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In the late 1980s, grain-hauling railroads began offering alternatives that have made shipping decisions more strategic. Shippers now confront alternatives ranging from nearby and unguaranteed ordering to various durations of forward and guaranteed shipment. Each has varying penalties for cancellation and payments from the railroad for nonperformance, and differing risks and payoffs. Because of the configuration of choices, shippers confront a portfolio of shipping alternatives. A dynamic stochastic simulation model was developed to analyze alternative strategies. The model includes the effects of uncertainties in tariff rate changes, car premiums, basis levels, forward and spot grain purchases, and receiving railcars under each of three alternatives. Shipping demand is determined by inter-month commodity price differences, carrying costs, transport costs, and storage capacity. Considering these factors, the shipper chooses grain sales and shipping strategies that maximize net payoffs and confronts a tradeoff between expected profits and risk.

The purpose of this paper is to analyze the dynamics of R&D investments, and the structure of the seed distribution sector using novel data sets that have not been used before to describe competition in these industries. The results describe four sets of issues of particular importance. One is that while all agbiotechology firms have increased their R&D expenditures, there have been sharp differences in the scope of this spending. Most important is that this has spawned the growth in what is now referred as “seeds and traits.” Second, a large number of future traits will be commercialized in the coming years. A third set of results indicates that one firm grew its market share by 14% and a portion of this growth has been through acquisition. The other three majors lost market share, but the ISC (independent seed companies) grew by 10%. At the crop reporting district level, the industry concentration ratios for the four largest firms (CR4) in most regions are .5‐.7. Finally, farmers purchased corn and soybean seed from 4‐7 different companies in most crop reporting districts (CRD) and up to 20 or more companies in the larger producing regions.

One of the impacts of higher prices along with greater volatility in futures and basis is that there is pressure for an escalation in cash contracting for grain. This volatility has resulted in an unprecedented level of contracting with growers in recent years. There is a wide array of cash contracts with varying terms. There is also a growing realization of growers not delivering on contracts, in part due to escalation in postcontract prices. These are evolving as major strategic issues for buyers and the marketing system, particularly as buyers seek to use such contracting strategies as an element of risk mitigation. There are three purposes of this article. First is to provide a broad survey of contract terms used in grain contracting with growers. Second, we illustrate some issues in contracting of some of the grains (durum, malting barley) in the upper Midwest. Third, we show some of the common contract clauses being adapted in these contracts. Finally, we summarize these issues with respect to industry implications.

Ethanol is one of the fastest growing industries in the U.S. agricultural sector. This study estimates factors that impact location decisions by new ethanol plants using logistic regression analysis and spatial correlation techniques. The results indicate that location decisions are impacted by the agricultural characteristics of a county, competition, and state-level subsidies. Spatial competition is particularly important. Existence of a competing ethanol plant reduces the likelihood of making a positive location decision and this impact decreases with distance. Finally, state-level subsidies were significant and a very important variable impacting ethanol location decisions.

