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Interaction Effects Of Promotion, Research, And Price Support Programs For U.S. Cotton


Author Info

  • Beach, Robert H.
  • Murray, Brian C.
  • Piggott, Nicholas E.
  • Wohlgenant, Michael K.


Many agricultural commodities have industry-funded generic promotion and/or research (“"checkoff”") programs designed to improve the economic performance of producers. To determine the effectiveness of these programs, the net benefits to producers attributable to activities funded by the checkoff must be separated from those due to other factors influencing commodity markets. One such factor that is very important in many agricultural commodity markets is the effect of government programs. However, studies evaluating the returns to checkoff programs often do not explicitly discuss the impact of pre-existing distortions caused by federal farm programs. Because the distortions caused by farm programs can be quite large, this omission can lead to seriously biased estimates of the returns to the checkoff programs. In this study, we develop a model that captures the influence of two Federal programs (loan deficiency payments to farmers and subsidies to consuming mills) on the estimated returns to the Cotton Research and Promotion Program. Using an econometrically estimated model of the U.S. cotton market, we find that the program interaction effects have a large impact on checkoff program returns.

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Bibliographic Info

Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2002 Annual meeting, July 28-31, Long Beach, CA with number 19803.

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Date of creation: 2002
Date of revision:
Handle: RePEc:ags:aaea02:19803

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Keywords: Agricultural and Food Policy; Crop Production/Industries;


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  1. Pritchett, James G. & Liu, Donald J. & Kaiser, Harry M., 1998. "Optimal Choice Of Generic Milk Advertising Expenditures By Media Outlet," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(01), July.
  2. Hatanaka, Michio, 1976. "Several efficient two-step estimators for the dynamic simultaneous equations model with autoregressive disturbances," Journal of Econometrics, Elsevier, vol. 4(2), pages 189-204, May.
  3. Kinnucan, Henry W. & Xiao, Hui & Yu, Shixue, 2000. "Relative Effectiveness Of Usda'S Nonprice Export Promotion Instruments," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(02), December.
  4. Lowenstein, Frank, 1952. "Factors Affecting the Domestic Mill Consumption of Cotton," Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, issue 2.
  5. John Lenz & Harry M. Kaiser & Chanjin Chung, 1998. "Economic analysis of generic milk advertising impacts on markets in New York State," Agribusiness, John Wiley & Sons, Ltd., vol. 14(1), pages 73-83.
  6. Duffy, Patricia A. & Shalishali, Kasazi & Kinnucan, Henry W., 1994. "Acreage Response Under Farm Programs For Major Southeastern Field Crops," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 26(02), December.
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