The Effect of Price on Acreage and Yield of Potatoes

Farmers' response to price has usually been measured by acreage response. Changes in yield were regarded largely as a consequence of weather. Accordingly, the inclusion of such changes would tend to obscure the underlying production-price responses of farmers. Weather has played a much less important role as a determinant of yields during World War II and the postwar period, and the notion of a yield response to price has become a logical assumption in the statistical measurement of supply response. The effects of weather were not analyzed in this particular study. In this paper, relationships between supply of potatoes (as measured by acreage and yield response) and expected "normal" price are studied. This price differs from previous year's price. Farmers are believed to gage the prospective price for the current crop from an evaluation of past prices to form some sort of "normal" price. The prospective or expected price is modified each year by the knowledge gained from actual price. Two objects are sought: (1) To obtain total elasticity of supply measures from elasticity of acreage and elasticity of yield, and (2) to evaluate farmers' response to expected "normal" price as contrasted with previous year's price. The study provides for a single yearly adjustment to price and therefore does not consider projected adjustments that might occur over long periods. For valuable assistance given the author wishes to express his appreciation to Anthony S. Rojko, Frederick V. Waugh, Will M. Simmons, and James P. C avin of the Agricultural Marketing Service, and Richard J. Foote, formerly of AMS. The paper was developed from research under authority of the Agricultural Marketing Act of 1946 (RMA, Title II).