The purpose of this study was to forecast grain and oilseed shipments through the Mississippi River system and to analyze impacts of delay costs. The focus is on the world grain trade and expected changes in response to a multitude of evolving competitive pressures and structural changes. The model is a spatial optimization model of the world grain trade. Important parameters are forecasted and used to evaluate changes in flows through specific logistical channels. Projected import demands are based on consumption functions estimated using income and population and accounting for intercountry differences in consumption dependent on economic development. Each of the competing supply regions and countries were represented by yields, area potential that could be used in production of each grain, costs of production, and interior shipping costs, where relevant. Crucial in this model is the interior spatial competition between the U.S. Pacific Northwest and shipments through the U.S. Gulf, as well as inter-reach competition. Delay costs are the additional costs associated with shipping on the barge system and result from queuing and the added costs for shipments that are delayed. These are an important feature of barge shipping, particularly when shipment volumes are greater. In several of the reaches, grain flows are near the point at which positive delay costs are accrued. At higher volumes, delay costs escalate and ultimately become nearly vertical. The latter is an indicator of capacity, i.e., the level of volume at which the delay costs become perfectly inelastic. The results suggest exports from the United States increase from the base period to 2010, in part due to the assumption that the maximum area for plantings would increase and in part due to the fact that China�s corn exports are assumed nil in 2010 and beyond. U.S. corn exports decline the most, with a potential peak of 62 mmt to around 42 mmt. Wheat exports decline substantially, but soybeans increase through 2030. Exports from the United States are concentrated in the U.S. Gulf, which declines to 57 mmt after reaching a peak of 92 mmt in 2010. Exports from the Pacific Northwest (PNW) are 25 mmt in the base year and decline in later years. The results illustrate that the United States remains an important exporter of soybeans and this conclusion persists in other scenarios. Expansion would result in reduced delay costs on each or Reaches 1, 2, and 4 by about $0.44/mt, $1.04/mt, and $1.01/mt, respectively. Expanding lock capacity reduces delay costs, increases capacity and shipments by barge. Barge shipments increase by about +4 mmt by 2020. Thereafter, the change in barge shipments would be about +0.9 mmt to +2.5 mmt. There is substantive inter-reach competition and by 2020 shipments on Reach 1, 2, and 4 increase, but shipments on Reach 5 and 6 would decrease. Delay costs, in aggregate, are comprised of the lower delay costs that would occur at current capacity, plus the volume effect. The impact of expansions on delay costs are in the area of $61 million, inclusive of both direct effects. Most of this is accrued on Reach 4, followed by Reach 2 and 1. Expansion results in an increase in barge costs due to the increase in volume, a decrease in rail shipping costs, and a slight increase in ocean shipping costs. In total, the impact of expanding locks is a decrease in costs by about $52 million. The base case assumed Energy Information Administration (EIA 2005) projections of corn use in ethanol demand. The model was revised assuming the EIA (2006) estimates of ethanol produced from corn. Results are drastic. Exports from Argentina, Europe, and Eastern Europe increase and wheat exports from Australia increase and exports from the United States decline. Gulf exports decrease (65 to 51 mmt) and PNW changes only slightly to 14 mmt. Most of the decline is in corn and wheat shipments. In addition, there are major changes in flows within the United States. Most interesting is the increase in shipments to the Eastern and Western Corn Belts, reflecting the increase in domestic demand for ethanol use. Also interesting are the changes in flows from the Northern Plains which had previously exported most of its corn through the PNW. These are now shifted with a significant portion destined for domestic movements. The model was run assuming more stylized assumptions for some critical variables, mostly impacting the ability of corn production to expand to meet these competing demands. The results suggest the model is fairly robust in capturing these different assumptions. Most striking in making these comparisons are: 1) corn exports from the United States increase; 2) soybean exports from the United States decline to 28 mmt vs. 36 mmt for the 2010 case; and 3) wheat exports increase from each of the competitors and those from the United States decline, but by not as much as in our unrestricted high-ethanol case. There are important reasons for these differences. Most important are assumptions about the yield growth, the ability to expand corn acres, and differing assumptions on soybean production and exports from the United States vs. competitor countries.

The costs of delays for shipping commodities on the Mississippi River are important and adversely impact growth in shipments. Lock and dam expansion requires substantial capital investment and an extended time period to complete. This study analyzes delay costs and the competitive position of grain shipments on the Mississippi River system. A spatial optimization model of the world grain trade was developed. Results indicated that without expansion in barge capacity, delay costs in 2020 would increase on each reach, with some up to $1.08/mt. Expansion results in reduced delay costs. Barge demand is also impacted by rail capacity. Finally, expanding the locks would result in a re-allocation of shipments among modes, reaches, and ports, notwithstanding minor adjustments in production.

