Agriculture economics

Small scale farming at the homestead or hobby farm scale provides opportunities for members of the public to visit farms, see livestock, and engage directly with how their food is produced. This scale is often dismissed as or minor importance, yet the biosecurity of larger farms makes these small farms often the only ones that the public can visit. My research explores whether communities want these direct connections with agriculture, and if this provides understanding of the interconnection of farming ecosystems. As a small scale egg producer, I first provide a personal autoethnography of my own operation. I then examine my customers attitudes toward my produce and farm, and analyse interview of other local producers and community members.

Author Keywords: Connectivity, Diversity, Family farming, Homesteading, Small-scale agriculture, Sustainable agriculture

This thesis is intended to support dependent-on-crops farmers to hedge the price risks of their crops. Firstly, we applied one-factor model, which incorporated a deterministic function and a stochastic process, to predict the future prices of crops (soybean). A discrete form was employed for one-month-ahead prediction. For general prediction, de-trending and de-cyclicality were used to remove the deterministic function. Three candidate stochastic differential equations (SDEs) were chosen to simulate the stochastic process; they are mean-reverting Ornstein-Uhlenbeck (OU) process, OU process with zero mean, and Brownian motion with a drift. Least squares methods and maximum likelihood were used to estimate the parameters. Results indicated that one-factor model worked well for soybean prices. Meanwhile, we provided a two-factor model as an alternative model and it also performed well in this case. In the second main part, a zero-cost option package was introduced and we theoretically analyzed the process of hedging. In the last part, option premiums obtained based on one-factor model could be compared to those obtained from Black-Scholes model, thus we could see the differences and similarities which suggested that the deterministic function especially the cyclicality played an essential role for the soybean price, thus the one-factor model in this case was more suitable than Black-Scholes model for the underlying asset.

Author Keywords: Brownian motion, Least Squares Method, Maximum Likelihood Method, One-factor Model, Option Pricing, Ornstein-Uhlenbeck Process