Risk Management Challenges and Opportunities in 2010

In 2009, agriculture was impacted by significant volatility in commodity and input prices and major world economic events. The world economy continued to flounder, resulting in reduced demand for agricultural commodities, particularly livestock products. The H1N1 outbreak further exacerbated the situation as consumers around the world reduced their consumption of pork. In the last quarter of 2009, unemployment in the United States reached ten percent and continues to rise each month, albeit at a slower rate. In recent reports economic analysts contend the reported figures underestimate the actual unemployment, and that we will continue to face ten percent or more unemployment through 2010.

Two and a Half Cheers for the Midwestern Bourgeoisie: Role of the Virtues in Tempering Business Decisions

A recent book (The Bourgeois Virtues: Ethics for an Age of Commerce, D. N. McCloskey), raises the matter of the role of the virtues in business and economic choice, arguing that capitalism can indeed, be virtuous or at least better than the alternative(s). This argument is especially timely in light of the apparent excesses on Wall Street and in some banking/financial institutions. Excessive greed and often the lack of business ethics contributed in substantive ways to the financial crisis and near economic meltdown we have been experiencing. As McCloskey, (2006, pp. 1-2) argues (in setting the stage for the complex argument made in this 616-page book!): “The book … is directed toward you who are suspicious of the phrase ‘bourgeois virtues,’ pretty sure that it is a contradiction in terms. And the book is directed, with less optimism about changing their minds, toward you who think the phrase is worse: a lie. ‘Bourgeois virtues’ is neither. The claim here is that modern capitalism does not need to be offset to be good. Capitalism can on the contrary be virtuous. In a fallen world bourgeois life is not perfect. But it’s better than any available alternative. American capitalism needs to be inspirited, moralized, completed. Two and a half cheers for the Midwestern bourgeoisie (middle-class, small business owners…. yet)… Many a businessman is an ethical shell or worse. Even the virtues of the bourgeoisie, … do not lead straight to heaven.”

Science and the Climate Change Debacle

As I write this on the first business day of 2010, I find myself thinking about the importance of respecting alternative views --- not only alternative political views, but also alternative scientific views. Good science requires that we understand the limits of knowledge and continuously seek the truth through respectful questioning, replication and review. In the climate change debate, which recently culminated in a disappointing and largely ineffective conference in Copenhagen, these salient principles of science were grossly violated. Well respected climate scientists proceeded well beyond the limits of their knowledge and became policy advocates. They demeaned anyone who dared to disagree with their findings or to suggest that limiting CO2 emissions may not be the best policy choice at the present time. Disagreeing with the “experts” became disrespected professional behavior, even within the academic community. This approach has not served the interests of anyone very well.

Analyzing the ACRE Program

The new farm bill enacted by Congress in June 2008 includes a new revenue-based safety-net, the Average Crop Revenue Election (ACRE) Program, that will be available to producers beginning with the 2009 crop year. This analysis of the mechanics of ACRE and the relevant yields and prices to include in ACRE can help producers assess whether ACRE will be a good choice for this crop year and beyond.

Optimism of Rural Nebraskans

Results from the 2008 Nebraska Rural Poll showed rural Nebraskans were more optimistic about their lives than they have been in previous years. More Nebraskans believed they were better off than they were five years ago, and more were optimistic about their futures. They had reason to be optimistic last year, the agricultural economy in 2007 was strong, especially for crop producers. The poll was taken between March and May, 2008, before the national economy began to falter in October. Thus the 2009 Nebraska Rural Poll will help clarify how rural Nebraskans are responding to the current economic times.

The American Recovery and Reinvestment Act of 2009

President Obama signed the $787 billion economic stimulus package into law on February 17, 2009. What will this mean to individuals or to tax law for 2009? Withholding brackets will be adjusted so individuals should receive an extra $400 through their paychecks over the course of the year, this will encourage spending, since it will be a smaller amount returned each week. The Alternative Minimum Tax will be "patched." Some post-secondary education plans will be implemented and Hope Credits will be expanded. A first time home buyer credit that went into effect in 2007 has been changed, increasing the dollar limit and waiving the payback requirement unless the home is sold within 36 months of purchase.

