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A Method For Evaluating Supply Response To Price Underwriting

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  • Fraser, Rob W.

Abstract

In this paper a method for evaluating the supply response of individual producers to a price underwriting scheme is presented. The method includes precise formulae to take account of the impact of price underwriting on the producer's uncertain conditions. The Australian Wheat Board's guaranteed minimum price scheme is taken as a specific example of price underwriting in practice. Results show the scheme to lead to only relatively small supply responses. The impact on producer behaviour of an increase in price uncertainty in the presence of an underwriting scheme is also demonstrated in the paper.

Suggested Citation

  • Fraser, Rob W., 1988. "A Method For Evaluating Supply Response To Price Underwriting," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 32(01), April.
  • Handle: RePEc:ags:ajaeau:22921
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    File URL: http://purl.umn.edu/22921
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    References listed on IDEAS

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    1. Gilbert, Christopher L, 1985. "Futures Trading and the Welfare Evaluation of Commodity Price Stabilisation," Economic Journal, Royal Economic Society, vol. 95(379), pages 637-661, September.
    2. Quiggin, John C., 1983. "Underwriting Agricultural Commodity Prices," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 27(03), December.
    3. Gallagher, Paul, 1978. "The Effectiveness Of Price Support Policy-Some Evidence For U.S. Corn Acreage Response," Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, issue 4.
    4. Meyer, Jack & Ormiston, Michael B., 1983. "The comparative statics of cumulative distribution function changes for the class of risk averse agents," Journal of Economic Theory, Elsevier, vol. 31(1), pages 153-169, October.
    5. Bond, Gary E. & Wonder, Bernard, 1980. "Risk Attitudes Amongst Australian Farmers," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 24(01), April.
    6. Anderson, Kym & Tyers, Rod, 1986. "Agricultural Policies of Industrial Countries and Their Effects on Traditional Food Exporters," The Economic Record, The Economic Society of Australia, vol. 62(179), pages 385-399, December.
    7. Fraser, Rob W., 1986. "Supply Responses, Risk Aversion And Covariances In Agriculture," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 30(02-03).
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Fraser, Rob W., 1993. "Welfare Effects of and Supply Responses to Recent Australian Agricultural Policy Changes," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 61(01), April.
    2. Fraser, Rob W., 1999. "An analysis of the Western Australian gold royalty," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 43(1), March.
    3. Quiggin, John C., 1991. "Contradictory Predictions On Supply Response Under Stabilization: A Reconciliation," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 35(03), December.
    4. R.W. Fraser, 1991. "Price-Support Effects On Ec Producers," Journal of Agricultural Economics, Wiley Blackwell, vol. 42(1), pages 1-10.
    5. Claire Chambolle & Sylvaine Poret, 2009. "Fair Trade Contracts for Some, an Insurance for Others," Working Papers hal-00367500, HAL.
    6. Fraser, Rob W., 1997. "Seasonal variability, land values and willingness-to-pay for a forward wheat contract with protein premiums and discounts," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 41(2), June.
    7. Fraser, Rob W., 1998. "Seasonal variability and a farmer's supply response to protein premiums and discounts," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 42(1), March.
    8. Sarris, Alexander, 2002. "The demand for commodity insurance by developing country agricultural producers - theory and an application to cocoa in Ghana," Policy Research Working Paper Series 2887, The World Bank.
    9. Fraser, R.W. & Murrell, A.J., 1990. "The Australian Wool Corporation's Reserve Price Scheme: An Assessment of Price Stabilisation and Producer Benefits," Discussion Papers 232295, University of Western Australia, School of Agricultural and Resource Economics.
    10. Fraser, R., 2002. "An evaluation of the relative performance of alternatively structured resource rent taxes," Resources Policy, Elsevier, vol. 28(1-2), pages 1-6.
    11. Fraser, Rob W., 1998. "Lease allocation systems, risk aversion and the resource rent tax," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 42(2), June.
    12. Fraser, Rob W., 1992. "An Analysis Of Willingness-To-Pay For Crop Insurance," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 36(01), April.

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