Recent differences in the measurement of farm efficiency may be related to the methods employed. Here, four alternative production frontiers are estimated using time‐series, cross‐section data for a sample of Illinois grain farms. Efficiency measures are found to be highly correlated between nonparametric methods, and between parametric methods. However, large differences are noted when efficiency measures are compared between nonparametric and parametric methods. An analysis of farms with large differences, which are efficient under the nonparametric method, indicates that correlations between efficiency measures are much higher when these firms are excluded.
he newly traded options on agricultural futures contracts offer speculative T instruments to investors and additional pricing strategies to agricultural producers and agribusinesses. Regardless of how and why the options are used, the level and expected change in option premia are obviously of central importance in the decision-making process. Traditional option pricing models provide an excellent framework for initial evaluation of the premium. However, during the past decade, numerous variants of the traditional model have been developed to account for theoretical assumptions which may not hold in practice.The objectives of this article, corresponding respectively with the five following sections, are: (a) to describe the fundamental concepts leading to traditional optionpremium solutions through examples which assume a simple dynamic process for the underlying commodity price; (b) to identify potential factors causing market premia to differ from the traditional solution; (c) to describe criteria, given market premia, which can be used to identify which of these factors are important; (d) to exemplify a factor identification process by examining the first five months of trading in the soybean futures option market; and (e) to suggest research needs.
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