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2008
Risk
and Profit Conference
August 14-15, 2008
August 14-15, 2008
K-State Alumni Center
Manhattan, Kansas
Manhattan, Kansas
Breakout Sessions
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Registrants may attend 8 of the 20 sessions listed below. Please note (by number) which sessions you plan to attend on your registration form. |
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1. Managing the
Threat of $3 Corn Art Barnaby The new Farm Bill has added “free” Supplemental Revenue (SURE) coverage that is directly tied to crop insurance. When growers select their level of crop insurance protection they are also selecting their level of “free” SURE coverage. In addition, the Farm Bill and the administration made a number of important changes to crop insurance that will directly impact the risk management decisions made by growers. It is unlikely all of the details will be available for September 30 crop insurance signup. |
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2.
Current Issues
Affecting Retail Agribusinesses and Cooperatives Michael Boland The objective is to discuss factors affecting the future of retail agronomy and grain origination businesses. Many different factors are driving the restructuring of these industries. Professor Boland will address these issues and their implications for your local input suppliers and grain marketers. |
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3. Financial Planning and FINPACK ANALYSIS Duane Hund and LaVell Winsor Record high grain prices have increased the potential for profit at the same time double digit increases in input costs are eating away at those potential profits. Large losses may result if production falls short of expectations. Livestock profitability must be carefully managed in this era of rapid increases in costs of production. Now more than ever careful financial planning is necessary to analyze risks and plan profitable strategies. "Finpack" analysis will aide in the decision making process. Finpack can also provide key information to operations transferring to the next generation. This presentation will provide information about the Finpack program, the farm analysts who facilitate the analysis and the benefits of long range planning for the farm and ranch business. |
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4. Labor Efficiency and Productivity Michael Langemeier This presentation documents differences in labor efficiency and productivity among farms. Farms will be categorized using labor efficiency and labor productivity measures. The following variables will be compared among the farm categories: value of farm production; net farm income; total acres; acres devoted to corn, grain sorghum, soybeans, and wheat; percent of income from beef, dairy, and swine enterprises; expense ratios; profitability ratios; and financial efficiency ratios. |
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5.
& 6. Global Supply and
Demand : Can We Feed the World (Part I and Part II) Michael Woolverton and Daniel O'Brien We examine increases in global demand for food driven by population and economic growth, changing foodways, competition from biofuels and other industrial uses for grain, and the likelihood of demand changing; especially decreases in demand that would cause commodity prices to fall. We estimate the ability of global agricultural producers to increase production of commodities to meet global demand. We will talk about areas of the world with the potential to expand production and constraints to increasing production such as land use competition, water availability, government policies, and costs of production and will highlight the critical role of energy. |
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7.
Super-Sized Crop Farms:
What Does It Take? Terry Kastens and Kevin Dhuyvetter As consolidation in agriculture continues, producers find themselves having to grow their operations to remain competitive or look to outside sources for supplemental income. What are the implications of growing your operation? This session will discuss economies of size and trends in agriculture, specifically focusing on management strategies, issues, concerns associated with rapid growth. |
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8.
Cover Crop Economics: Costs,
Risks and Adoption Jason Bergtold and Lucas Maddy Can conservation tillage go further and produce greater rewards, both economically and environmentally? The addition of cover crops to existing conservation production systems may provide a unique opportunity for farms in Kansas. Cover crops can provide drought protection, improve soil quality, further reduce erosion, provide weed suppression, improve water quality and improve cash crop productivity. These benefits come at a cost of planting and managing the cover crop. The purpose of this presentation is to explore the opportunities for cover crop use in Kansas, considering the economic and environmental benefits and costs, while discussing adoption limitations and concerns in the mind of a risk-aware producer. |
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9.
Credit Scores of Kansas
Farmers Allen Featherstone and Michael Langemeier The financial health of the Kansas agricultural economy has been excellent for the past couple of years with farm income at record levels. However, the overall U.S. economy is experiencing a significant slowdown in growth, a credit crisis, and record energy prices. Although the farm sector has been shielded from the downturn in the economy and has coped with record energy prices due to record high crop prices, it may not be long before the agricultural sector enters a downturn. In fact, those farms involved in livestock production are already beginning to experience stress. The last major downturn in the sector occurred in the early 1980s when farm bankruptcy issues dominated the news. Is the farm sector poised to enter this type of crises in the early 2010s? |
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10. Livestock: Who Wins, Who Loses, and Why? Orlen Grunewald Rising commodity prices and high food price inflation in the United States and globally have gained media attention. Much of the attention has focused on the causes and impacts of the commodity boom. Farmers and agribusinesses are interested in whether the commodity boom is another bubble ready to burst or if there are fundamental, structural changes that have created a higher plateau for commodity prices. This presentation will focus on some of the purported causes of the recent commodity price increases to determine their impact on the long-term viability of the livestock industry. |
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11.
