Seasonal Quality Premiums for Wheat: A Case Study for Northern Germany

Loy, Jens‐Peter; Holm, Thore; Steinhagen, Carsten; Glauben, Thomas

doi:10.1002/agr.21387

Cited by 5 publications

(4 citation statements)

References 14 publications

(23 reference statements)

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“…This means that they may sell their products more promptly when prices are high and more hesitantly when prices are low (Vollmer et al, 2019). For those large‐scale farmers who grow different varieties of agricultural products simultaneously, the seasonal changes in price premiums on agricultural products provide them with opportunities to increase their profits by adjusting their selling strategies (Loy et al, 2015). Moreover, compared with small‐scale farmers in developing countries, large‐scale farmers in developed countries may have more opportunities to use financial derivatives to hedge their value (Goodwin & Schroeder, 1994; Patrick et al, 1998; Shapiro & Brorsen, 1988; Tomek & Peterson, 2001).…”

Section: Introductionmentioning

confidence: 99%

Price expectations, risk aversion, and choice of sales methods for large‐scale farmers under incomplete market conditions

Peng

2022

Agribusiness

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Large-scale farmers' sales methods and prices are crucial for them to realize their production value. In this study, we consider conditions that involve incomplete insurance, futures, and product markets to construct a sales decision-making analysis framework for large-scale farmers and to reveal the influence mechanism of different sales methods. We empirically examine data from field surveys and subjective preference experiments involving 373 large-scale grain farmers in four provinces in China. The results reveal that large-scale farmers' ability to anticipate prices and their degree of risk aversion are important for their choices of sales methods because of the incomplete insurance, futures, and product markets in developing countries. Price expectations reflect farmers' judgments of future price trends.Therefore, large-scale farmers who anticipate an increase in grain prices will choose to postpone grain sales to potentially maximize profits. The degree of risk aversion determines whether farmers will sell several times to avoid normalized price volatilities. Risk-averse largescale farmers will choose a multiperiod sales method, while risk-loving ones will choose a single-period delayed sales method.

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Section: Introductionmentioning

confidence: 99%

Price expectations, risk aversion, and choice of sales methods for large‐scale farmers under incomplete market conditions

Peng

2022

Agribusiness

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“…The hedonic price model has been used in this manner in past studies: recent examples include Loy et al. (), Srinivas et al. () and Terfa et al.…”

Section: Estimation Strategymentioning

confidence: 99%

The influence of proximity to market on bean producer prices in Nicaragua

Ebata

Pacheco²,

Cramon‐Taubadel

2017

Agricultural Economics

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Transport costs are an important determinant of smallholder welfare in developing countries. In particular, transport costs influence the prices that smallholders receive for their produce. We propose a simple way of quantifying this influence. Taking the example of bean producers in Nicaragua, we employ a hedonic price model to estimate the effects of a smallholder's proximity to markets on the prices that he/she receives, while controlling for other factors such as the volume and quality of beans sold. We find that on average each additional minute of travel time reduces farm gate prices by 2.5 cents per quintal. Based on these results, the annual income from bean sales of the average smallholder in our sample would increase by between 24 and 110 USD if travel time to markets were reduced by 25%. Estimates of this nature can make an important contribution to cost-benefit assessments of infrastructure investments.JEL classifications: Q12, Q13, O18

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“…Farmers who can better anticipate and appropriately manage quality-based price variation (e.g., through intertemporal storage and/or wheat segregation and mixing strategies) may be able to capture additional value (and lower reductions in value) of their product. This research contributes to an existing literature that considers wheat-quality premiums by examining factors underlying wheat-quality pricing schedules and developing models that could assist wheat producers, procurers, and public institutions (such as the USDA and university extension programs) to better anticipate the market equilibrium level of protein premiums/discounts during a marketing year (for example, see Bale & Ryan, 1977;Wilson & Gallagher, 1990;Larue, 1991;Carlson et al, 1993;Parcell & Stiegert, 1998;Smith, 2000;Loy et al, 2015).…”

Section: Introductionmentioning

confidence: 99%

Quality forecasts: Predicting when and how much markets value higher‐protein wheat

Bekkerman

2021

Canadian J Agri Economics

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Wheat markets stand out among other major crop commodity markets because pricing at the first point of exchange—typically a grain handling facility—is differentiated on specific quality characteristics. Moreover, the premiums and discounts that elevators offer to obtain grain of specific quality can be significant. The relative importance of quality premiums and discounts to farm‐level production and marketing decisions demonstrate a need to quantitatively measure and explain factors that affect elevators' wheat‐quality pricing decisions. This study develops an informed expectation model of elevators' quality‐based pricing strategies and empirically estimates the model from a lengthy dataset of weekly price observations. I find empirical evidence that elevators use linear pricing schedules, but more aggressively discount wheat with protein levels lower than a baseline than reward higher‐protein wheat. The results also indicate that weather characteristics, futures contract price indicators, and USDA Crop Progress reports are contributors to predicting the new crop protein premiums and discounts, and that out‐of‐sample accuracy for predicting how grain elevators will value wheat protein ranges between 70% and 80%.

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Seasonal Quality Premiums for Wheat: A Case Study for Northern Germany

Cited by 5 publications

References 14 publications

Price expectations, risk aversion, and choice of sales methods for large‐scale farmers under incomplete market conditions

Price expectations, risk aversion, and choice of sales methods for large‐scale farmers under incomplete market conditions

The influence of proximity to market on bean producer prices in Nicaragua

Quality forecasts: Predicting when and how much markets value higher‐protein wheat

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