Urea fertilizer is widely used in the U.S., however, most urea is not openly traded and formula p... more Urea fertilizer is widely used in the U.S., however, most urea is not openly traded and formula pricing is common. This study measures the efficiency of spatial urea prices in the New Orleans-Arkansas River urea market and the New Orleans-Middle East urea market. The vector error correction model (VECM) and Baulch's (1997) parity bound model (PBM) are used. Nonlinearity testing finds no threshold effects. Thus, we do not include threshold values in our vector error correction models. Parameter estimates of vector error correction models show that violations of spatial price equilibrium are corrected faster in the Arkansas River-New Orleans urea market than the New Orleans-Middle East urea market. Results from the parity bound model show that in the New Orleans-Middle East urea market, price spreads are found greater than transportation costs in about 23% of the time. So, the New Orleans-Middle East market is a moderately inefficient market rather than a perfectly efficient market.
PurposeThe authors determine the effectiveness of the Rainfall Index Annual Forage Program (RIAFP... more PurposeThe authors determine the effectiveness of the Rainfall Index Annual Forage Program (RIAFP) in offsetting yield risk of winter annual forage growers. The authors also evaluate the effectiveness in reducing risk of potential alternative weather indices.Design/methodology/approachThe RIAFP is designed to compensate forage producers when yield losses occur. Prior research found weak correlation between the rainfall index and actual winter annual forage yields. The authors use long-term small-plot variety trials of rye, ryegrass, wheat, triticale and oats with rainfall recorded on site and measure the correlation of the index with actual rainfall and actual yields. The alternative indices include frequency of precipitation events and of days with temperature below freezing.FindingsThe correlation between actual rainfall and the current RMA index was strongly positive as in previous research. Correlations between forage yields and monthly intervals of the current RMA index were mo...
This research forecasts peak call volume to allow a centralized call center to minimize staffing ... more This research forecasts peak call volume to allow a centralized call center to minimize staffing costs. A Gaussian copula is used to capture the dependence among nonnormal distributions. Peak call volume can be easily and more accurately predicted using the marginal probability distribution with the copula function than without using a copula. The modeling approach allows simulating adding another cooperative. Ignoring the dependence that the copula includes, causes peak values to be underestimated.
A site-specific fertilizer application system that uses optical reflectance measurements of growi... more A site-specific fertilizer application system that uses optical reflectance measurements of growing plants to estimate fertilizer requirements and that can apply liquid nitrogen fertilizer at a grid level of four square feet is under development. The objective is to determine if the site-specific system is more economical than alternative systems.
Sample size is often dictated by budget and acceptable error bounds. However, there are many econ... more Sample size is often dictated by budget and acceptable error bounds. However, there are many economic problems where sample size directly affects a benefit or loss function, and in these cases, sample size is an endogenous variable. We introduce an economic approach to sample size determination utilizing a Bayesian decision theoretic framework that balances the expected costs and benefits of sampling using a Bayesian prior distribution for the unknown parameters. To demonstrate the method for a relevant applied economics problem, we turn to randomly sampling beef cattle for genetic testing. A theoretical model is developed, and several simplifying assumptions are made to solve the problem analytically. Data from 101 pens (2,796 animals) of commercially-fed cattle are then used to evaluate this solution empirically. Results indicate that at the baseline parameter values an optimal sample size of n^*=10 out of 100 animals generate returns from sampling of nearly $10/head, or a return-...
Despite abundant literature on crop yield distributions, there is no strict agreement about funct... more Despite abundant literature on crop yield distributions, there is no strict agreement about functional form and distributional assumptions. This paper estimated the optimal nitrogen rates in wheat production assuming a stochastic plateau yield function with nonnormal random effects. The yield plateau parameter is assumed to be beta distributed. The parameters are estimated using a Bayesian estimation methods and a noninformative prior. The maximum likelihood method was also used to compare the results of the two approaches. The results indicate a slight difference in nitrogen recommendation, which can be associated with the fact that the Bayesian methods capture parameter uncertainty while the MLE does not.