Impacts of Climate Change on
Irrigated Agriculture in Northwest Kansas Bill Golden and Jeff Peterson Scientists who study the dynamics of the atmosphere normally agree that increasing atmospheric concentrations of carbon dioxide and other gases increase the earth’s natural greenhouse effect and result in global warming. In this research, we evaluate the impacts of future climate changes on the groundwater resources in the Ogallala aquifer, and describe the resulting economic implications. |
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12. Strong Dollar/Weak Dollar: An Economist's View on the Value of the US Dollar
and Its Impact on Agriculture Paul Clark, Kara Ross, and Kelly Chen Recently, the popular press has been full of stories about the damaging effect of the ‘weak’ US dollar. Conventional trade theory tells us that as the price of the dollar relative to that of the currency of a trading partner declines (weakens) the export sector benefits and the import sector suffers. In other words, the trading partner can buy more units of a commodity priced in dollars for the same number of Euros or Yen. As a result, there is an increase in the export demand for the commodity, which contributes to an increase in the domestic price. On the other hand, prices paid by the home country for imported goods increase, raising the cost of production. The purpose of the paper is to first review the basics of foreign exchange and what it means to say a currency is ‘weak’ or ‘strong’. Secondly, we compare the trade-weighted exchange rate of the US dollar to the CRB commodity price index and NASS ‘Prices Paid by Farmers Index’ to investigate how changes in the exchange rate of the dollar impact prices received and paid by farmers. |
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13. Food Crisis or Malthus Apologists? Explaining the Reactions to Global Food
Price Inflation Vincent Amanor-Boadu Recent increases in food prices engendered panic in many policy circles and drew calls for new regulations. This discussion paper casts the food crisis conversation within the context of the dynamics of global economic shifts. It argues that the perceived problem is a result of income increases around the world, but especially in India and China, that have shifted consumer consumption profiles. The paper suggests the need to reframe the situation as an opportunity and develop strategies to seize it. It cautions against any attempts to unduly interfere in the market with new regulations that would prevent the seizure of embedded opportunities and send wrong signals to the market. |
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14. A New Risk Era? Are Traditional Risk Management Tools/Strategies Still
Effective? Kevin Dhuyvetter and Ted Schroeder Price variability, market volatility, limit moves… These are some of the terms that are becoming common in everybody’s vocabulary these days. What are the implications of this increased risk from a marketing standpoint? Should producers be increasing their use of risk management tools, or are these tools even effective in this environment? This session will discuss price risks in the current environment and what impact they have on various marketing tools/strategies. |
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15. Cost of Gain and Death Loss Trends in the Cattle Feeding Sector Rodney Jones In the current environment of high feed prices, cost-of-gain in cattle feeding is a hot topic of discussion. This presentation will summarize recent research that examined cost of gain trends in both steer and heifer feeding, and related research that looked at death loss trends in the cattle feeding sector and how death loss is related to feeding cost of gain. The results have implications for those planning cattle feeding programs. Contemporary cost of gain data and projections will be discussed, as well as implications for the cattle feeding industry. |
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16. Using a Computer-Based Irrigation Decision Tool (WARAT) to Asses the Risk of
Limited Irrigation in Northwest Kansas Paul Clark, Bill Golden, and Leah Tsoodle Irrigators facing reduced water allocations, either from declining water levels or policy mandates, are confronted with how to maximize profits and manage risk under reduced water allocations. A producer may elect to keep planting his existing crop mix at the reduced water level and accept lower yields, fully water fewer acres, or shift production to alternative crops. Decisions of this sort may well determine the producer’s future viability. Because of the complexity of those decisions, he will most likely rely on computer based analytical tools to support the decision-making process. This paper applies a web-based decision tool (WARAT), which is being developed by a team of researchers at Kansas State University. The tool combines crop specific production and risk functions, crop production budgets, and weather data to identify combinations of crops mixes and water allocations that will come closest to meeting a producer’s profit goals. The tool will also provide a measure of the risk associated with each profit goal. To illustrate how the tool might be used to help a producer determine crop mixes and water allocations for his profit and risk goals, we run scenarios for an irrigated farm in Sheridan County, KS as we reduce the water allocation in 10% increments. |
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17. Kansas Ethanol Production and Its Effect on Crops, Livestock, Trucking and a Community Josh Roe and Daniel O'Brien Currently, there are ten “traditional” ethanol plants in production in Kansas. In this discussion we will a) show their effect on local and statewide grain usage, b) quantify local storage availability, and c) examine the potential for local livestock feed use of distiller’s grain. We will also quantify the demand the Kansas ethanol industry has for the trucking sector and take an in-depth look at the economic impact of one ethanol plant on its surrounding community. |
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18. A New Risk Era? How Will Crop Rental Arrangements Be Impacted? Kevin Dhuyvetter and Terry Kastens Producers and landowners are currently seeing record high prices for many commodities produced in Kansas, but with these high prices we are also seeing extremely high volatility. Plus, prices for many inputs are at all-time highs. What impacts do these conditions have on crop share and cash rental arrangements? This session will discuss the principles behind leasing arrangements and how they apply in the current environment. |
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19.
Web Ways: Intelligent Internet
Interaction Rich Llewelyn The Internet is an excellent way to obtain needed information. However, rapid changes in technology, the abundant and varied information available, as well as the increased mobility and interactivity allowed by the Internet can create challenges and difficulties in efficiently accessing and using the information on the web. Though not comprehensive, this presentation notes some of the current trends in Internet usage (Web 2.0) and seeks to help users to make more effective use of the Internet. The AgManager.info website is introduced and used as an example of some of the issues discussed. |
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20. Farm Tax and Retirement Planning in Good Economic Years Kent Miller and Lynn Hennigan Kansas farmers realized record high farm incomes during 2007. Kent and Lynn will review tax management strategies that will help soften the tax bite in 2008. They will review new tax legislation that significantly expands depreciation available on purchases of equipment and buildings in 2008. Retirement plans for farmers and their employees will also be discussed. |
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