In an era of rapid consolidation in banking, the effect of mergers on the availability of credit to agricultural businesses is unclear. Commercial bank mergers have profoundly altered the urban credit marketplace and are positioned to do the same for the agricultural credit marketplace. Adjustment models are estimated with data on independent bank consolidations from 1988 through 1995. The regression results bode well for agricultural lending if acquiring banks have larger concentrations of assets in agriculture than acquired banks. Conversely, if acquiring banks have smaller concentrations than acquired banks, acquisitions have a negative impact on agricultural lending. Since most acquiring banks have smaller agricultural loan concentrations than acquired banks, there is concern for agricultural lending. However, other lenders are likely to fill credit gaps that develop.

Factors that affect the decision to feed or sell calves at weaning are analyzed for Arkansas cow-calf operators. A discrete choice logit model is used to analyze the adoption of value-added cattle production. Farm size, human capital, perception of risk/returns and enterprise diversification are hypothesized to explain this decision. Regional factors and land quality are also accounted for. Operator perceptions towards risk, profitability and facilities were important. Production control and attention to marketing were also significant, but farm size and scale of cattle production had a minimal impact. Effects of human capital and off-farm labor opportunities need further investigation.

This paper examines the effects of optional subdivision on APHP losses for wheat, corn, and soybeans. Thirty-seven state/crop programs are analyzed and the implications of the results are discussed in relation to newly developed crop and revenue insurance programs. The results illustrate the importance of incorporating actuarial experience into the premium rate structure and contract provisions of an insurance program.

An analysis of the characteristics of farm businesses by size of FCS direct lending association suggests that further consolidation of FCS lending should have limited negative impacts on credit availability. Commercial-sized farm businesses with FCS real estate debt appeared similar to those who obtained credit from competing lenders, but smaller associations and those with fewer stockholders per branch appeared to serve larger and more wealthy commercial-sized farms.

Approximate profit functions are estimated using time-series, cross-sectional, county level data for 12 midwest states. Measures of climate variability are included in the profit functions. Simulated impacts of climate changes on profits are derived. Results show that inclusion of measures of climate variation are important for measuring the impact of changes in mean temperature and precipitation levels. Failure to account for the impact of differences in variability leads to an overestimate of damages. If global warming increases diurnal variation, such increases would have negative impacts on the profitability of midwest agriculture.

Recursive Partitioning Algorithm (RPA) is introduced as a technique for credit scoring analysis, which allows direct incorporation of misclassification costs. This study corroborates nonagricultural credit studies, which indicate that RPA outperforms logistic regression based on within-sample observations. However, validation based on more appropriate out-of-sample observations indicates that logistic regression is superior under some conditions. Incorporation of misclassification costs can influence the creditworthiness decision.

Federal legislation mandates substantial reduction of air pollution emissions from electric utilities. Utilities in Appalachia that use locally mined high-sulfur coal must choose among abatement options such as fuel mixing and smokestack scrubbing technologies. Wet scrubbers are the most frequently adopted abatement technology in Ohio. This paper investigates beneficial reuses of by-product from wet scrubbers. By-product is most often disposed of in landfills, resulting in large external costs. We combine social cost and benefit transfers with a linear optimization model to investigate potential benefits of by-product recycling. Results suggest that significant incentives exist to find beneficial uses for by-product.

Production risk includes yield and days suitable for fieldwork variability. Both were modeled using biophysical simulation and a mean-variance, chance-constrained mathematical programming formulation representing a Kentucky corn, soybean, and wheat producer. While crop diversification, planting date, and maturity group can be used to reduce the types of risk considered, interaction between the two influences how production practices are used to manage risk. For the conditions studied, plant population alterations were less effective for risk reduction of either component. The study provides evidence of the importance of the consideration of both elements of production risk in whole farm planning.

The impact of adopting integrated pest management (IPM) techniques is examined for peach producers in eight states accounting for most of the U.S. production. The method accounts for self-selectivity, simultaneity, and the pesticide demand equations are theoretically consistent with a restricted-profit function. Biological pest management techniques tend to reduce pesticide use and pesticide toxicity substantially, while pesticide-efficiency techniques (using scouting and economic thresholds) have an increasing effect on pesticide use and toxicity, and cultural techniques have an insignificant effect on pesticide use and toxicity.

