Brian W Gould

• University of Wisconsin–Madison

Livestock Gross Margin Insurance for Dairy Cattle (LGM-Dairy) is a risk management tool for protecting milk income over feed cost margins. In this article, we examine the assumptions underpinning the method used to determine LGM-Dairy premiums. Analysis of the milk-feed dependence structure is conducted using copula methods, a rich set of tools tha...

With the increased volatility of feed prices, dairy farm managers are no longer concerned with managing only milk price volatility, but are considering the adoption of risk management programs that address income over feed cost (IOFC) margin risk. Successful margin risk management should be founded on an understanding of the behavior of IOFC margin...

The U.S. dairy sector is characterized by increasing volatility of milk prices, and consolidation in production as evidenced by declining number of dairy farms with an increasingly larger share of milk supplied from a small number of very large farms. Using aggregate national data, we build a mixed‐frequency herd dynamics econometric model of the U...

We derive a structural model of firm behavior that is composed of the Generalized Quadratic Almost Ideal Demand System to represent both consumers’ milk preferences and firm profit maximization conditions that allow for a range of competitive scenarios. The importance of this specification is found in its fuller representation of consumer preferenc...

We undertake a range of tests for structural food preference change in urban China, using provincial-level panel data from 2002 to 2010. We introduce a time transition function into the Generalized Quadratic Almost Ideal Demand System (GQAIDS) to represent consumer preferences. We apply this system to evaluate the demand structure for seven food gr...

a b s t r a c t The Livestock Gross Margin Insurance for Dairy Cattle is a federally reinsured insurance program that enables US dairy producers to establish minimum levels of milk income net of feed cost. Given the struc-ture of this program there are an infinite number of possible contract designs based on the choice of deductible level and propo...

This article examines food demand structure and its dynamics for 11 commodities in urban China. The analysis is based on household-level expenditure survey data for two cross-sectional surveys of Chinese households pertaining to food expenditure patterns during 1995 and 2003. Pre-committed components of commodity demands, that are insensitive to ec...

Promotion Research (NEC-63). A component of the Land Grant committee structure to coordinate research in agriculture and related fields, NEC-63 was established in 1985 to foster quality research and dialogue on the economics of commodity promotion. The Institute’s mission is to enhance the overall understanding of economic and policy issues associa...

Paper prepared for presentation at the Agricultural & Applied Economics Association's 2011 AAEA & NAREA Joint Annual Meeting, Pittsburgh, Pennsylvania, July 24-26, 2011. Copyright 2011 by Fengxia Dong, Xiaodong Du and Brian W. Gould. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, pro...

608) 698-4325 Selected Paper prepared for presentation at the Agricultural & Applied Economics Association's 2011 AAEA & NAREA Joint Annual Meeting, Pittsburgh, Pennsylvania, July 24-26, 2011 Copyright 2011 by Vardges Hovhannisyan and Brian W. Gould. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes...

Milk and feed price volatility are the major source of dairy farm risk. Since August 2008 a new federally reinsured insurance program has been available to many US dairy farmers to help minimize the negative effects of adverse price movements. This insurance program is referred to as Livestock Gross Margin Insurance for Dairy Cattle. Given the flex...

Livestock Gross Margin insurance for dairy cattle (LGM-Dairy) is a risk management tool that can be used to insure a lower bound on a dairy producer’s gross margin. In this paper we (1) review the basic structure of LGM-Dairy (2) examine the sensitivity of Gross Margin Guarantee (GMG) and premium to changes in feeding regimes and (3) quantify impac...

This study has three main objectives: (i) to quantify the impacts of milk and feed price changes on the primary milk supply in the U.S.; (ii) to examine the impacts of technological changes on the price responsiveness of supply and specific herd characteristics; and (iii) to generate dynamic long-run forecasts of the milk supply response to price c...

There is continuing pressure by various farm groups to attempt to solve the chronic problems in the U.S. dairy industry represented by increased milk price variability, inability to generate positive returns at the farm level, increasing role of dairy exports as an important market for U.S. dairy products, etc. As such it is important for analysts...

Payouts from the Western Grain Stabilization Program are determined on the basis of prairie-wide net cash flow from grains. Of particular importance is what happens to the returns to wheat – the predominant crop. Thus while wheat producers in aggregate can be expected to benefit from the current program, producers of nonwheat crops may not. This pa...