Ethanol is one of the fastest growing industries in the U.S. agricultural sector. This study estimates factors that impact location decisions by new ethanol plants using logistic regression analysis and spatial correlation techniques. The results indicate that location decisions are impacted by the agricultural characteristics of a county, competition, and state-level subsidies. Spatial competition is particularly important. Existence of a competing ethanol plant reduces the likelihood of making a positive location decision and this impact decreases with distance. Finally, state-level subsidies were significant and a very important variable impacting ethanol location decisions.

The purpose of this study was to forecast grain and oilseed shipments through the Mississippi River system and to analyze impacts of delay costs. The focus is on the world grain trade and expected changes in response to a multitude of evolving competitive pressures and structural changes. The model is a spatial optimization model of the world grain trade. Important parameters are forecasted and used to evaluate changes in flows through specific logistical channels. Projected import demands are based on consumption functions estimated using income and population and accounting for intercountry differences in consumption dependent on economic development. Each of the competing supply regions and countries were represented by yields, area potential that could be used in production of each grain, costs of production, and interior shipping costs, where relevant. Crucial in this model is the interior spatial competition between the U.S. Pacific Northwest and shipments through the U.S. Gulf, as well as inter-reach competition. Delay costs are the additional costs associated with shipping on the barge system and result from queuing and the added costs for shipments that are delayed. These are an important feature of barge shipping, particularly when shipment volumes are greater. In several of the reaches, grain flows are near the point at which positive delay costs are accrued. At higher volumes, delay costs escalate and ultimately become nearly vertical. The latter is an indicator of capacity, i.e., the level of volume at which the delay costs become perfectly inelastic. The results suggest exports from the United States increase from the base period to 2010, in part due to the assumption that the maximum area for plantings would increase and in part due to the fact that China�s corn exports are assumed nil in 2010 and beyond. U.S. corn exports decline the most, with a potential peak of 62 mmt to around 42 mmt. Wheat exports decline substantially, but soybeans increase through 2030. Exports from the United States are concentrated in the U.S. Gulf, which declines to 57 mmt after reaching a peak of 92 mmt in 2010. Exports from the Pacific Northwest (PNW) are 25 mmt in the base year and decline in later years. The results illustrate that the United States remains an important exporter of soybeans and this conclusion persists in other scenarios. Expansion would result in reduced delay costs on each or Reaches 1, 2, and 4 by about $0.44/mt, $1.04/mt, and $1.01/mt, respectively. Expanding lock capacity reduces delay costs, increases capacity and shipments by barge. Barge shipments increase by about +4 mmt by 2020. Thereafter, the change in barge shipments would be about +0.9 mmt to +2.5 mmt. There is substantive inter-reach competition and by 2020 shipments on Reach 1, 2, and 4 increase, but shipments on Reach 5 and 6 would decrease. Delay costs, in aggregate, are comprised of the lower delay costs that would occur at current capacity, plus the volume effect. The impact of expansions on delay costs are in the area of $61 million, inclusive of both direct effects. Most of this is accrued on Reach 4, followed by Reach 2 and 1. Expansion results in an increase in barge costs due to the increase in volume, a decrease in rail shipping costs, and a slight increase in ocean shipping costs. In total, the impact of expanding locks is a decrease in costs by about $52 million. The base case assumed Energy Information Administration (EIA 2005) projections of corn use in ethanol demand. The model was revised assuming the EIA (2006) estimates of ethanol produced from corn. Results are drastic. Exports from Argentina, Europe, and Eastern Europe increase and wheat exports from Australia increase and exports from the United States decline. Gulf exports decrease (65 to 51 mmt) and PNW changes only slightly to 14 mmt. Most of the decline is in corn and wheat shipments. In addition, there are major changes in flows within the United States. Most interesting is the increase in shipments to the Eastern and Western Corn Belts, reflecting the increase in domestic demand for ethanol use. Also interesting are the changes in flows from the Northern Plains which had previously exported most of its corn through the PNW. These are now shifted with a significant portion destined for domestic movements. The model was run assuming more stylized assumptions for some critical variables, mostly impacting the ability of corn production to expand to meet these competing demands. The results suggest the model is fairly robust in capturing these different assumptions. Most striking in making these comparisons are: 1) corn exports from the United States increase; 2) soybean exports from the United States decline to 28 mmt vs. 36 mmt for the 2010 case; and 3) wheat exports increase from each of the competitors and those from the United States decline, but by not as much as in our unrestricted high-ethanol case. There are important reasons for these differences. Most important are assumptions about the yield growth, the ability to expand corn acres, and differing assumptions on soybean production and exports from the United States vs. competitor countries.