We estimate the value of using information from genetic marker panels for seven economically-rele... more We estimate the value of using information from genetic marker panels for seven economically-relevant feedlot cattle traits. At the current cost of genetic testing it would not pay to sort cattle by optimal days-on-feed, but it could pay to use the genetic tests for breeding cattle selection.
Large families in rural areas causes pressure on natural resources, an upsurge of inter-community... more Large families in rural areas causes pressure on natural resources, an upsurge of inter-community conflicts. Anecdotal evidence suggests that one reason for large families is the value of children as a source of labor.This research determines the marginal change in household productivity with respect to traction animals and the number of young people in the household.
A new stochastic process is introduced where permanent changes occur following a Poisson jump pro... more A new stochastic process is introduced where permanent changes occur following a Poisson jump process and temporary changes occur following a normal distribution. The model is estimated using hard wheat basis data and is used to explain why the optimal length of moving average to forecast basis varies over time. The estimated probability of jumps is large and thus the optimal length of moving average is small.
Improved software now makes Bayesian estimation a strong alternative to nonlinear maximum likelih... more Improved software now makes Bayesian estimation a strong alternative to nonlinear maximum likelihood. Bayesian methods were used to estimate a linear response stochastic plateau for cotton and were shown to provide estimates similar to maximum likelihood. Optimal levels of nitrogen were lower than recommended levels.
Sensor-based precision fertilizer technologies are being developed and researched by production s... more Sensor-based precision fertilizer technologies are being developed and researched by production scientists. One such technology uses normalized difference vegetation index (NDVI) reflectance measurements of growing winter wheat plants and a nitrogen fertilizer optimization algorithm (NFOA) to determine nitrogen requirement necessary for plants to reach their yield plateau. A number of precision fertilizer application systems that use this technology are considered in this paper. A linear response stochastic plateau wheat yield function conditional on NDVI reflectance measurements is estimated and used within an expected profit-maximization framework to estimate upper bounds on the returns from the precision nitrogen application systems. The on-the-go precision system that assumes perfect information was approximately $7 per acre more profitable than the convention of applying 80 pounds of nitrogen prior to planting in the fall. The whole-field precision system was break-even with co...
Using ammonium based nitrogen fertilizers in crop production has been shown to acidify soils. Lim... more Using ammonium based nitrogen fertilizers in crop production has been shown to acidify soils. Lime used to correct soil pH is an important cost to producers. Recommendations of the optimal level of nitrogen to apply typically ignore the cost of lime created by nitrogen fertilization. This study was aimed to estimate soil pH change in response to nitrogen and lime application, and determine the effect of considering the cost of lime on recommendations about the optimal level of nitrogen. Yield response and pH functions were estimated and used to determine optimal levels of inputs. The effect of the cost of lime on recommendations about the optimal level of nitrogen was found to be marginal. Nitrogen acidification was found to be more severe with nitrogen application amounts above recommended rates than with nitrogen that is used by the plant.
Our objective is to determine if a first-price auction or a posted-price market provides a seller... more Our objective is to determine if a first-price auction or a posted-price market provides a seller with the larger expected revenue when buyers have a common value for the item being sold. An agent-based, posted-price market and an agent-based, first-price common-value auction with a reserve price are developed to compare these selling methods. When the seller cannot impose a reserve price in the auction, the seller is better off selling the item in a posted-price market. However, when the seller can impose a reserve price in the auction, we find that the seller is mostly indifferent between these selling methods under several different scenarios, although the auction is preferred when seller uncertainty is high relative to buyer uncertainty. JEL classification: C73, D44
Journal of Agricultural and Applied Economics, 2019
The CIF NOLA “river market” represents an important but opaque forward market that serves Gulf ex... more The CIF NOLA “river market” represents an important but opaque forward market that serves Gulf exporters and elevators. CIF NOLA bids function similarly to traditional forward contracts; however, like a futures market, firms can offset their forward contractual obligations by offsetting positions in a liquid off-exchange paper market. Analysis shows grain sellers pay a risk premium for fall harvest delivery contracts. However, outside of fall harvest, contract liquidity, coupled with a good institutional balance of long and short market participants, mostly removes the pricing bias commonly found in farmer forward contracting in corn and soybeans.
