for the 2014 annual meetings. The group agreed to continue to hold the meetings jointly with the fall meeting of the National Ag Credit Committee and will meet in Kansas City at the Federal Reserve. Joleen Hadrich (Colorado State University) was unanimously elected as the new Secretary on the executive committee for 2013. Continuing members are Mindy Mallory (President) and Todd Kuethe (Vice President).

Accomplishments

Agricultural and Rural Finance Markets in Transition has had another productive year. Member activities continue to focus on the projects four objectives. The objectives and activities related to each are provided below.<br /> <p>1. Examine the impact of recent fluctuations in capital and commodity markets on the performance, management, and regulation of agricultural financial institutions.<br /> <br /> <p>Given recent market fluctuations, it is important to consider the impact of capital and commodity market volatility on the performance, management and regulation of agricultural financial institutions. Initial work in this area has considered the implications of evolving regulatory capital requirements on the Farm Credit System. These implications were assessed through a simulation model that considered the impact of various regulatory changes including potential changes stemming from Basel III. Researchers at the University of Georgia analyzed the efficiency of banks pre and post financial crisis. They found that agricultural banks were more technically efficient than non-agricultural banks. The research also found that agricultural banks input decisions were influenced by dependence on transaction deposits and high standards for equity-capital ratios. Researchers at Cornell University studied the impact of government sponsored enterprise (GSE) status on the pricing of bonds issued by Federal Farm Credit Banks Funding Corporation. They found that the yield would be 13.62 basis points higher than a non-GSE bond. The implications of losing GSE status would impact the competitive balance between commercial and system lenders. <br /> <br /> <p>Researchers at the University of Kentucky studied the impact of natural disasters on financial institutions. They found that natural disasters significantly increased problem loans and also forced many loans into restructuring. The recent increase in weather related issues such as drought in Midwest, hurricanes in southern states, and flooding in Northern plains indicate that financial institutions need to be prepared for these scenarios. <br /> <p>2. Evaluate the management strategies, capital needs, and policy impacting the financial performance and long-term sustainability of firms in the food and agribusiness sector.<br /> <br /> <p> Multiple universities have begun to provide research concerning this objective. Researchers at Kansas State, Kentucky, University of Illinois, University of Minnesota, and North Dakota State University have begun to develop farm level databases. This farm level data is being used to develop state and national benchmarks to be used by researchers, lenders, and farmers. This data is also being used by researchers at Kansas State to show how liquidity impacts a farm level efficiency. Researchers have used this data to develop financial stress tests for farmers and also examine the sources of revenue variation. Researchers at Colorado State University found that small market crops and corn had the largest impact on revenue variation while crop insurance had the greatest impact on revenue diversification. Researchers have started considering the implications of fluctuating cash rents on farm profitability. Examination of cash rents of a nationally representative survey has started among a couple of land grant universities. <br /> <br /> <p>3. Identify financial institutions and services that benefit agricultural producers and rural communities and expand agricultural markets, especially those producers that are beginning, young, from socially disadvantaged groups, and/or involved in producing specialty crops.<br /> <br /> <p> The agricultural industry is not only concerned with finding new farmers but also replacing agricultural lenders. Researchers at the University of Florida, Louisiana State University, Kansas State University, and the Federal Reserve conducted a survey to identify the relevant financial concepts that universities should be teaching related to agricultural finance concepts. The survey found that there was improvement needed in finance skills with an increased focus on business and financial risk. <br /> <br /> <br /> <p>4. Investigate capital structure, financial performance, and investment strategies of firms producing renewable energy in context of long term climate change. Implications of these findings for agriculture and rural communities will be delineated.<br /> <p>Work on objective four has focused on evaluation of the impact of the Renewable Fuel Standard (RFS) mandates and Renewable Identification Numbers on the energy and agricultural markets. This has provided timely policy analysis of the RFS. The impact of carbon policies on livestock producers has also been considered, along with related research to better understand the economic feasibility of alternative energy production systems. Research and extension outputs in these areas have helped to inform related policy decisions, educate producers, and successfully led to business startups.<br /> <br /> <p>The following provides a list of more general accomplishments for 2013. Also included with the annual report is a list of selected publications from project members in 2013.<br /> <br /> <br /> <p>Project members continued to build on the newly formed section within the Agricultural and Applied Economics Association (AAEA). The section  Agricultural Finance and Management  provides a stronger linkage to the main professional association in agricultural economics. This will assist project and section members in disseminating results and information from their research and outreach programs to the full membership of the AAEA. Section activities include organized sessions at the annual AAEA meetings, with publication of the papers presented during these sessions as proceedings in the Agricultural Finance Review.<br /> <p>Project members continue to exhibit excellent grantsmanship in securing both internal and external funding for related research and extension efforts. A partial list of the grant activity of members in 2013 is included with the attached list of publications. Funding sources include external sources such as commodity groups, consulting contracts with private businesses, and regional and national government agencies. Funding was also secured from internal sources across the various academic and government institutions in which members hold appointments. Linkages among project members and the Economic Research Service of the USDA also continue to be strong as evidenced by the multiple cooperative agreements in place between ERS researchers and academic faculty and staff who are members of the NC-1177 project.<br /> <br /> <p>Project members have also served in numerous leadership roles within the agricultural economics profession. In 2013, members coordinated abstract reviews for multiple national and regional conferences, served as peer reviewers for scholarly journals and experts for major grant reviews.<br />

Publications

Impact Statements

1. Evaluation of farmland as an investment compared to other alternative investments inclusive of the impacts of the 2008 financial crisis.
2. Evaluation of the impact of the tax-deferred exchange provision on farm real estate values.
3. Evaluation of welfare impacts of reduced government subsidies to farm families.
4. Evaluation of financial performance of publicly traded agribusiness.
5. Evaluated the impact of participation in the milk income loss contract program and the implication for milk production.
6. Analyzed the impact of the fluctuations of commodity prices and the financial crisis on agricultural lenders financial health.
7. Evaluated the impact of tax-exempt bond financing for beginning and low-equity farmers.
8. Assessed the efficiency of derivatives as a risk management tool for banks.
9. Analyzed the relationship between openness to trade and efficiency levels in low income countries. This research specifically was using data from Latin American and Caribbean countries.
10. Analyzed the efficiency of Kansas farmers using Data Envelopment Analysis and semi parametric regression analysis.
11. Investigated the government insurance program design, incentive effects, and how this impacted technology adoption.
12. Analyzed the implications of within county yield heterogeneity for modeling crop insurance premiums.
13. Evaluated the financial well-being of farms in Georgia through the Georgia Farm Outlook and Planning Guide.
14. Evaluated the scale economics, governance, and elasticity of substitution in microfinance institutions.
15. Received grant funding to develop and analyze multi-state benchmarking for farm level data.

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