Seasonal variability and a farmer's supply response to protein permiums and discounts
This article extends the analysis of the impact of a system of protein premiums and discounts to that on a farmer’s planned production. Despite an unambiguously negative impact on expected profits of equally likely premiums and discounts, supply response to the introduction of such a system is shown to depend on the level of seasonal variability faced by the farmer. In particular, farmers in regions which are more seasonally unreliable are likely to feature a negative supply response, whereas those in regions which are more seasonally reliable are likely to feature a positive supply response. Consequently, it is suggested that, overall, protein payments for wheat may have encouraged a shift of wheat‐growing activity away from more seasonally unreliable areas.
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- Anderson, Jock R. & Dillon, John L. & Hazell, Peter B.R. & Cowie, A.J. & Wan, G.H., 1988. "Changing Variability in Cereal Production in Australia," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 56(03), December.
- 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.
- 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.
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