Regional and farm-level analyses are conducted to evaluate the economic and environmental impacts of water quality protection policies. The regional analysis evaluates reducing nitrate losses by reducing per-acre nitrogen use, taxing nitrogen use, taxing irrigation water use, and reducing furrow irrigation. Incentives to convert furrow systems to sprinkler and LEPA systems outperform the other policies. The firm-level analysis derives farm plans that limit the expected values of environmental indices for nitrates and pesticides, and reduce the probability that specified targets will be exceeded. The analysis demonstrates the importance of evaluating environmental risk as a stochastic process.

This paper investigates the motivations for local right-to-farm protection ordinances by estimating a logit model relating the adoption of these ordinances to various political, economic and demographic factors previously found to affect the likelihood of passage of farmland preservation policies. Results suggest that the probability of adopting right-to-farm policies increases with the size and political clout of the farm public and with incentives to promote right-to-farm. Adoption is not enhanced by environmental concerns, nor by factors known to encourage adoption of farmland preservation policies. These findings raise serious concerns about the long-run viability of protections afforded agriculture in urbanizing areas.

Adoption of conservation tillage can lead to substantial environmental benefits from reduced soil erosion. But benefits may be partially offset if adoption increases reliance on agricultural chemicals. Using area study data from the Cornbelt, this study examines factors affecting adoption of no-till and other conservation tillage systems and their effect on chemical use and corn yield. The results find no evidence that herbicide or fertilizer application rates are higher on fields with conservation tillage systems compared with conventional tillage. However, insecticide use may increase somewhat and yield may be lower. Current demographic trends in U.S. agriculture favor continued diffusion of conservation tillage.

The effects of considering variable within-farm soil runoff and leaching potential on costs of reducing nitrogen losses are analyzed for a Virginia dairy. Manure applications may cause nitrogen losses through runoff and leaching because of factors such as uncertain nitrogen mineralization. Farmers can reduce nitrogen control costs by applying manure on soils with less nitrogen loss potential. Ignoring within-farm soil variability may result in overstating the farm's costs of reducing nitrogen losses.

Initial ideas on risk management uses of precision agricultural technology focused on site-specific treatment of problem areas to reduce the probability of low yields and returns. Recent discussions deal with sensor and remote-sensing information to improve marketing and “as applied maps” as trace-back mechanisms to manage liability. A theoretical model is presented that suggests that there are plausible circumstances under which precision farming can reduce temporal yield variability. Empirical evidence from an on-farm trial of site-specific P&K management in the Eastern Cornbelt supports the hypothesis that precision farming can have risk-reducing benefits.

Thoroughbred incentive programs are subsidy policies funded from state parimutuel tax revenue designed to promote regional race horse breeding and ownership. At issue is an ongoing debate concerning the effectiveness of alternative policies. Empirical results indicate that incentive programs have a positive economic effect, but gains to Thoroughbred breeders can be obtained by reallocating tax revenue to non-restricted purses. A policy allocating tax revenue to non-restricted purses shifts yearling demand and increases prices, while breeder subsidies shift only the supply function and therefore lower prices. Consequently, breeder revenues increase in response to a policy that favors non-restricted purses over subsidies.

This study evaluates three agricultural nonpoint pollution abatement policies: regulating the spatial pattern of agricultural activities, ambient tax, and abatement tax/subsidy. All three policies incorporate spatial characteristics of agricultural emission loading and movement for an agricultural watershed in the Midwest. The effects of spatial variation in natural conditions and landscape features on agricultural emissions and crop yield are evaluated using a newly developed biophysical simulation model and experimental data. While the policies are equally cost effective in reducing agricultural nonpoint source pollution, their implementation feasibility is quite different.

The relationship between student achievement and school inputs has long been a subject of academic research. The general conclusion of past research is that school inputs, such as the number of teachers relative to pupils, has little impact on student academic outcomes. This paper provides a fresh look at this issue. Seventeen alternative measures of student performance in North Carolina school districts are related to a wide array of school policy inputs and socioeconomic characteristics of students and their families. Both static and dynamic analyses are performed. The key findings are (1) the school policy inputs significantly related to student achievement vary by the measure of student achievement used, (2) the joint contribution of school policy inputs to student achievement is relatively small, and (3) the results differ between the static and dynamic analyses; in particular, changes in the number of teachers relative to the number of pupils in the district have a much stronger association with student achievement in the dynamic analysis.

Markov chain analysis (one-step and long-run) is applied to the National Resources Inventory (NRI) database to evaluate changes in wind-based soil erosion rates over time. The research compares changes in soil erosion rates between NRI sample sites with and without applied conservation practices for a random sample of Great Plains counties. No significant differences between sites are found for half of the counties evaluated. The effectiveness and efficiency of conservation policies are thus questioned in light of these research results.