Using Nebraska's Beginning Farmer Tax Credit Program

Many farm or ranch families that are attempting to bring a son or daughter back into their business experience a strain on the cash flow. Recent changes to Nebraska's Beginning Farmer Tax Credit Program provide an attractive incentive that can be very beneficial to those families. Regulation changes made in 2008 now allow parents to rent agricultural assets to their own children.

Energy Restriction During Breeding Gilt Development: An Economic Analysis

Swine production has increasingly become a lowmargin business. As costs of production have increased, producers are continuing to increase efficiency in both market pig production and gilt development. Restricting energy during gilt development reduces feeding costs and can enhance some productivity measures, but can also negatively impact other areas of production. Thus, the net economic returns from a restricted energy gilt development program are unclear. This study utilized gilt development and market pig production data for two genetic lines of hogs, LWxLR (a cross between industry Large White and Landrace) and L45X (a Nebraska line selected 23 generations for increased litter size) from Johnson and Miller and Johnson et al., to estimate the returns to finishing market hogs using conventional and restricted energy gilt development programs.

Tailoring Rural Community Web Sites to New Residents

Recruiting and retaining new residents is critically important to communities that are experiencing either job growth or a declining population. City councils and village boards across the state often ask the question, “How can we bring in and keep new people today?” This issue has not gone unnoticed by the Nebraska Department of Economic Development or the University of Nebraska.

Nebraska Ethanol's Carbon Footprint

If burning a gallon of ethanol emits less greenhouse gas or GHGs (CO2, primarily), than the gasoline it replaces then it has a smaller carbon footprint than gasoline. Actually, it is the amount of fossil CO2 emitted that matters, because CO2 from fossil fuels represents "new" carbon in the atmosphere, whereas the CO2 released by corn ethanol is recycled atmospheric carbon.

Using Nebraska’s Beginning Farmer Tax Credit Program

Many farm or ranch families that are attempting to bring a son or daughter back into their business experience a strain on the cash flow. After all, a business that has been providing enough income for one family to live on, must now not only generate adequate income for the parents living expenses, but also attempt to provide enough income for a second family, the successor. Recent changes to Nebraska’s Beginning Farmer Tax Credit Program provide an attractive incentive that can be very beneficial for family farming/ranching operations that are trying to bring a family member back into their business. Regulation changes made in 2008 now allow parents to rent agricultural assets to their own children.

Trade Adjustment Assistance for Farmers Available 2010

The American Recovery and Reinvestment Act (ARRA) of 2009 has re-authorized and modified the Trade Adjustment Assistance for Farmers program. The statute authorizes an appropriation of not more than $90 million per year for the next three fiscal years. The TAA for Farmers program helps producers of raw agricultural commodities (farmers, ranchers or fishermen) who have experienced significant declines in price or production, adjust to the changing economic environment brought on by import competition. The program provides benefits to eligible producers in the form of educational assistance, as well as up to $12,000 per producer in cash benefits to help create and implement business adjustment plans.

Stochastic Partial Budgeting: A New Look at an Old Tool

Farm business managers are constantly making adjustments in their businesses for smoother operations and profitability. Many times, these choices involve actions to enhance the financial return of the farm business; while other times these decisions are made out of necessity to minimize the effects of unfavorable conditions or events such as drought or changes in the market conditions. Some of these decisions are relatively simple, requiring making choices among alternatives within an enterprise; while others are complex involving a total overhaul of the business and its enterprises. Alternative choices within an individual enterprise can have a differential impact on farm profitability. Therefore, making the best decision may make the difference between profit or loss for that enterprise. Partial budgeting is very useful in making such changes within an enterprise of a farm.