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Location and Marketing under Marketing Assistance Loan and Loan Deficiency Payment Programs

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  • Alexander E. Saak

Abstract

Marketing assistance loan (MAL) and loan deficiency payment (LDP) programs differ in their treatment of basis. This paper analyzes marketing decisions under these programs when producers are differentiated by location with respect to the terminal market. The developed model may help explain the observed lack of an association between the county loan rate and the share of a county's production enrolled in MAL programs. Under certain conditions, multiple equilibria are shown to emerge. The effects of MAL and LDP programs on welfare and policy implications are discussed.

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Bibliographic Info

Paper provided by Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University in its series Food and Agricultural Policy Research Institute (FAPRI) Publications with number 02-wp297.

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Date of creation: Apr 2002
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Handle: RePEc:ias:fpaper:02-wp297

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Related research

Keywords: commodity prices; grain storage; price support programs.;

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  1. Williams,Jeffrey C. & Wright,Brian D., 1991. "Storage and Commodity Markets," Cambridge Books, Cambridge University Press, number 9780521326162.
  2. Dermot J. Hayes & Bruce A. Babcock, 1998. "Loan Deficiency Payments or the Loan Program?," Center for Agricultural and Rural Development (CARD) Publications 98-bp19, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  3. Bruce A. Babcock & Dermot J. Hayes & Phillip Kaus, 1998. "Are Loan Deficiency Payments Too Low In Iowa?," Center for Agricultural and Rural Development (CARD) Publications 98-bp20, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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