Recent efforts to expand the level of Saskatchewan's exports are expected to generate significant impacts in terms of provincial levels of household income, gross domestic product, and gross output. Besides these economic effects, increased export activity will likely impact the level of provincial resource use. A combined input‐output/resource dem...

This analysis examines the determinants of organic food purchase behavior of a random sample of U.S. food shoppers. We analyze food expenditures conditional upon whether a household purchases organic foods. The results from our econometric modeling effort identify shopping venue, awareness of the organic label, positive beliefs toward organic foods...

We evaluate the current structure of food demand in urban China by using household expenditure survey data from five provinces. Two complementary analyses are undertaken. First, an aggregate analysis based on a fractional logit model is used to examine how households allocate food expenditures across the food-at-home (FAH) and food-away-from-home (...

The dairy products industry is adjusting the types of products being marketed by increasing the availability of reduced-fat foods. The desire of consumers to purchase foods with lower fat content is affecting the cheese market with the introduction of recently developed reduced-fat cheese varieties. Econometric models of cheese expenditures for thr...

A U.S. household panel is used to estimate a model of household purchases of butter, margarine and butter/margarine blends. The econometric model accounts for the discrete purchase decisions process and the censored nature of disaggregated commodity demand. Observed market prices are “quality” adjusted for the three commodities investigated based o...

This study develops an empirical framework to estimate quality-adjusted price elasticities from cross-sectional data. The new approach shows the importance of properly adjusting for quality variation in both prices and quantities in demand analysis. When quality adjustment is concerned only with price, the unit value-based elasticity tends to overs...

This study develops an empirical framework to estimate quality-adjusted price elasticities from cross-sectional data. The new approach shows the importance of properly adjusting for quality variation in both prices and quantities in demand analysis. When quality adjustment is concerned only with price, the unit value-based elasticity tends to overs...

"We investigate market structure and strategic pricing for leading brands sold by Coca-Cola Company and PepsiCo. in the context of a flexible demand specification (i.e., nonlinear AIDS) and structural price equations. Our flexible and generalized approach does not rely upon the often used ad hoc linear approximations to demand and profit-maximizing...

A Quadratic Almost Ideal Demand System is used to examine the structure of food demand for a sample of urban Chinese households. The dual choice of product quality and quantity is accounted for in the econometric model via the inclusion of simultaneously estimated unit-value equations.

Over the last 20 years the cheese manufacturing sector has become the most important market for U.S. farm milk. Using a plant-level dataset encompassing the 1972-1997 period we examine the production characteristics of this industry. Using the results obtained from our cost function we estimate a series of measures of input substitutability and sca...

The modeling of micro-level food demand patterns requires not only allowing for household heterogeneity, but also addressing the problem of censoring. In this article, we present a variation of the Amemiya-Tobin framework for estimating a censored demand system that allows for household heterogeneity. The unique aspect of our approach is the use of...

The use of household level data for food demand analysis requires the researcher to address issues such as purchase censoring and the impacts of household age/gender composition on such demand. This analysis adopts an estimation approach to modeling censored food expenditures. The major methodological contribution of this analysis is our incorporat...

The impacts of generic cheese advertising on U.S. household cheese purchases are examined via the use of a unique household panel. Modest gains in overall at-home cheese purchases from generic cheese advertising appear to be largely the result of strong gains in purchases of natural cheese rather than processed cheese. Results indicate that relativ...

With China's admission into the WTO, there is the potential for dramatic increases in U.S. agricultural exports to China. As China's economy continues to develop, there is general consensus that there will be an associated change in the population's diet. Currently, dairy products account for a small proportion of total food consumed, but that has...

This article explores the issue of price and expenditure endogeneity in empirical demand analysis. The analysis focuses on the U.S. carbonated soft drink market. We test the null hypothesis that price and expenditures are exogenous in the demand for carbonated soft drinks. Using an almost ideal demand system (AIDS) specification, we strongly reject...

The role of farm dependency and size on rural economic growth is examined using data from 2240 non-metropolitan U.S. counties for the period 1990 to 1995. A simple neoclassical model of regional economic growth is set forth with a central question relating to the role of agriculture on rural economic convergence. Traditional neoclassical theory pre...

With China admitted to the World Trade Organization there is the potential for dramatic increases in U.S. agricultural exports. The present analysis uses household-level data to identify important determinants of expenditures on food for at-home consumption by households in three Chinese urban provinces. Besides the role of household income, we exa...

