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As the climate in the midwestern United States becomes increasingly variable because of global climate change, it is critical to provide tools to the agricultural community to ensure adaptability and profitability of agricultural cropping systems. When used by farmers and their advisors, agricultural decision support tools can reduce uncertainty and risks in the planning, operation, and management decisions of the farm enterprise. Agricultural advisors have historically played a key role in providing information and guidance in these decisions. However, little is known about what these advisors know or think about weather and climate information and their willingness to incorporate this type of information into their advice to farmers. In this exploratory study, a diverse set of professionals who advise corn growers, including government, nonprofit, for-profit, and agricultural extension personnel, were surveyed in four states in the midwestern Corn Belt. Results from the survey indicate that advisors are more influenced by current weather conditions and 1-7-day forecasts than longer-term climate outlooks. Advisors predominantly consider historical weather trends and/ or forecasts in their advice to farmers on short-term operational decisions versus longer-term tactical and strategic decisions. The main conclusion from this analysis is that opportunities exist to further engage the advisor community on weather and climate issues and, through them, the farmers who are managing the land. Keywords

This study outlines several possible structures for livestock revenue insurance. The policies take the form of an exotic option, an Asian basket option. The actuarially fair premiums for these policies are equal to the prices of the options they represent. Because of the complexity of pricing Asian basket options, we combined two techniques for pricing options to reach the actuarially fair premiums. Projected premiums, producer welfare, and program efficiency are evaluated for the insurance products and existing market tools. Using efficiency ratios and certainty equivalent returns, we compare the insurance policies to strategies involving existing futures and options.

Increased crop insurance subsidies have increased the demand for insurance at coverage levels higher than the traditional level of 65 percent. Premium rates for higher levels of yield insurance under the Federal Actual Production History (APH) program equal the premium rate at the 65 percent coverage level multiplied by a rate relativity factor that varies by coverage level but not by crop or region. In this paper, we examine the consistency of these constant rate relativity factors with the laws of probability by determining the maximum 65 percent premium rate that is consistent with a well-defined yield distribution. We find that more than 50 percent of U.S. counties have premium rates for corn, soybeans, and wheat that are not consistent with the laws of probability for coverage levels up to 75 percent. For coverage levels up to 85 percent, almost 80 percent of corn counties, 82 percent of soybean counties, and 80 percent of wheat counties have rates that are not consistent. Adding the further restriction that at least 15 percent of probability falls between 85 percent and 100 percent of APH yields implies that 92 percent of corn counties, 90 percent of soybean counties, and 95 percent of wheat counties have APH rates that are not consistent with the laws of probability for coverage levels up to 85 percent. These results imply that crop insurance rates under the APH program in most U.S. production regions at high coverage levels exceed those that could be generated by a well-defined yield distribution. AbstractIncreased crop insurance subsidies have increased the demand for insurance at coverage levels higher than the traditional level of 65 percent. Premium rates for higher levels of yield insurance under the Federal Actual Production History (APH) program equal the premium rate at the 65 percent coverage level multiplied by a rate relativity factor that varies by coverage level but not by crop or region. In this paper, we examine the consistency of these constant rate relativity factors with the laws of probability by determining the maximum 65 percent premium rate that is consistent with a well-defined yield distribution. We find that more than 50 percent of U.S. counties have premium rates for corn, soybeans, and wheat that are not consistent with the laws of probability for coverage levels up to 75 percent. For coverage levels up to 85 percent, almost 80 percent of corn counties, 82 percent of soybean counties, and 80 percent of wheat counties have rates that are not consistent. Adding the further restriction that at least 15 percent of probability falls between 85 percent and 100 percent of APH yields implies that 92 percent of corn counties, 90 percent of soybean counties, and 95 percent of wheat counties have APH rates that are not consistent with the laws of probability for coverage levels up to 85 percent. These results imply that crop insurance rates under the APH program in most U.S. production regions at high coverage levels exceed those that could be generated by a well-defined yield di...

Abstracthis paper examines the impact of ethanol expansion in the United States, brought about by higher crude oil prices, on agricultural commodity prices. Given the United States's stature as a major producer and exporter of many agricultural commodities, the resulting increase in commodity prices has spillover effects into the global market. Using the price changes estimated within a multi-commodity, multi-country agricultural modeling system, this paper attempts to show how an increase in world commodity prices would affect the costs of food baskets around the world and how higher food costs will impact food security, particularly in developing countries. In general, we find that countries where corn is the major food grain experience larger increases in food basket cost while countries where rice is the major food grain have smaller food basket cost increases. Countries where wheat and/or sorghum are the major food grains fall in between. Consequently, the highest percentage increases are seen in Sub-Saharan Africa and Latin America where food basket costs are estimated to increase by at least 10%. The lowest percentage increases are seen in Southeast Asia, with cost increases of less than 2.5%. AbstractThis paper examines the impact of ethanol expansion in the United States, brought about by higher crude oil prices, on agricultural commodity prices. Given the United States's stature as a major producer and exporter of many agricultural commodities, the resulting increase in commodity prices has spillover effects into the global market. Using the price changes estimated within a multi-commodity, multi-country agricultural modeling system, this paper attempts to show how an increase in world commodity prices would affect the costs of food baskets around the world and how higher food costs will impact food security, particularly in developing countries. In general, we find that countries where corn is the major food grain experience larger increases in food basket cost while countries where rice is the major food grain have smaller food basket cost increases. Countries where wheat and/or sorghum are the major food grains fall in between. Consequently, the highest percentage increases are seen in Sub-Saharan Africa and Latin America where food basket costs are estimated to increase by at least 10%. The lowest percentage increases are seen in Southeast Asia, with cost increases of less than 2.5%.

We project U.S. ethanol production and its impact on planted acreage, crop prices, livestock production, trade, and retail food costs. The projections are made using a multicommodity, multicountry, partial equilibrium model. Results indicate that expanded U.S. ethanol production will cause long-run crop prices to increase. In response to higher feed costs, livestock farmgate prices increase enough to cover the feed cost increases. If crude oil prices increase, the U.S. ethanol sector expands. Results of a 1988-type drought scenario combined with a large mandate for ethanol consumption show higher crop prices, a drop in livestock production, and higher food prices.T he recent emergence of biofuels as important agricultural commodities has generated interest in their likely impact on U.S. and world agriculture.