Marketing specialty corn contracts under uncertainty in Iowa
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The Department of Economic Science was founded in 1898 to teach economic theory as a truth of industrial life, and was very much concerned with applying economics to business and industry, particularly agriculture. Between 1910 and 1967 it showed the growing influence of other social studies, such as sociology, history, and political science. Today it encompasses the majors of Agricultural Business (preparing for agricultural finance and management), Business Economics, and Economics (for advanced studies in business or economics or for careers in financing, management, insurance, etc).
History
The Department of Economic Science was founded in 1898 under the Division of Industrial Science (later College of Liberal Arts and Sciences); it became co-directed by the Division of Agriculture in 1919. In 1910 it became the Department of Economics and Political Science. In 1913 it became the Department of Applied Economics and Social Science; in 1924 it became the Department of Economics, History, and Sociology; in 1931 it became the Department of Economics and Sociology. In 1967 it became the Department of Economics, and in 2007 it became co-directed by the Colleges of Agriculture and Life Sciences, Liberal Arts and Sciences, and Business.
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1898–present
Historical Names
- Department of Economic Science (1898–1910)
- Department of Economics and Political Science (1910-1913)
- Department of Applied Economics and Social Science (1913–1924)
- Department of Economics, History and Sociology (1924–1931)
- Department of Economics and Sociology (1931–1967)
Related Units
- College of Agricultural and Life Sciences (parent college)
- College of Liberal Arts and Sciences (parent college)
- College of Business (parent college)
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Abstract
The Farm Costs and Returns Survey reported that over {dollar}1 billion of corn production was under marketing contracts in 1993. Many would agree that the corn industry will be more truly end-user and demand oriented in the future and farmers are more interested in using marketing contracts to reduce their exposure to risk. This study analyzes three specialty corn contracts vs. producing regular commodity corn and it focuses attention on the net return per acre of these productions. The contracts evaluated are 1) Commodity price plus a premium (market plus contract), 2) Flat price per bushel, and 3) Flat payment per acre. A spreadsheet model was developed to compare the performance of the different contracts.;BESTFIT [superscript registered trademark symbol] was used to find the parameters of the distribution of prices and yields in Iowa for the past 18 years. Cost of production and uncertainty in price and yield were factored into a Monte Carlo simulation, which was carried out by using @RISK [superscript registered trademark symbol]. Yield sensitivity and net return distribution were evaluated using a modified safety-first approach of risk management.