A growing trend in demand analysis during the last two decades is the use of household survey data. Detailed demographic information collected in these surveys allows treatment of heterogeneous preference and the typically large sample also allows estimation of large demand system that are otherwise not possible with aggregate time series. However,...

The proposed paper adopts the censored demand system approach of Lee and Pitt (1986) to examine the structure of Mexican food demand. This approach uses the concept of virtual prices to explain specific purchase patterns. The contribution of our selected paper is the incorporation of the endogenous equivalence scale function proposed by Phlipps (19...

The use of household surveys for demand system estimation necessitates a recognition of purchase censoring that often arises within an analysis of a disaggregated set of commodities. We extend the Amemiya-Tobin demand system approach to an analysis of Mexican household food demand via the use of a LA/AIDS specification.

Market structure and strategic pricing for leading brands sold by Coca Cola and Pepsi Inc. are investigated in the context of a flexible demand specification and structural price equations. This approach is more general than prior studies that rely upon linear approximations and interactions of an inherently nonlinear problem. We test for Bertrand...

A two-step model with sample selection is applied to panel data of U.S. households to estimate at-home demand for fluid milk and cheese, incorporating advertising expenditures. The model consistently accounts for sample-selection bias, unobserved household heterogeneity, and temporal correlation. Generic advertising programs for fluid milk and chee...

In the analysis of food expenditures, the use of a simple count of household members as an estimate of household size implicitly assumes each household member has the same marginal impact. In this analysis of Mexican food expenditures, endogenously determined adult equivalence scales are estimated in such a way that these marginal impacts are allow...

This Discussion Paper provides a comprehensive description of longer-term trends for exports and world prices of dry milk products. The importance of U.S. exports of dry milk products is suggested by figures in the paper showing that in 2000, 17% of U.S. nonfat dry milk, 35% of dry whey, 47% of lactose, and 11% of whey protein concentrates were exp...

In the analysis of food expenditures, use of household member counts as an explanatory variable assumes each member has the same marginal food expenditure impact. In our analysis of Latin American food expenditures we reject this assumption via the estimation of endogenously determined adult equivalence scales that vary by household member gender a...

The structure of Chinese food demand is examined using a non-homothetic translog indirect utility function. This analysis uses household level survey data for 3 urban Chinese provinces over the 1995-1997 period. We improve upon previous studies by incorporating theoretically consistent equivalence scales to account for differences in household size...

A new measure of 'voraciousness' in leisure activities is introduced as an indicator of the pace of leisure, facili-tating a theoretical linkage between the literature on time pressure, busyness and harriedness in late modernity, and the literature on cultural consumption. On the methodological side it is shown that time use diaries can pro-vide at...

How food demand responds to changes in income, prices and household characteristics is important from a policy perspective when attempting to improve the dietary status of a particular population. This study develops a unique double-hurdle model of demand for a composite food, which endogenizes the commodities unit value. The model structure allows...

How food demand responds to changes in income, prices and household characteristics is important from a policy perspective when attempting to improve the dietary status of a particular population. This study develops a unique double-hurdle model of demand for a composite food, which endogenizes the commodities unit value. The model structure allows...

Consistent two-step censored estimation is applied to household demand equations for disaggregated milk and cheese products. The long-run advertising elasticity for total milk was positive, largely due to low fat milk; however the elasticity for cheese was not significant, and only shredded cheese had a positive, significant response.

Increased availability of scanner-based panel data has enabled researchers to better understand nondurable commodity purchase dynamics. In this study, we focus on one component of the purchase process--when to buy. The relationship between the discrete purchase decision and a set of household and purchase characteristics is quantified using a simul...

This study develops a unique double-hurdle model of demand for composite food commodities which endogenizes unit values. The model structure allows us to account for the inability to observe such values for non-purchasing households and simultaneously adjusts for quality demand effects reflected in these unit values. Application to Mexican househol...

The purchase dynamics of a subset of food fats and oils are investigated using event-history analysis applied to a panel of U.S. households. The consumer behavior examined is the switching between purchases of butter, margarine, and butter/margarine blends across purchase occasions. We find that price, previous purchases, seasonality, and household...

This session investigates the impact of economic, social, and demographic factors as well as the food stamp program on the demand for food items. Papers include: Dairy Expenditures and the Changing Racial Composition of the United States, Donald McDowell, North Carolina A&T State University; Joyce Allen-Smith, University of Illinois; Raphael Okafor...

