Risk and the Economic Incentive to Retain Ownership of Steer Calves

Scott Fausti, Brad Johnson, William Epperson and Nancy Grathwohl

No 32023, Economics Staff Papers from South Dakota State University, Department of Economics

Abstract: Retained ownership of steer calves is an investment decision for cow/calf producers. Data collected over a three-year period on 845 steer calves reveals that retaining ownership of steer calves is, on average, profitable. Systematic and unsystematic risks associated with retaining ownership of steer calves are identified. Empirical results indicate that unsystematic risk account for 67% of the variability in the rate of return to retained ownership in this study. For seventy-five producers who entered weaned calves into a university sponsored ranch to rail program, the empirical evidence suggests that retaining ownership is a riskier investment decision than ascertained in the earlier literature. We conclude that the lack of enthusiasm for retaining ownership by cow/calf producers may be the result of the level of risk associated with retaining ownership rather than producers being too risk averse as asserted in the literature.

Keywords: Risk; and; Uncertainty (search for similar items in EconPapers)
Pages: 25
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://ageconsearch.umn.edu/record/32023/files/StaffPaper2003-6-scan.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:sdsusp:32023

DOI: 10.22004/ag.econ.32023

Access Statistics for this paper

More papers in Economics Staff Papers from South Dakota State University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().