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Conversion Decision (conversion + decision)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Selected Abstracts

Why Isn't More US Farmland Organic?

JOURNAL OF AGRICULTURAL ECONOMICS, Issue 2 2010
Nicolai V. Kuminoff
D81; Q18 Abstract We develop a theoretical model to assess the dollar compensation required to induce conventional growers to convert to organic. The model incorporates the uncertainty in producers' expectations about future returns and about the impact of policy changes on these expectations in particular. We demonstrate that a new policy which favours organic can have opposing effects on the rate of conversion. An increase in relative returns to organic today will increase conversion rates. However, if the future of the policy programme is uncertain, its introduction can increase the value of waiting to switch, which will decrease conversion rates. We then develop an empirical switching regression model that enables direct estimation of the value associated with being able to postpone the conversion decision until some of the uncertainty is resolved. The model is applied to data on organic and conventional soybeans before and after major changes in US farm policy toward organic growers. The results suggest that sunk costs associated with conversion to organic coupled with uncertainty about future returns can help to explain why there is so little organic farmland in the USA. [source]

Farmers' objectives as determinants of organic farming adoption: the case of Catalonian vineyard production

AGRICULTURAL ECONOMICS, Issue 5 2010
Zein Kallas
Organic farming adoption; Duration analysis; Analytical hierarchy process; Farmers' objectives Abstract This article assesses the decision to adopt organic farming practices. We use Duration Analysis (DA) to determine why farmers adopt organic farming practices and what influences the timing of adoption. We extend previous studies by including farmers' objectives, risk preferences, and agricultural policies as covariates in the DA model. The Analytical Hierarchy Process is used as a multicriteria decision-making methodology to measure farmers' objectives. The empirical analysis uses farm-level data from a sample of vineyard farms in the Spanish region of Catalonia. Farmers' objectives are found to influence the conversion decision. Moreover, farmers who are not risk averse are more likely to adopt organic farming. Results point to the policy changes that have been most relevant in motivating adoption of organic practices. [source]

Ownership Structure Changes in the Insurance Industry: An Analysis of Demutualization

JOURNAL OF RISK AND INSURANCE, Issue 3 2003
Krupa S. Viswanathan
This article focuses on the demutualization process and investigates why certain mutuals undergo this organizational structure change. The primary motivation for conversion is access to capital. By statute, mutual firms are limited in their capital-raising activities while stock firms can attract funds through a variety of stock and debt offerings. By examining the financial characteristics of firms that demutualize, changes in business practices in the years surrounding conversion can be observed. Determinants of the conversion decision are explored through logistic regression. In the years before demutualization, converting property-liability mutuals exhibit significantly lower surplus-to-asset ratios. This capital constraint eases after demutualization. Converting life-health mutuals hold a significantly lower proportion of liquid assets; in addition, they have a higher proportion of separate accounts under management. This liquidity constraint and increased focus on a higher managerial discretion activity drive the demutualization decision. For both property-liability and life-health converting mutuals, support for the access to capital hypothesis is found. [source]

Effect of yield and price risk on conversion from conventional to organic farming,

AUSTRALIAN JOURNAL OF AGRICULTURAL & RESOURCE ECONOMICS, Issue 3 2009
Szvetlana Acs
Although the benefits of organic farming are already well known, the conversion to organic farming does not proceed as the Dutch government expected. In order to investigate the conversion decisions of Dutch arable farms, a discrete stochastic dynamic utility-efficient programming (DUEP) model is developed with special attention for yield and price risk of conventional, conversion and organic crops. The model maximizes the expected utility of the farmer depending on the farmer's risk attitude. The DUEP model is an extension of a dynamic linear programming model that maximized the labour income of conversion from conventional to organic farming over a 10 year planning horizon. The DUEP model was used to model a typical farm for the central clay region in the Netherlands. The results show that for a risk-neutral farmer it is optimal to convert to organic farming. However, for a more risk-averse farmer it is only optimal to fully convert if policy incentives are applied such as taxes on pesticides or subsidies on conversion, or if the market for the organic products becomes more stable. [source]