After earning an A.B. from Occidental College in economics and working three years in the Peace Corps, Professor Philip (“Phil”) Garcia received M.S. and Ph.D. degrees from Cornell University in agricultural economics. Excellence in research and graduate education distinguishes Phil’s outstanding career.  He achieved an exceptional track record of continuous scholarly contributions that spans four decades. In particular, Phil made landmark contributions to understanding market behavior and performance in agricultural commodity markets. Phil’s graduate teaching record was also exceptional.  He shaped several generations of agricultural economists through his graduate teaching, advising, and mentoring activities. Phil’s accomplishments exemplify the ideal of the professor-educator, producing highly influential scholarly research and training others to perform equally rigorous and informative research.

In four decades of scholarly research on commodity markets, Phil conducted path-breaking research and made important contributions to the understanding of commodity markets. Phil produced more than 220 research publications, including more than 120 journal articles, 13 book chapters, 90 published proceedings and abstracts, and numerous conference and professional presentations.  According to Google Scholar, Phil has generated around thousands of citations.  Three papers were recognized for notable contributions to understanding futures and options behavior and performance in the AAEA’s “A Century of Research on Agricultural Markets” (AJAE 2010).

His most significant and lasting contributions to the profession emerge in two areas—rational pricing and forecast assessment and convergence in futures markets. Pricing is critical for making decisions in agriculture.  An important contribution of Phil’s research was the assessment of forward-looking pricing mechanisms and price forecasting procedures in a rigorous context, in particular, performing evaluations in an out-of-sample framework.  Early in his career, Phil embarked on the study of rationality in pricing and forecast evaluation in agricultural futures markets. A highly cited 1981 AJAE paper evaluating price forecasting performance of livestock futures markets identified substantive pricing errors in live cattle and hog markets and helped set the stage for subsequent work.  This was followed by innovative papers on pricing efficiency of futures markets published in a variety of journals including the AJAE (1988), which refined and measured the conditions for rationality in commodity markets.  Phil and his co-authors’ work pushed out the frontier of out-of-sample pricing and rationality tests, as well as the economic value to users. 

In later work, important evidence emerged that livestock markets, particularly the hog futures market at distant horizons, did not perform as well as forecasts for grains, a difference attributed to the lack of storability and potential for supply responses within the year.  Phil continued to emphasize rigorous out-of-sample evaluation when assessing hedging (e.g., Applied Econ 1995, 2009, Sankhya 1997), the rationality of option pricing and variance forecasting (J Fut Mkts 1996, AJAE 2007, JARE 2011), and commodity price forecasting (J of Business 1994). Phil’s work on pricing efficiency and rationality, forecasting, and out-of-sample evaluation has had an enduring impact on the profession and has been widely cited.

For most of 2005-2010, futures contracts expired up to 35% above cash prices in the principal U.S. grain futures markets, generating the biggest challenge facing the use of futures markets for hedging and price discovery in the last 50 years.  These anomalous and unprecedented convergence failures produced a heated public and academic debate, including an official U.S. Senate investigation focused on possible causes.  Policy makers, regulators, exchanges, industry leaders and participants, and academics searched for a solution. 

Phil and his colleagues’ non-convergence research emerged in a series of journal publications, reports, and academic and governmental (CFTC, U.S. congressional hearings) presentations.  It culminated in a 2015 AJAE paper that developed a dynamic rational expectations model of commodity storage to explain non-convergence.  The analysis showed that non-convergence was generated by disequilibrium between the storage rate for physical grain and the exchange-established storage rate paid to holders of the delivery instrument for the grain futures contracts.  As a result, non-convergence could be addressed by raising the contract storage rate.  This is what the Chicago Mercantile Exchange (CME) did when it adopted a variable storage rate system for wheat.  Informatively, the findings support the forward-looking rational expectations model and fail to substantiate other explanations of the problem since trading by commodity index funds, credit differentials favoring speculative financial firms, or irrational bubbles did not contribute in any measureable way to non-convergence. The paper also contributes to a more general understanding of futures markets.

Teaching and graduate education were always fundamental components of Phil’s academic portfolio.  His graduate courses in agricultural marketing, price analysis, and research writing focus on identifying problem-solving, analytic rigor, and professional dialog to engage students.  One metric of the exceptional quality of his teaching is reflected in student evaluations.  He taught over 50 graduate courses since 1987 (when the evaluation scales changed) and student evaluations of his teaching averaged 4.6/5.0. He was also a leader in a major restructuring the Department’s Ph.D. program and has been invited regularly to lecture in international graduate education settings.   

Phil was not only an exceptional graduate teacher but also a truly remarkable graduate mentor.  He directed over 20 MS theses and 30 Ph.D. dissertations. Of these, five Ph.D. dissertations and an MS thesis were recognized by the University of Illinois as outstanding and submitted to the AAEA award competition.  Koontz’s 1991 dissertation was awarded honorable mention in the AAEA competition.  He also has served on more than 90 additional dissertation/thesis committees.   

Several publications developed with students are particularly noteworthy for their insights on agricultural markets.  For instance, Hurt identified the effect of output and input risk on farrowing decisions and supported the use of futures prices to represent producer expectations (AJAE 1982).  Anderson offered the first assessments of the effect of exchange uncertainty on U.S. agricultural exports (AJAE 1989).  Koontz notably furnished first evidence of cooperative meatpacker pricing behavior in a game theoretic approach (AJAE 1993, JARE 1997).  Wang provided the first evidence of the influence of electronic trading on liquidity costs in agricultural commodities markets (AJAE 2014).  These and numerous other publications demonstrate sustained excellence and commitment to student development by fostering rigorous scholarship.

Since being named the Hieronymus Chair and Director of OFOR in 2003, Phil supported graduate education through assistantships, arranging CME and CBOT internships, and student participation at conferences.  With colleagues, he developed workshops and seminar courses on futures and options markets, and invited guests to create an academic environment that fosters student use of professional dialogue. 

The students who Phil has advised and mentored took U.S. or international academic positions at a number of prestigious institutions, including: Purdue, Michigan State, Oklahoma State, Wisconsin, Cornell, Oregon State, Louisiana State, Colorado State, Arkansas, Arizona State, Illinois, Texas A&M, Nebraska, Wageningen, Manitoba, and University of New South Wales.  Several have leadership positions in government and international institutions, and research institutes.  Others have successful careers in national and international agribusiness firms.  These scholars and leaders provide an enormous and lasting academic legacy.

With his record of excellence, it is no surprise that Phil won more than 23 University teaching awards (Outstanding or Excellent Teacher Award) in addition to numerous research awards and honors.  He was also recognized three times as the Outstanding Department Graduate Professor and five times as advisor of the Outstanding Department PhD Dissertation.  Phil also received the flagship College award (Funk Award) for his combined teaching, research and outreach contributions.  In 2016, he won the AAEA Distinguished Graduate Teaching Award.