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

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

Abstract

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.

Suggested Citation

  • Beach, Robert H. & Murray, Brian C. & Piggott, Nicholas E. & Wohlgenant, Michael K., 2002. "Interaction Effects Of Promotion, Research, And Price Support Programs For U.S. Cotton," 2002 Annual meeting, July 28-31, Long Beach, CA 19803, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea02:19803
    DOI: 10.22004/ag.econ.19803
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    References listed on IDEAS

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    Cited by:

    1. Batie, Cicely M. & Dennis, Elliott J. & Lubben, Bradley D., 2020. "Do state-level agricultural promotion programs increase agricultural output? The case of the Livestock Friendly County designation program in Nebraska," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304399, Agricultural and Applied Economics Association.

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