Quality Uncertainty and Challenges to Wheat Procurement

Issues related to quality uncertainty in wheat producing countries have escalated in importance in recent years. While Canada addresses these issues in part through variety regulations, firms in the United States resolve these through varying commercial strategies. Conventional alternatives for procurement range from spot purchases with specifications for easily measurable characteristics, to varying forms of strategies with precommitment. In grains, these are complicated by intrinsic uncertainty associated with functional qualities that are not easily measurable and that procurement costs vary spatially. Thus, shifting origins may involve higher cost due to having to bid grain away from its best market. We posed alternative procurement strategies and developed analytical models to evaluate the costs and risks of these in the case of hard red spring (HRS) wheat. Climatic conditions are a source of uncertainty in functional performance which reduces incentives for contracting and vertical integration, and poses a challenge to any form of integrated supply chain management. Les problèmes liés à l'incertitude quant à la qualité des approvisionnements des pays producteurs de blé ont augmenté au cours des dernières années. Tandis que le Canada s'attaque à ces problèmes en imposant divers règlements, des entreprises états‐uniennes les résolvent en adoptant diverses stratégies commerciales. Les moyens d'approvisionnement traditionnels varient des achats au comptant assortis de critères pour les caractéristiques facilement mesurables, à diverses stratégies comprenant un pré‐engagement. Dans le secteur des céréales, la situation est compliquée par l'incertitude intrinsèque quant aux qualités fonctionnelles qui ne sont pas facilement mesurables et le fait que les coûts d'approvisionnements varient d'un endroit à l'autre. Par conséquent, s'approvisionner dans d'autres pays pourrait entraîner des coûts plus élevés en privant le secteur de son meilleur marché. Nous avons formulé d'autres stratégies d'approvisionnement et élaboré des modèles analytiques pour évaluer les coûts et les risques de ces stratégies dans le cas du blé de force roux de printemps. Les conditions climatiques sont une source d'incertitude de la qualité fonctionnelle qui diminue les incitatifs pour la conclusion de contrat et l'intégration verticale et qui pose un obstacle pour toute forme de gestion intégrée de la chaîne d'approvisionnement.     

Factors Influencing Illinois Farmland Values

A hedonic model of Illinois farmland values is estimated using county-level cross-section time-series data. Explanatory variables include land productivity, parcel size, improvements, distances to Chicago and other large cities, an urban–rural index, livestock production through swine operation scale and farm density measures, population density, income, and inflation. The inclusion of spatial and serial correlation components substantially improves the model fit. Farmland values decline with parcel size, ruralness, distance to Chicago and large cities, and swine farm density, and increase with soil productivity, population density, and personal income.     

Actuarial Fairness of Crop Insurance Rates with Constant Rate Relativities

Increased availability and demand for low-deductible crop insurance policies have increased focus on crop insurance rating methods. Actuarial fairness cannot be achieved if constant multiplicative factors are used to determine how premiums change as coverage levels increase. A comparison of premium rates generated by the factors used by the two most popular crop insurance products with those generated by a standard yield distribution shows that the popular insurance products overcharge for low-deductible policies in most counties. This overpricing may explain why large premium subsidies were required to induce farmers to move from low-deductible to high-deductible policies beginning in 2001.     

Including Imperfect Competition in Spatial Equilibrium Models

Following Martin's paper on quadratic spatial equilibrium models this paper presents ways to incorporate imperfect competition in these models by altering the objective function of the quadratic program. This paper shows how the standard Cournot and Slackelberg equilibria may be modelled. The paper also describes the new theoretical models of consistent conjectural variations and how they may be translated into quadratic spatial equilibrium models. Situations that are likely to be modelled are discussed and appropriate models are presented. More complicated equilibria that cannot be modelled by simple adjustment of the quadratic objective function are also discussed.
Aprés la composition de Martin sur les modeles de L'équilibre quadratique et spatial, nous presentons des moyens d'incorprer la compétition imparfaite dans ces modeles en modifiant la fonction objective du programe quadratique. Nous montrons comment on peut modeler les équilibres Cournot et Stackelberg. Nous décrivons aussi les nouveaux modeles théoriques des variations consistentes et conjecturales, et comment ils peuvent éytre traduits en modeles de l'équilibre quadratique et spatial. Nous discutons les situations qui peuvent probablement étre modelées et nous presentons des modeles qui nous semblent appropriés. Nous discutons aussi des équilibres plus compliqués qui ne peuvent pas étre modelés par un simple ajustement de la fonction objective et quadratique.     