Urea fertilizer is widely used in the U.S., however, most urea is not openly traded and formula p... more Urea fertilizer is widely used in the U.S., however, most urea is not openly traded and formula pricing is common. This study measures the efficiency of spatial urea prices in the New Orleans-Arkansas River urea market and the New Orleans-Middle East urea market. The vector error correction model (VECM) and Baulch's (1997) parity bound model (PBM) are used. Nonlinearity testing finds no threshold effects. Thus, we do not include threshold values in our vector error correction models. Parameter estimates of vector error correction models show that violations of spatial price equilibrium are corrected faster in the Arkansas River-New Orleans urea market than the New Orleans-Middle East urea market. Results from the parity bound model show that in the New Orleans-Middle East urea market, price spreads are found greater than transportation costs in about 23% of the time. So, the New Orleans-Middle East market is a moderately inefficient market rather than a perfectly efficient market.
PurposeThe authors determine the effectiveness of the Rainfall Index Annual Forage Program (RIAFP... more PurposeThe authors determine the effectiveness of the Rainfall Index Annual Forage Program (RIAFP) in offsetting yield risk of winter annual forage growers. The authors also evaluate the effectiveness in reducing risk of potential alternative weather indices.Design/methodology/approachThe RIAFP is designed to compensate forage producers when yield losses occur. Prior research found weak correlation between the rainfall index and actual winter annual forage yields. The authors use long-term small-plot variety trials of rye, ryegrass, wheat, triticale and oats with rainfall recorded on site and measure the correlation of the index with actual rainfall and actual yields. The alternative indices include frequency of precipitation events and of days with temperature below freezing.FindingsThe correlation between actual rainfall and the current RMA index was strongly positive as in previous research. Correlations between forage yields and monthly intervals of the current RMA index were mo...
This research forecasts peak call volume to allow a centralized call center to minimize staffing ... more This research forecasts peak call volume to allow a centralized call center to minimize staffing costs. A Gaussian copula is used to capture the dependence among nonnormal distributions. Peak call volume can be easily and more accurately predicted using the marginal probability distribution with the copula function than without using a copula. The modeling approach allows simulating adding another cooperative. Ignoring the dependence that the copula includes, causes peak values to be underestimated.
A site-specific fertilizer application system that uses optical reflectance measurements of growi... more A site-specific fertilizer application system that uses optical reflectance measurements of growing plants to estimate fertilizer requirements and that can apply liquid nitrogen fertilizer at a grid level of four square feet is under development. The objective is to determine if the site-specific system is more economical than alternative systems.
Sample size is often dictated by budget and acceptable error bounds. However, there are many econ... more Sample size is often dictated by budget and acceptable error bounds. However, there are many economic problems where sample size directly affects a benefit or loss function, and in these cases, sample size is an endogenous variable. We introduce an economic approach to sample size determination utilizing a Bayesian decision theoretic framework that balances the expected costs and benefits of sampling using a Bayesian prior distribution for the unknown parameters. To demonstrate the method for a relevant applied economics problem, we turn to randomly sampling beef cattle for genetic testing. A theoretical model is developed, and several simplifying assumptions are made to solve the problem analytically. Data from 101 pens (2,796 animals) of commercially-fed cattle are then used to evaluate this solution empirically. Results indicate that at the baseline parameter values an optimal sample size of n^*=10 out of 100 animals generate returns from sampling of nearly $10/head, or a return-...
Despite abundant literature on crop yield distributions, there is no strict agreement about funct... more Despite abundant literature on crop yield distributions, there is no strict agreement about functional form and distributional assumptions. This paper estimated the optimal nitrogen rates in wheat production assuming a stochastic plateau yield function with nonnormal random effects. The yield plateau parameter is assumed to be beta distributed. The parameters are estimated using a Bayesian estimation methods and a noninformative prior. The maximum likelihood method was also used to compare the results of the two approaches. The results indicate a slight difference in nitrogen recommendation, which can be associated with the fact that the Bayesian methods capture parameter uncertainty while the MLE does not.
