IDEAS home Printed from https://ideas.repec.org/a/taf/apeclt/v21y2014i1p55-59.html
   My bibliography  Save this article

A note on the role of price risk in soya bean supply functions

Author

Listed:
  • Jung Hwan Min
  • Harry M. Kaiser

Abstract

This article examines whether the inclusion of the price risk variable as an explanatory variable in a Gardner-type acreage response model is statistically significant. By estimating six separate soya bean acreage response equations, including two linear equations with and without risk, two double logarithmic equations with and without risk and two semi-logarithmic equations with and without risk, we find that adding a risk variable to the futures price model yields a better statistical result in every case. Furthermore, the models that have incorporated the risk variable have higher own and cross-price elasticities. This is a desirable result, since in the literature, many previous estimated supply elasticities were considered lower than plausible.

Suggested Citation

  • Jung Hwan Min & Harry M. Kaiser, 2014. "A note on the role of price risk in soya bean supply functions," Applied Economics Letters, Taylor & Francis Journals, vol. 21(1), pages 55-59, January.
    • Handle: RePEc:taf:apeclt:v:21:y:2014:i:1:p:55-59
    DOI: 10.1080/13504851.2013.837574
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/13504851.2013.837574
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13504851.2013.837574?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Marc Nerlove, 1958. "Distributed lags and Estimation of Long-Run Supply and Demand Elasticities: Theoretical Considerations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 40(2), pages 301-310.
    2. Lin, William, 1977. "Measuring Aggregate Supply Response Under Instability," 1977 AAEA-WAEA Joint Meeting, July 31-August 3, San Diego, California 283678, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Just, Richard E., 1974. "Econometric Analysis of Production Decisions with Government Intervention: The Case of the California Field Crops," Monographs, University of California, Davis, Giannini Foundation, number 251950, December.
    4. William Lin, 1977. "Measuring Aggregate Supply Response under Instability," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 59(5), pages 903-907.
    5. Bruce L. Gardner, 1976. "Futures Prices in Supply Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(1), pages 81-84.
    6. Richard E. Just, 1974. "An Investigation of the Importance of Risk in Farmers' Decisions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(1), pages 14-25.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Meilke, Karl D. & Weersink, Alfons, 1991. "An Analysis of the Effects of Government Payments to Grain and Oilseeds Producers on Cropping Decisions," Working Papers 244081, Agriculture and Agri-Food Canada.
    2. Langley, James A., 1983. "Regional acreage response functions for major US field crops: estimation and policy implications," ISU General Staff Papers 198301010800008678, Iowa State University, Department of Economics.
    3. Julie SUBERVIE, 2006. "The impact of world price instability on agricultural supply according to several macroeconomic factors," Working Papers 200604, CERDI.
    4. Brorsen, B. Wade & Grant, Warren R. & Richardson, James W. & Schnake, L.D., 1984. "Impacts Of Price Variability On Marketing Margins And Producer Viability In The Texas Wheat Industry," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 9(2), pages 1-11, December.
    5. Winter, John R. & Whittaker, James K., 1979. "Estimation Of Wheat Acreage Response Functions For The Northwest," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 4(2), pages 1-6, December.
    6. Lee, Young-Jae & Kennedy, P. Lynn, 2013. "An Examination of the Crop Acreage Allocation Decision Process under Uncertainty," Asian Journal of Agriculture and Rural Development, Asian Economic and Social Society (AESS), vol. 3(02), pages 1-10, February.
    7. Pope, Rulon D. & LaFrance, Jeffrey T. & Just, Richard E., 2011. "Agricultural arbitrage and risk preferences," Journal of Econometrics, Elsevier, vol. 162(1), pages 35-43, May.
    8. Patrick GUILLAUMONT, 2000. "On the Economic Vulnerability of Low Income Countries," Working Papers 200016, CERDI.
    9. Robison, Lindon & Carman, Garth, 1979. "Aggregate Risk Response Models And Market Equilibrium," Risk Management in Agriculture: Behavioral, Managerial, and Policy Issues, January 25-26, 1979, San Francisco, California 271467, Regional Research Projects > W-149: An Economic Evaluation of Managing Market Risks in Agriculture.
    10. Jean-Claude Nascimento & Marc Raffinot, 1985. "Politique de prix agricoles et comportement des producteurs : le cas de l'arachide au Sénégal," Revue Économique, Programme National Persée, vol. 36(4), pages 779-796.
    11. Jeon, Jong-Pyeong, 1989. "The impacts of policy alternatives and foreign demand fluctuations on the US rice market," ISU General Staff Papers 1989010108000010204, Iowa State University, Department of Economics.
    12. Musser, Wesley N. & Stamoulis, Kostas G., 1980. "Risk Transfer And Commodity Programs," Risk Analysis in Agriculture: Research and Educational Developments, January 16-18, 1980, Tucson, Arizona 271565, Regional Research Projects > W-149: An Economic Evaluation of Managing Market Risks in Agriculture.
    13. Lin, William W. & Dismukes, Robert, 2005. "Risk Considerations in Supply Response: Implications for Counter-Cyclical Payments' Production Impact," 2005 Annual meeting, July 24-27, Providence, RI 19304, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    14. Lence, Sergio Horacio, 1991. "Dynamic firm behavior under uncertainty," ISU General Staff Papers 1991010108000010656, Iowa State University, Department of Economics.
    15. Edwards, Clark, 1985. "U.S. Agriculture's Potential to Supply World Food Markets," Agricultural Economic Reports 307995, United States Department of Agriculture, Economic Research Service.
    16. Heifner, Richard G. & Plato, Gerald E., 1979. "Wheat Price Bands And Welfare: An Analysis Of Stabilization Alternatives," Risk Management in Agriculture: Behavioral, Managerial, and Policy Issues, January 25-26, 1979, San Francisco, California 271466, Regional Research Projects > W-149: An Economic Evaluation of Managing Market Risks in Agriculture.
    17. Liu, Karen, 1981. "Multiple Crop Supply and Factor Demand Component of the World Grains, Oilseeds, and Livestock Model," Staff Reports 276718, United States Department of Agriculture, Economic Research Service.
    18. Branch, William & Tilley, Daniel S., 1991. "Catfish Producer Harvest Response To Production And Asymmetric Price Risk," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 23(2), pages 1-9, December.
    19. Estes, Edmund A. & Blakeslee, Leroy L. & Mittelhammer, Ronald C., 1982. "Regional And National Impacts Of Expanded Pacific Northwest Potato Production," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 7(2), pages 1-14, December.
    20. Holt, Matthew T., 1999. "A Linear Approximate Acreage Allocation Model," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(2), pages 1-15, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:21:y:2014:i:1:p:55-59. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEL20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.