Investment decisions in hog finishing: an application of the real options approach

In this paper, option-pricing theory is applied to an investment problem in hog production. A stochastic simulation model capable of pricing American-type options is developed. This is achieved by recursive calculation of the exercise frontier. The model is used to determine the investment trigger and the disinvestment trigger for a pig-fattening barn under German market conditions. It turns out that the investment trigger, taking into account the value of waiting in an uncertain environment, can be considerably higher compared to classical investment criteria such as the net present value. This offers an explanation as to why farmers are indeed reluctant to invest in hog production. Another finding is the sensitivity of the option prices with respect to the stochastic process that is assumed for revenues and variable costs of the production activity.     

Developing Economic Indexes for the Quebec Hog/Pork Industry

The Quebec hog/pork industry has grown significantly over the last 25 years. Explanations of this growth in the literature have centered on government policies, expansion of profitable market opportunities, and reforms in marketing institutions. A coincident index model that trends with total hog slaughters in Quebec is estimated using a dynamic factor model. It implicitly defines a variable that measures the overall state of economic activity in the Quebec hog/pork industry. The results show that reforms in hog marketing institutions are strongly correlated with the economic expansion of the industry. A leading economic index also forecasts the growth of the coincident index using leading variables. The overall statistical performance of the leading coincident index is disappointing, but the growth in American inventories of frozen pork meat is shown to have useful predictive value.     

Nonlinear adjustments in deviations from the law of one price for wholesale hog prices

This article applies the Band‐Threshold Autoregression (Band‐TAR) model to investigate whether the law of one price (LOOP) holds in Taiwanese wholesale hog markets during the period from May 1987 through December 2003. We find evidence of a nonlinear mean reversion in deviations from the LOOP for relative hog prices. Our empirical study confirms the presence of thresholds and provides strong evidence in support of the view that the regional hog markets have been tightly integrated in Taiwan and that the wholesale hog market in Taiwan is an efficient market economy. Furthermore, the estimated half‐lives from the nonlinear generalized impulse response analysis are as short as four months.     

Supply Management and Productivity Growth in Alberta Dairy

Specification of quota licenses as quasi-fixed inputs in a multi-variate flexible accelerator model of dynamic input adjustment reveals supply management's effect on Alberta dairy investment patterns and, thereby, on total factor productivity growth. Estimates of a dynamic dual model of Alberta dairy, using panel data from 1975–91, show that strong complementarity between cattle and quota licenses results in short-run cattle adjustments that are opposite in direction from the long-run adjustments. A model of total factor productivity growth under dynamic input adjustment shows that the distortions to cattle investment caused by investing in quota licenses adversely affects productivity growth. As a result, there is likely to be a significant understatement of single-period estimates of the cost of supply management in the dairy sector.     

Estimating Investment Rigidity within a Threshold Regression Framework: The Case of U.S. Hog Production Sector

This article addresses the issues of investment/disinvestment asymmetry and a possible existence of a sluggish regime in the demand for a quasi-fixed input in the U.S. hog production sector. Adopting a new threshold estimation procedure, quarterly data from 1970 through 2002 are used to estimate a regime-dependent investment demand equation for a quasi-fixed input, taking sows as a proxy. The results support the existence of three regimes over alternative specifications precluding the sluggish regime, confirming the existence of asset fixity in hog production. The results also highlight the importance of accounting for investment rigidity when estimating hog supply and variable input demands.     