The dynamics of cheese purchases is analysed by estimating a series of econometric models of duration based on a 170 week household panel. Besides purchase quantity and price data, information with respect to coupon use and household demographic characteristics are used in a variety of models which build upon each other in terms of assumed distribu...

U.S. fluid milk consumption has changed dramatically since the early 1970s. Whole milk accounted for over 81% of commercial fluid milk disappearance in 1970. By 1993, this percentage was less than 39%. A three-equation fluid milk demand system is estimated for fluid milks that vary by fat content. The household panel data set used includes over 4,3...

An endogenous switching regression model is used to examine how meal planner health knowledge affects dietary fat intake. Ethnicity, income, meal planner age, being on a low-fat diet, and other health awareness behaviors had significant effects on health knowledge. After controlling for differences in household and meal planner characteristics, int...

We formulate an econometric model of fluid milk expenditures, taking into account two important characteristics: expenditures may be censored at zero and may be interdependent across milk type. Censoring of fluid milk expenditures is addressed with a generalized Tobit system estimator. Interdependence of milk expenditures is examined through a like...

Cheese consumption has been expanding at a time when demand for other dairy products has remained relatively constant. To examine factors affecting this demand, a Heckman sample selection model is used to obtain at-home demand function parameter estimates for several cheese varieties. Within this model, cheese adult equivalence scales (CAES) are us...

A systems model of U.S. food fats and oils demand is estimated using quarterly time-series data for the period 1962–87. Demographic scaling is used to incorporate demographic variables and per capita government butter donations. In addition to price, income, and demographic demand elasticities, dietary fat intake elasticities are calculated for eac...

The demand for fluid milk products has changed dramatically in recent years not only in terms of lower levels consumed but also in terms of the composition of the products consumed. A time-series based demand system analysis of the market for lowfat and whole milk products is developed incorporating the effects of changes in prices and demographic...

Through the use of a longitudinal data set, we determine those factors that are important to off-farm labor market entry and compare them with factors affecting off-farm labor market exiting. The model of labor market entry and exit takes into account the effects of changes in key economic variables over a four-year period. The data are for married...

The primary objective of this study is to examine the effect of various factors on the use of conservation tillage. In the model developed here we have explicitly incorporated the Ervin and Ervin (1982) structure of soil conservation adoption into an integrated model. The first stage of the process is the recognition by the farm operator that soil...

Canada has recently enacted legislation that decontrols the price of domestically produced crude oil and natural gas. This study presents an analysis of the impacts of such decontrol via the use of an econometric model of the petroleum industry of the province of Alberta. The model developed in this study improves upon previous models in terms of t...

In this paper an interregional input-output model (PRAIRIO) of Canada is developed. This model represents an application of the rectangular accounting system within a multiregional impact analysis. The development of such a model is important from a public policy perspective in that input-output analyses are often used as a part of an overall progr...

The impacts of changes in final demand on energy use are analysed through the use of a combined energy use/input-output model of the province of Saskatchewan. Through the use of various index measures, the energy interdependence of the provincial economy is examined for the 1974–1979 period. Key sectors are identified whose final demand result in r...

The present paper examines the effects of alternate export scenarios on the demand for the energy resources in Saskatchewan. A combined input-output and econometric model is used to estimate the changes in energy use that may be necessary to meet future increases in agricultural and non-agricultural exports.

This manuscript is used to examine food demand structure and its dynamics for 11 commodities in urban China. The analysis is based on household-level expenditure survey data for two cross-sectional surveys of Chinese households pertaining to food expenditure patterns during 1995 and 2003. A major focus of this presentation is on the pre-committed c...

The main goal of this manuscript is to explore the retailer conduct in the milk market in a U.S. Midwestern city, based upon a structural estimation of consumer milk demand and retailer optimality conditions. To model milk demand we rely upon the Almost Ideal Demand System, while allowing the retailer optimality conditions to cover a range of compe...

Dairy farmers are faced with tremendous and increasing volatility, both in terms of milk prices, and the costs of purchased feed. There is a new weapon in the risk management arsenal of U.S. dairy producers: the Livestock Gross Margin for Dairy (LGM-Dairy) insurance program controls for lower gross revenue, defined as the value of milk produced min...

Livestock Gross Margin Insurance for Dairy Cattle (LGM-Dairy) is a recently introduced tool for protecting average income over feed cost margins in milk production. In this paper we examine the assumptions underpinning the rating method used to determine premiums charged for LGM-Dairy insurance contracts. The first test relates to the assumption of...