Dissertation
Agricultural risk management decision modeling for the US Pacific Northwest
Washington State University
Doctor of Philosophy (PhD), Washington State University
12/2006
DOI:
https://doi.org/10.7273/000005578
Abstract
The dissertation includes both empirical and theoretical studies in risk management for Pacific Northwest (PNW) farmers. Chapter one gives a brief introduction of the structure and contents of the following three studies. Chapter two uses a mean-variance model to assess the risk management impact of cross hedging with alternative futures contracts (Chicago - CBOT, Kansas City - KCBT, or Minneapolis - MGE) for PNW soft white wheat hedgers. Since existing measures of liquidity costs are limited, a breakeven approach is developed to assess the risk management effect of the alternative futures markets. Results suggest KCBT is the best choice for risk protection in most cases. The MGE ranks the lowest and the CBOT is in the middle. The goal of the chapter three is to develop a general mean-variance-skewness (MVS) model and compare it and the traditional mean-variance (MV) model against the expected utility (EU) model in the setting of an individual producer hedging in the futures market. Optimal solutions of optimal hedge ratios and comparative statics are derived. The optimal hedge ratios from MV and MVS models are numerically compared with that of EU model under alternative preference parameters. Results show that: 1) the derived linear MVS model maintains the analytical convenience of MV model, 2) it can generate different results as MV, 3) it approximate EU better than MV, and 4) it is more flexible than MV. Chapter four is to assess income risks of PNW apple growers and the effect of the apple crop insurance program. We have examined the income risks of conventional and organic production; and evaluate the roles of Grower Yield Certification (GYC) and a hypothesized Income Protection insurance for Red Delicious, Golden Delicious, Gala and Fuji. Results show organic apple growers earn higher expected revenue, incur higher production cost, make higher expected profit, but face higher income risks than conventional growers. Based on government investment in premium subsidies, revenue insurance is more cost effective. Organic apple production risks are higher than their conventional counterparts, causing the current GYC premium to be below the expected indemnity (except Gala).
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Details
- Title
- Agricultural risk management decision modeling for the US Pacific Northwest
- Creators
- Xiaomei Chen
- Contributors
- H. Holly Wang (Chair)R C Mittelhammer (Committee Member) - Washington State University, School of Economic SciencesDouglas L Young (Committee Member)Larry Makus (Committee Member)
- Awarding Institution
- Washington State University
- Academic Unit
- School of Economic Sciences
- Theses and Dissertations
- Doctor of Philosophy (PhD), Washington State University
- Publisher
- Washington State University
- Number of pages
- 119
- Identifiers
- 99901054738001842
- Language
- English
- Resource Type
- Dissertation