中国生猪产业国际竞争力评价研究基于贸易与产业发展视角的比较分析

目的 中国是世界上最大的生猪生产国和消费国,科学评价中国生猪产业国际竞争力水平,对于提高生猪产业国际竞争力水平,促进生猪产业可持续发展,具有重要的理论和现实意义。方法 文章基于产业发展视角构建了包含资源禀赋竞争力、生产竞争力、消费竞争力和贸易竞争力4个一级指标及13个相关二级指标的生猪产业国际综合竞争力评价指标体系,利用1995—2018年生猪产业相关数据,对中国、美国、德国、巴西、西班牙、俄罗斯等生产、消费和贸易大国生猪产业国际综合竞争力进行评价,并与传统的基于贸易视角的竞争力评价结果进行对比分析。结果 研究发现,基于贸易视角与产业发展视角的测算结果存在一定差距。基于贸易视角的测算结果显示,中国生猪产业缺乏竞争力,且竞争力仍在持续减弱。基于产业发展视角的测算结果显示,中国生猪产业具有一定竞争优势。其中,中国猪肉消费竞争力极强,显著拉升了中国生猪产业国际综合竞争力水平;生产竞争力和资源禀赋竞争力也具有一定优势;贸易竞争力处于劣势地位,明显拉低了中国生猪产业国际综合竞争力水平。结论 建议中国生猪产业充分发挥巨大的内需优势,提升生猪产业国际竞争水平,实现生猪产业高质量发展。进一步提高中国生猪种业创新能力,保障优良种猪供给;提高生猪生产技术效率与经济效率,提升生猪养殖场组织化、标准化、规模化水平;稳定生猪生产饲料供给;建立生猪产业风险防范机制。     

Hog Industry Structure and the Stringency of Environmental Regulation

The paper develops a comparative statics model of long‐run industry equilibrium in the presence of size‐based environmental regulation stringency and applies the model to the U.S. hog industry. The economic model shows that when size‐based environmental stringency is also size biased, large farms downsize, expand, or do neither depending on how environmental stringency shifts their marginal production cost relative to their average cost. Empirical testing using data from the top‐ten hog‐producing states suggests that environmental regulation stringency has limited impact on small farms and leads to a reduction in the number of large farms. Results cannot reject positive size bias at the farm level due to the stringency of environmental regulation.     

Exploring Farm Investment Behaviour in Transition: The Case of Russian Agriculture

This paper analyses the investment behaviour of Russian farms during the period of economic stabilisation that followed Russia’s financial crisis of 1998, and is the first to apply the error‐correction investment model to describe farms’ investment behaviour in the transitional context. Additionally, the paper employs the error‐correction and the adjustment‐cost model to test for differences in the investment behaviour between various farm categories. The results show that in general Russian farms exhibited an error‐correcting behaviour in the period under investigation. From 1999 to 2005 the output–capital gap was closed by an average rate of 10% per year. Estimates of the adjustment‐cost model show that Russian farm investments are very sensitive to the sales–capital ratio, suggesting that Russian farms exhibit increasing returns to scale and positive expectations about future revenues. Yet, such farm characteristics as ownership structure, access to input markets and also regional specifics were found to be decisive for farm investment not only in the short but long term too. Finally, the results show that the adjustment‐cost model is adequate for the evaluation of differences in short‐term investment behaviour, whereas it is noticeably less powerful for investigating differences in the farms’ long‐term investment behaviour.     

Are piglet prices rational hog price forecasts?

In this paper a simple model is developed in which the piglet price serves as a forecast for the hog price 3 months ahead. The model is tested on data from Northern Europe, viz. Norway, Sweden, Denmark and Finland during the period 1982-1992. The empirical results lend strong support to the hypothesis that hog producers hold rational expectations when pricing the piglets. Thus, the weight adjusted piglet price typically represents an unbiased (conditional) forecast with unsystematic errors for the hog price one quarter later.     

