ABSTRACT
Agricultural production variability can have substantial impacts on agribusinesses that are dependent on that production. Cotton gins provide an example of such a business. This analysis addresses the impacts of production variability on the optimal organization of the ginning industry in Mississippi. A non-linear programming model is used to determine the optimal organization under two scenarios: (1) when cotton production is held at mean levels and (2) after accounting for production variability. In addition, the impacts of potential increases in acreage variability are explored. Findings suggest that the opportunity cost of variability in the level of production on the ginning industry is large. However, increases in acreage variability above historical levels are not expected to dramatically change the optimal organization of the ginning industry in Mississippi.
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