Articles
THE ECONOMICS OF PRODUCTION AND MARKETING IN THE US POTATO INDUSTRY: GROWERS’ SUPPLY RESPONSE
Article number
223_45
Pages
282 – 286
Language
Abstract
U.S. potato prices are very volatile due to an inelastic demand and varying elasticities of supply in different production areas.
If growers have a better understanding of supply response in the different areas, given national demand, they may be able to reduce their price risk.
A 78 equation econometric model of the U.S. potato industry was developed.
The model specified acreage-planted equations for 17 production areas.
Explanatory variables in the supply equations included: lagged acreage, lagged price, lagged price range, lagged alternate crop prices, and a dummy variable for shifting price expectations at higher price levels.
For the spring and summer crops, fall-crop production the previous year was another explanatory variable.
Overall, acreage response was more elastic in production areas where there are many alternate crops.
If growers have a better understanding of supply response in the different areas, given national demand, they may be able to reduce their price risk.
A 78 equation econometric model of the U.S. potato industry was developed.
The model specified acreage-planted equations for 17 production areas.
Explanatory variables in the supply equations included: lagged acreage, lagged price, lagged price range, lagged alternate crop prices, and a dummy variable for shifting price expectations at higher price levels.
For the spring and summer crops, fall-crop production the previous year was another explanatory variable.
Overall, acreage response was more elastic in production areas where there are many alternate crops.
Authors
J.F. GUENTHNER, R.J. FOLWELL
Keywords
Online Articles (61)