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Kansas Grain Supply Response to Economic and Biophysical Factors, 1977-2007

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Author Info

  • Boussios, David
  • Barkley, Andrew P.

Abstract

This research identifies and quantifies the impact of biophysical and economic variables on Kansas grain supply for the period 1977- 2007. This research estimates total supply response by aggregating yield and acreage responses. Previous methods have effectively analyzed the response of crop supply through either acreage or yield responses. However, the method proposed in this research incorporates both yield and acreage response to various production variables through recursive modeling. The results include the negative impact of acreage expansion on aggregate yields and thus the impact on total supply. The results also show that previous methods underestimate supply response elasticities by as much as 97%. Furthermore, this research estimates supply response to estimated changes in climate temperatures and precipitation. Results show the importance of incorporating both responses in estimating supply as acreage and yields are constantly changing, sometimes in contradictory ways. This research extends previous research on producer price expectations. The results show strong statistical significance of both futures and basis prices affecting total supply, which indicates both prices are instrumental in estimating expectations. Understanding these results is important given the volatility in current agricultural commodity markets.

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File URL: http://purl.umn.edu/124385
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Bibliographic Info

Paper provided by Agricultural and Applied Economics Association in its series 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington with number 124385.

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Date of creation: Aug 2012
Date of revision:
Handle: RePEc:ags:aaea12:124385

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Related research

Keywords: Yield; Acreage; Supply; Grain; Extensive Margin; Producer Expectations; Climate; Weather; Agribusiness; Agricultural and Food Policy; Crop Production/Industries; Environmental Economics and Policy; Land Economics/Use; Production Economics; Resource /Energy Economics and Policy;

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References

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  1. Richard E. Just & Quinn Weninger, 1999. "Are Crop Yields Normally Distributed?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(2), pages 287-304.
  2. Just, Richard E., 2000. "Some Guiding Principles For Empirical Production Research In Agriculture," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 29(2), October.
  3. Choi, Jung-Sup & Helmberger, Peter G., 1993. "How Sensitive Are Crop Yields To Price Changes And Farm Programs?," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 25(01), July.
  4. William Lin & Robert Dismukes, 2007. "Supply Response under Risk: Implications for Counter-Cyclical Payments' Production Impact," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(1), pages 64-86.
  5. Douglas J. Miller & Andrew J. Plantinga, 1999. "Modeling Land Use Decisions with Aggregate Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 180-194.
  6. Robert K. Kaufmann & Seth E. Snell, 1997. "A Biophysical Model of Corn Yield: Integrating Climatic and Social Determinants," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 178-190.
  7. Jeffrey D. McDonald & Daniel A. Sumner, 2003. "The Influence of Commodity Programs on Acreage Response to Market Price: With an Illustration Concerning Rice Policy in the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 857-871.
  8. Gallagher, Paul W. & Houck, James P., 1976. "The Price Responsiveness of U.S. Corn Yields," Staff General Research Papers 12563, Iowa State University, Department of Economics.
  9. Brian D. Wright, 2011. "The Economics of Grain Price Volatility," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(1), pages 32-58.
  10. Wolfram Schlenker & W. Michael Hanemann & Anthony C. Fisher, 2006. "The Impact of Global Warming on U.S. Agriculture: An Econometric Analysis of Optimal Growing Conditions," The Review of Economics and Statistics, MIT Press, vol. 88(1), pages 113-125, February.
  11. Chavas, Jean-Paul & Pope, Rulon D. & Kao, Robert S., 1983. "An Analysis Of The Role Of Futures Prices, Cash Prices And Government Programs In Acreage Response," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 8(01), July.
  12. Ian W. Hardie & Peter J. Parks, 1997. "Land Use with Heterogeneous Land Quality: An Application of an Area Base Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 299-310.
  13. Rulon D. Pope & Richard E. Just, 2003. "Distinguishing Errors in Measurement from Errors in Optimization," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 348-358.
  14. Bruce A. McCarl & Xavier Villavicencio & Ximing Wu, 2008. "Climate Change and Future Analysis: Is Stationarity Dying?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(5), pages 1241-1247.
  15. Wolfram Schlenker & Michael J. Roberts, 2006. "Nonlinear Effects of Weather on Corn Yields ," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(3), pages 391-398.
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