Transparency and Bidding Competition in International Wheat Trade

One of the trade policy issues identified by U.S. interests, including grower groups, traders and policy makers, is price transparency. This has been a point of contention between the United States and Canada as well as other exporting countries with state trading enterprises (STEs). The transparency problem generally refers to the inability to observe terms of trade (including price, quality, credit, etc.)offered by STEs, and the potential strategic advantage this provides in bidding competition. A game theory model of import tendering is developed in this paper to examine the effects of information asymmetry among rivals. Several stylized examples are used to illustrate aspects of competition and to analyze effects on bidding strategies. Results indicate that:

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  Less uncertainty among rivals reduces equilibrium bids and prices.

       

Exact Aggregation in Mathematical Programming Sector Models

This paper defines the exact aggregation problem in the sector modeling context and develops the theoretical basis of an aggregation procedure based on extreme point representation. Under the assumption of full information on all firms this procedure yields exact aggregation, irrespective of firm heterogeneity, and it also suggests empirical procedures for cases when full information is not present. Although aggregation in such cases is in general not exact, empirical evidence shows that little error is involved, and the aggregate model is rather stable under various parameter changes.
Le présent document définit le problème de l'agrégation exacte dans le contexte de la modélisation d'un secteur et énonce la base théorique d'une méthode d'agrégation fondée sur la représentation des points extrêmes. Si on part de l'hypothèse qu'on détient toutes les informations sur les entreprises, la méthode proposée donne une agrégation exacte de ces dernières, peu importe leur hétérogénéité. Les auteurs suggèrent aussi des méthodes empiriques lorsque certaines données font défaut. Même si, dans ces cas, l'agrégation est rarement exacte, les résultats indiquent que les erreurs sont peu nombreuses et que le modèle agrégé garde sa stabilité meme advenant la modification de divers paramètres.     

Turning a Global Crisis into a Tourism Opportunity: the Perspective from Tuvalu

The Global Financial Crisis (GFC) of 2008/2009 had a major impact on many small island states. In the case of Tuvalu, the GFC uncovered structural weaknesses in the national economy including the need to build alternative sources of income. Given the country's location and its rich marine resources, tourism is possibly the only new industry that has some capacity to generate new revenue streams. This article examines the problems that the country will face if it decides to pursue tourism and offers three options for tourism development including diving, ‘off the beaten track’ experiences and voyeuristic ‘last chance’ tourism. Copyright © 2012 John Wiley & Sons, Ltd.     

Strategic integration of HRM and firm performance in a changing environment in China: the impact of organisational effectiveness as a mediator

In the context of dramatic changes in China, this paper investigates the role of organisational effectiveness as a mediator in the relationship between the strategic integration of human resource management (HRM) and firm financial performance. Our study is based on the survey responses of 618 managers in state-owned and private (domestic and foreign-invested) enterprises in China. While most studies of the linkage between HRM practices and firm performance in China have measured firm financial performance or used an ad hoc combination of financial and non-financial indicators, we argue for a distinction to be made between non-financial organisational effectiveness and financial performance. As hypothesised, controlling for sector (state-owned vs. private), we find positive relationships between perceived changing business environment and strategic integration of HRM, and between strategic integration of HRM and organisational effectiveness. Our research adds an important conceptual link by showing that organisational effectiveness plays an important role as a mediator in the HRM and firm financial performance relationship and reinforces the importance of the organisational and environmental context for HRM.