We estimate the value of using information from genetic marker panels for seven economically-rele... more We estimate the value of using information from genetic marker panels for seven economically-relevant feedlot cattle traits. At the current cost of genetic testing it would not pay to sort cattle by optimal days-on-feed, but it could pay to use the genetic tests for breeding cattle selection.
Large families in rural areas causes pressure on natural resources, an upsurge of inter-community... more Large families in rural areas causes pressure on natural resources, an upsurge of inter-community conflicts. Anecdotal evidence suggests that one reason for large families is the value of children as a source of labor.This research determines the marginal change in household productivity with respect to traction animals and the number of young people in the household.
A new stochastic process is introduced where permanent changes occur following a Poisson jump pro... more A new stochastic process is introduced where permanent changes occur following a Poisson jump process and temporary changes occur following a normal distribution. The model is estimated using hard wheat basis data and is used to explain why the optimal length of moving average to forecast basis varies over time. The estimated probability of jumps is large and thus the optimal length of moving average is small.
Improved software now makes Bayesian estimation a strong alternative to nonlinear maximum likelih... more Improved software now makes Bayesian estimation a strong alternative to nonlinear maximum likelihood. Bayesian methods were used to estimate a linear response stochastic plateau for cotton and were shown to provide estimates similar to maximum likelihood. Optimal levels of nitrogen were lower than recommended levels.
Sensor-based precision fertilizer technologies are being developed and researched by production s... more Sensor-based precision fertilizer technologies are being developed and researched by production scientists. One such technology uses normalized difference vegetation index (NDVI) reflectance measurements of growing winter wheat plants and a nitrogen fertilizer optimization algorithm (NFOA) to determine nitrogen requirement necessary for plants to reach their yield plateau. A number of precision fertilizer application systems that use this technology are considered in this paper. A linear response stochastic plateau wheat yield function conditional on NDVI reflectance measurements is estimated and used within an expected profit-maximization framework to estimate upper bounds on the returns from the precision nitrogen application systems. The on-the-go precision system that assumes perfect information was approximately $7 per acre more profitable than the convention of applying 80 pounds of nitrogen prior to planting in the fall. The whole-field precision system was break-even with co...
Using ammonium based nitrogen fertilizers in crop production has been shown to acidify soils. Lim... more Using ammonium based nitrogen fertilizers in crop production has been shown to acidify soils. Lime used to correct soil pH is an important cost to producers. Recommendations of the optimal level of nitrogen to apply typically ignore the cost of lime created by nitrogen fertilization. This study was aimed to estimate soil pH change in response to nitrogen and lime application, and determine the effect of considering the cost of lime on recommendations about the optimal level of nitrogen. Yield response and pH functions were estimated and used to determine optimal levels of inputs. The effect of the cost of lime on recommendations about the optimal level of nitrogen was found to be marginal. Nitrogen acidification was found to be more severe with nitrogen application amounts above recommended rates than with nitrogen that is used by the plant.
Our objective is to determine if a first-price auction or a posted-price market provides a seller... more Our objective is to determine if a first-price auction or a posted-price market provides a seller with the larger expected revenue when buyers have a common value for the item being sold. An agent-based, posted-price market and an agent-based, first-price common-value auction with a reserve price are developed to compare these selling methods. When the seller cannot impose a reserve price in the auction, the seller is better off selling the item in a posted-price market. However, when the seller can impose a reserve price in the auction, we find that the seller is mostly indifferent between these selling methods under several different scenarios, although the auction is preferred when seller uncertainty is high relative to buyer uncertainty. JEL classification: C73, D44
Journal of Agricultural and Applied Economics, 2019
The CIF NOLA “river market” represents an important but opaque forward market that serves Gulf ex... more The CIF NOLA “river market” represents an important but opaque forward market that serves Gulf exporters and elevators. CIF NOLA bids function similarly to traditional forward contracts; however, like a futures market, firms can offset their forward contractual obligations by offsetting positions in a liquid off-exchange paper market. Analysis shows grain sellers pay a risk premium for fall harvest delivery contracts. However, outside of fall harvest, contract liquidity, coupled with a good institutional balance of long and short market participants, mostly removes the pricing bias commonly found in farmer forward contracting in corn and soybeans.
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Papers by Wade Brorsen