生猪价格的省域空间溢出效应及其动态关联分析——基于空间面板模型和DY分解

目的 分析生猪价格的省际空间溢出效应,并通过各省域间价格联动效应探究我国生猪价格体系的传导机制,对治理我国生猪产业区域不均衡发展问题具有重要意义。方法 文章建立空间杜宾模型探索生猪价格的空间传导特性,引入溢出效应分解分析替代品价格、成本要素对省域生猪价格的冲击效应,并运用广义预测误差分解测定省际生猪价格关联水平及方向。结果 （1）我国生猪价格波动具有显著空间相关性和异质性,其空间集聚特征随时间推移愈发显著,产业布局呈现“高—高南部簇拥,低—低东向西扩”的空间演变特征。（2）省内替代品价格、成本要素对生猪价格波动的影响显著但作用力度有限,省际溢出效应是生猪价格发生空间传导的主导因素。（3）鸡肉价格与省内、省外的生猪价格存在密切正向关联;牛肉价格波动推动本省生猪价格同步波动;豆粕价格波动对本省或邻省生猪价格均起到正向推动作用;玉米价格变化引起本省或邻省生猪价格的负向变化。（4）辽宁、河北、吉林、河南等省的正向净关联度较大,属于波动“主导者”或“发动者”;上海、广西、重庆等省市的负净关联度较大,隶属价格波动的“接收者”;江苏、湖南、福建等省市的关联度和全国平均关联度持平,在价格波动传导体系中属于波动“中介者”。结论 有关部门应针对不同省域在生猪价格传导体系中所发挥职能的不同,分级管控生猪价格,同时促进地方畜牧业经济发展,不断优化我国生猪养殖产业区域布局。     

Subtherapeutic Antibiotics and Productivity in U.S. Hog Production

Antimicrobial drugs are fed to hogs at subtherapeutic levels to prevent disease and promote growth. However, there is concern that the presence of antimicrobial drugs in hog feed is a factor promoting the development of antimicrobial drug-resistant bacteria. This study uses a treatment-effects sample-selection model to examine the impact that feeding antibiotics has on the productivity of U.S. hog operations. No relationship was found between productivity and antibiotics fed during finishing, but productivity was significantly improved when antibiotics were fed to nursery pigs. Restrictions on feeding antimicrobial drugs during the nursery phase would likely impose significant economic costs on U.S. hog producers.     

Risk Preferences of Dairy and Hog Producer in Quebec

The objective of this study is to investigate the nature of risk preferences of Quebec dairy and hog producers. The direct elicitation of utility method is employed to determine producers'degree of risk aversion. The Delphi process is used to obtain more refined and realistic responses. The results reveal that the risk preferences of the randomly selected Quebec farmers are highly diverse. The percentage of risk-taking farmers ranges from 8% to 23% depending upon the level of investment and the nature of the enterprise. On average, the majority of farmers in both groups are found to be risk averse. Based on the differences between the means as well as distributions, although not significant in all cases, hog producers are found to be consistently more risk averse than dairy producers. Moreover, the gap between the two groups widens as the level of investment increases. The implications of this result are that the stability of farm income due to supply management in dairy sector may facilitate investments of a given risk (for example, adoption of a new technology) more so than it would in the hog sector.     

Canadian Hog Supply Response: A Provincial Level Analysis

Canada's hog sector has faced two decades of tumultuous growth, yet there are no recent estimates of supply response. This study uses state‐space methods to account for a multiplicity of autonomous structural changes impacting the sector and determines if the fundamental relationship between supply response and hog prices has changed from previous estimates. The results are consistent with prior research but offer the reader previously unavailable estimates of supply response with respect to feed prices and the variability of hog and feed prices. Feed price elasticities are somewhat larger than hog price elasticities. The effects of price risk for supply response appear quite muted but the impacts of feed price risk are greater than for hog price risk.     

