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Estimating Vulnerability of U.S. Peanut Producers to Changes in Farm Support

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  • Nadolnyak, Denis A.
  • Fletcher, Stanley M.

Abstract

In the paper, we make an attempt to estimate the supply of farmer stock peanuts in the Southeastern Region of the U.S. and evaluate production effects of the recent changes in farm support policies and of trade liberalization that have affected prices. The choice of estimation methodology is dictated by the unavailability of suitable time-series data due to heavily regulated nature of the U.S. peanut markets before 2002. Supply estimation is performed by estimating farm-level supply using cross-sectional survey data on farm-level costs and returns. Results show that producers not able to expand peanut acreage are likely to be vulnerable to price reductions, as there might exist economies of scale. Production on dry land is likely to remain unprofitable at the current price levels. The analysis is complicated by severe multicollinearity problems and noisiness of the input data explained by the fact that many input variables may be inverse proxies for land productivity, which varied because of the constraints imposed by the supply management policies.

Suggested Citation

  • Nadolnyak, Denis A. & Fletcher, Stanley M., 2005. "Estimating Vulnerability of U.S. Peanut Producers to Changes in Farm Support," 2005 Annual meeting, July 24-27, Providence, RI 19287, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea05:19287
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    File URL: http://purl.umn.edu/19287
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    References listed on IDEAS

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    1. D. S. Prasada Rao & Bart van Ark, 2013. "Introduction," Chapters,in: World Economic Performance, chapter 1, pages 1-6 Edward Elgar Publishing.
    2. J. P. Houck & M. E. Ryan, 1972. "Supply Analysis for Corn in the United States: The Impact of Changing Government Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(2), pages 184-191.
    3. de Gorter, Harry & Abbott, Philip C. & Barichello, Richard R. & Boughner, Devry S. & Bureau, Jean-Christophe & Choi, Jung-Sup & Coleman, Jonathan R. & Herrmann, Roland & Kramb, Marc Christopher & Shel, 2001. "Issues In Reforming Tariff-Rate Import Quotas In The Agreement On Agriculture In The Wto," Commissioned Papers 14617, International Agricultural Trade Research Consortium.
    4. Houck, James P. & Ryan, Mary E., 1972. "Supply Analysis For Corn In The United States: The Impact Of Changing Government Programs," Staff Papers 13554, University of Minnesota, Department of Applied Economics.
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    Keywords

    Agricultural and Food Policy;

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