Introduction: This report provides an overview of the important factors affecting investments in agricultural value-added ventures. The introductory section outlines current research on factors important in the location of economic activity. Research applied to specific agricultural value-added ventures, such as food manufacturing and livestock feeding and finishing operations, are discussed. A listing of resources available to entrepreneurs considering value-added investments concludes the introductory section. Following the introductory section are short overviews of industries that already have, or may have, potential for increasing economic activity in the state. All are based on the important foundation of agriculture in the state's economy or upon the natural resource base giving the state a comparative advantage in investments in alternative energy or resource-based recreation.

Introduction : This report provides an overview of the important factors affecting investments in agricultural value-added ventures. The introductory section outlines current research on factors important in the location of economic activity. Research applied to specific agricultural value-added ventures, such as food manufacturing and livestock feeding and finishing operations, are discussed. A listing of resources available to entrepreneurs considering value-added investments concludes the introductory section. Following the introductory section are short overviews of industries that already have, or may have, potential for increasing economic activity in the state. All are based on the important foundation of agriculture in the state's economy or upon the natural resource base giving the state a comparative advantage in investments in alternative energy or resource-based recreation.

Marketing of specialty and identity preserved grains has become an important strategy in the grain marketing industry and is being driven, in part, by consumer and processor demand and an interest in non-GM products. This study provides background and practices of numerous organizations involved in marketing of specialty/identity preserved grains. Supporting marketing activities are reviewed. Key factors in the success (or failure) of their efforts are identified. Major challenges facing the participants in the specialty/IP grain marketing industry are discussed. The primary focus is on the role of agricultural cooperatives and producer owned alliances.

Development and organization of procurement strategies have escalated in importance with maturity of the food processing industry, as well as with the prospect of greater choice attributable to variety development and information technology. Conventional alternatives for procurement range from spot purchases with specifications for easily measurable characteristics, to varying forms of strategies with pre-commitment. In the case of grains these choices are complicated by two factors. First, there is intrinsic uncertainty associated with end-use qualities that are not easily measurable. Second, grain prices and therefore procurement costs vary spatially due to competing market regions. Thus, shifting origins may involve higher cost due to having to bid grain away from its next best market. We posed three procurement strategies and developed analytical models to evaluate the risks and costs among these alternatives in the case of hard red spring (HRS) wheat. The first involves no commitment. The second involves some form of irrevocable commitment and the third entails less commitment. Stochastic simulation models were developed for each with an objective of cost minimization subject to different levels of risk. The results indicate that the naive strategy has the lowest expected cost, but a fairly high probability of not conforming to end-use requirements. The constant share strategies result in higher probabilities of meeting requirements, but at substantially higher costs. The opportunistic strategy results in a higher probability of meeting requirements than either of the other two alternative strategies at a comparable cost.

The grain trading industry has changed radically during the past two decades. This report describes these changes in detail. First, dynamics of the major fundamental changes are described. Second, the extent and nature of structural changes in the grain handling industry are analyzed. Changes in the transnational grain exporting industry are analyzed and described as well as the implications of privatization of grain importing functions.

The grain trading industry has changed radically during the past two decades. This report describes these changes in detail. First, dynamics of the major fundamental changes are described. Second, the extent and nature of structural changes in the grain handling industry are analyzed. Changes in the transnational grain exporting industry are analyzed and described as well as the implications of privatization of grain importing functions.

Upper Great Plains Transportation Institute Report No.49