江苏省水利基建项目投资补助政策调整研究

运用水利投资分析理论,根据国家和省级财政管理体制改革、市县财政保障能力分类分档调整等新政策、新要求,立足于江苏水利基建项目投资管理实际,分析了现行政策对"十二五"水利基建的贡献、出现的政策导向性不足、对"十三五"水利建设目标的不适应以及与财政政策调整的不协调等问题,提出省以上投资补助政策调整建议。以"十三五"全省水利基建项目投资为算例,测算分析政策调整后投资结构变化情况,并提出资金筹措建议。     

我国天然气市场发展思路

我国天然气市场正处于发展期,具有区域分割性、消费结构不合理性、主体不明确性的特征。目前,影响我国天然气市场发展的主要因素是资源因素、基础设施因素、价格因素和政策法规因素。针对我国天然气市场发展的现状和问题,我国天然气市场的发展思路是:合理利用国内外两种资源;完善天然气管网系统建设;推进天然气定价机制改革;实现天然气行业有效监管;建立天然气行业相关法律体系。     

A model of entry–exit decisions and capacity choice under demand uncertainty

Many investment decisions of agribusiness firms, such as when to invest in an emerging market or whether to expand the capacity of the firm, involve irreversible investment and uncertainty about demand, cost or competition. This paper uses an option‐value model to examine the factors affecting an agribusiness firm's decision whether and how much to invest in an emerging market under demand uncertainty. Demand uncertainty and irreversibility of investment make investment less desirable than the net present value (NPV) rule indicates. The inactive firm is more reluctant to enter the market when it takes into account demand uncertainty because it preserves the opportunity of making a better investment later. The active firm is more reluctant to abandon the investment because there is an option value of keeping the operation alive. There is a greater distance between the entry and exit thresholds under the option‐value approach than under the NPV rule due to demand uncertainty. The results have implications for agribusiness decision‐making.     

断裂型二元结构矿业经济及其优化问题探讨

市场经济的发展导致了断裂型二元结构矿业经济的产生。断裂型二元结构矿业经济主要表现在矿业经济在运行的体制机制、投资结构、生产效率和用工制度等方面,由于资源的集中和集聚,导致了资源的开发、投资和生产结构的变化造成了断裂型二元结构矿业经济的产生,优化这种结构必须采取尊重小矿存在的合理性并加强其自身建设、加强政府干预和管理,有序推进矿业整合、构建帮扶体系等系列措施。     

海岛产业发展及布局的国际案例及借鉴——以长岛县为例

论文从分析长岛县海岛产业的发展现状入手。然后,分析了全球海洋产业的发展趋势-"四高"倾向以及产业结构调整、港口经济迅速发展等。最后,通过分析国内外海岛产业发展的成功经验,提出了长岛县开发的几点有益借鉴,包括:1)渔业要向品牌、高效、生态方向发展,完善渔业法规条例以及制定发展计划;2)发展特色工业,重点发展海洋水产加工业;3)实施旅游精品战略以及改善交通条件和规划旅游地产开发;4)政府要重视海岛开发前后角色转变,制定科学规划以及平衡开发与保护。     

Adoption of organic farming in Germany and Austria: an integrative dynamic investment perspective

Farm‐level adaptation to changing economic environments is often slower than expected. Technological innovations, for instance, are frequently adopted at a later date than the net present value of investment suggests. This can be explained by a model of “investment under uncertainty,” which consistently accounts for uncertainty, sunk costs, and the flexibility of investment timing. Its essential conclusion is that, due to temporal opportunity costs, critical incremental cash flows that trigger investments might be higher than those needed for simple cost recovery. This accounts for an ostensible reluctance to invest (economic hysteresis). In this article, we demonstrate how slow conversion to organic farming in general, and the different rates of conversion in Germany and Austria in particular, can be explained by the new investment theory.     

Investment planning under uncertainty and flexibility: the case of a purchasable sales contract*

Investment decisions are not only characterised by irreversibility and uncertainty but also by flexibility with regard to the timing of the investment. This paper describes how stochastic simulation can be successfully integrated into a backward recursive programming approach in the context of flexible investment planning. We apply this hybrid approach to a marketing question from primary production which can be viewed as an investment problem: should grain farmers purchase sales contracts which guarantee fixed product prices over the next 10 years? The model results support the conclusion from dynamic investment theory that it is essential to take simultaneously account of uncertainty and flexibility.