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Examining Economic Efficiency of U.S. Government Grading System: The Case of Louisiana Rough Rice

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  • Sung C. No
  • Michael E. Salassi

Abstract

This study estimates a hedonic price model for Louisiana rough rice to evaluate the USDA grading system. The parameter estimates suggest that chalky kernel and red rice are significant quality factors that affect prices in the bid/acceptance regional rough rice market. Results also show that head and broken rice are as important characteristic as the USDA grade quality factors. Generalized least-squares estimation indicates that the USDA grades do not fully explain the observed price variations in Louisiana rough rice. The study constructs a modified grading system for rice. Comparisons show that the modified grading system outperforms the current government grading.

Suggested Citation

  • Sung C. No & Michael E. Salassi, 2011. "Examining Economic Efficiency of U.S. Government Grading System: The Case of Louisiana Rough Rice," Research in World Economy, Research in World Economy, Sciedu Press, vol. 2(1), pages 2-13, April.
    • Handle: RePEc:jfr:rwe111:v:2:y:2011:i:1:p:2-13
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    References listed on IDEAS

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    2. Espinosa, Juan Andres & Goodwin, Barry K., 1991. "Hedonic Price Estimation For Kansas Wheat Characteristics," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(1), pages 1-14, July.
    3. Godfrey, Leslie G, 1978. "Testing for Higher Order Serial Correlation in Regression Equations When the Regressors Include Lagged Dependent Variables," Econometrica, Econometric Society, vol. 46(6), pages 1303-1310, November.
    4. Akaike, Hirotugu, 1981. "Likelihood of a model and information criteria," Journal of Econometrics, Elsevier, vol. 16(1), pages 3-14, May.
    5. B. Wade Brorsen & Warren R. Grant & M. Edward Rister, 1984. "A Hedonic Price Model for Rough Rice Bid/Acceptance Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(2), pages 156-163.
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