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Better supply elasticities improve commodity policy: The federal response to the Covid-19 pandemic

Author

Listed:
  • Goyal, Raghav
  • Adjemian, Michael K
  • Secor, William

Abstract

Accurate supply parameters are essential for policy analysis, especially since they often support taxpayer-funded relief programs costing billions of dollars. This study incorporates a broader dataset than traditional methods and applies modern, straightforward econometric techniques to estimate marketing and supply elasticities for the U.S.’s top crops: corn and soybeans. While rarely examined, marketing elasticities, at 3.27% for corn and 2.86% for soybeans, capture the rate at which producers market harvests based on expected cash-futures basis changes. A 3SLS approach estimates supply elasticities for corn and soybeans at 0.28 (95% CI: 0.09–0.47) and 0.12 (95% CI: 0.007–0.22), respectively; we use these elasticities to show that USDA’s COVID-19 compensation programs underestimated losses to the producers of both commodities.

Suggested Citation

  • Goyal, Raghav & Adjemian, Michael K & Secor, William, 2025. "Better supply elasticities improve commodity policy: The federal response to the Covid-19 pandemic," Food Policy, Elsevier, vol. 135(C).
    • Handle: RePEc:eee:jfpoli:v:135:y:2025:i:c:s0306919225001423
    DOI: 10.1016/j.foodpol.2025.102937
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    Keywords

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    JEL classification:

    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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