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Dynamic Marketing and Retention Decisions for Cow-Calf Producers

Author

Listed:
  • Ted C. Schroeder
  • Allen M. Featherstone

Abstract

Optimal calf retention and marketing activities for cow-calf producers are examined using a expected utility-maximizing discrete stochastic programming model. Steer, heifer, and corn prices are modeled as stochastic variables. The mathematical model is used to consider retention at weaning and yearling stages and marketing alternatives of cash, hedging, and options. Results show how calf retention decisions depend upon current profit, expected future profit distributions, pricing alternatives available, and the cow-calf producer's aversion to risk.

Suggested Citation

  • Ted C. Schroeder & Allen M. Featherstone, 1990. "Dynamic Marketing and Retention Decisions for Cow-Calf Producers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(4), pages 1028-1040.
    • Handle: RePEc:oup:ajagec:v:72:y:1990:i:4:p:1028-1040.
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    1. Petersen, E. H. & Fraser, R. W., 2001. "An assessment of the value of seasonal forecasting technology for Western Australian farmers," Agricultural Systems, Elsevier, vol. 70(1), pages 259-274, October.
    2. Popp, Michael P. & Faminow, Merle D. & Parsch, Lucas D., 1998. "Adoption Of Backgrounding On Cow-Calf Farms," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20800, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Kingwell, Ross, 1996. "Programming models of farm supply response: The impact of specification errors," Agricultural Systems, Elsevier, vol. 50(3), pages 307-324.
    4. Pope, Kelsey Frasier & Schroeder, Ted C. & Langemeier, Michael R. & Herbel, Kevin L., 2011. "Cow-Calf Producer Risk Preference Impacts on Retained Ownership Strategies," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 43(4), pages 497-513, November.
    5. Apland, Jeffrey & Hauer, Grant, 1993. "Discrete Stochastic Programming: Concepts, Examples And A Review Of Empirical Applications," Staff Papers 13793, University of Minnesota, Department of Applied Economics.
    6. Lewis, Karen & Griffith, Andrew & Boyer, Christopher & Rhinehart, Justin, 2015. "Returns to Retained Ownership through Finishing for Beef Cattle Originating from Tennessee," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196620, Southern Agricultural Economics Association.
    7. Pannell, David J. & Malcolm, Bill & Kingwell, Ross S., 2000. "Are we risking too much? Perspectives on risk in farm modelling," Agricultural Economics, Blackwell, vol. 23(1), pages 69-78, June.
    8. Novak, Frank & Eales, James & Munro, Earl, 1993. "Profitability and Risk of Retained Ownership of Beef Calves," Project Report Series 232371, University of Alberta, Department of Resource Economics and Environmental Sociology.
    9. Kingwell, Ross S., 1992. "The Tactics of Dryland Farm Management given Variance in Climate and Prices," 1992 Conference (36th), February 10-13, 1992, Canberra, Australia 146536, Australian Agricultural and Resource Economics Society.
    10. Franken, Jason R.V. & Parcell, Joseph L. & Patterson, David J. & Smith, Michael F. & Poock, Scott, 2010. "Cow-Calf Producer Interest in Retained Ownership," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 28(1), pages 1-11.
    11. Amadou, Zakou & Ward, Clement E. & Raper, Kellie Curry & Cook, Billy & Biermacher, Jon T., 2009. "Management Production Systems and Timing Strategies for Cull Cows," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46593, Southern Agricultural Economics Association.
    12. Awondo, Sebastain Nde & Fonsah, Esendugue Greg & Riley, David G., 2012. "Are Tomato-Spotted Wilt Virus Management Tactics Good Enough?," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama 119790, Southern Agricultural Economics Association.
    13. Fausti, Scott W. & Johnson, Brad & Epperson, William & Grathwohl, Nancy, 2003. "Risk and the Economic Incentive to Retain Ownership of Steer Calves," Economics Staff Papers 32023, South Dakota State University, Department of Economics.
    14. Popp, Michael P. & Faminow, Merle D. & Parsch, Lucas D., 1999. "Factors Affecting The Adoption Of Value-Added Production On Cow-Calf Farms," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 31(1), pages 1-12, April.
    15. Tsakiridis, Andreas & Hanrahan, Kevin & Breen, James & Wallace, Michael & O’Donoghuea, Cathal, 2016. "Feed substitution and economies of scale in Irish beef production systems," 149th Seminar, October 27-28, 2016, Rennes, France 244769, European Association of Agricultural Economists.
    16. Tsakiridis, Andreas & Breen, James & O'Donoghue, Cathal & Hanrahan, Kevin & Wallace, Michael & Crosson, Paul, 2016. "Flexibility of beef suckler cow systems under varying calf retention strategies," 90th Annual Conference, April 4-6, 2016, Warwick University, Coventry, UK 236289, Agricultural Economics Society.
    17. Lei, Li-Fen, 1992. "Using futures and option contracts to manage price and quantity risk: A case of corn farmers in central Iowa," ISU General Staff Papers 1992010108000011326, Iowa State University, Department of Economics.
    18. Ibendahl, Gregory A. & Anderson, John D., 2001. "Open Cow Replacement Decisions: an Application of Asset Replacement Theory," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36184, Western Agricultural Economics Association.
    19. Tang, Minfeng & Lewis, Karen E. & Griffith, Andrew P. & Boyer, Christopher N., 2016. "Identifying Factors that Impact Returns to Retained Ownership of Cattle," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229766, Southern Agricultural Economics Association.
    20. Johnson, D. Demcey & DeVuyst, Eric A. & Nganje, William E., 2000. "Supply-Side Risks And Malting Barley Procurement And Storage," 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia 36367, Western Agricultural Economics Association.
    21. Riley, John Michael & Williams, Brian R., 2013. "Cow-Calf Industry Expansion on the Horizon? Market Signals vs. Outside Factors," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 143044, Southern Agricultural Economics Association.

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