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Dynamic Econometric Models of Manitoba Crop Production and Hypothetical Production Impacts for CAIS

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  • Coyle, Barry T.
  • Wei, Ran
  • Rude, James

Abstract

This study analyzes the impact of the Canadian Agriculture Income Stabilization (CAIS)program. The study begins with a specification of dynamic crop production that decomposes static short run crop acreage allocation decisions and dynamic crop yield affects. The modelling framework accommodates risk aversion, price uncertainty, and applies recent aggregation theory to aggregate weather data. Using this framework an analytical model of the impacts of CAIS on crop production is developed. Hypothetical impacts of are simulated using an aggregate Manitoba data set. The results show that CAIS has a substantial impact on the shadow prices of both inputs and outputs. These shadow price effects resulted in a 4 percent increase in long run wheat and barley yields and a 2 percent increase for canola. CAIS has a small impact on nominal wealth but the impacts depend on the properties of producers’ risk preferences. With constant relative risk aversion there is a wealth effect which in turn affects production decisions.

Suggested Citation

  • Coyle, Barry T. & Wei, Ran & Rude, James, 2008. "Dynamic Econometric Models of Manitoba Crop Production and Hypothetical Production Impacts for CAIS," Working Papers 46630, Canadian Agricultural Trade Policy Research Network.
    • Handle: RePEc:ags:catpwp:46630
    DOI: 10.22004/ag.econ.46630
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    References listed on IDEAS

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    Cited by:

    1. Haile, Mekbib G. & Kalkuhl, Matthias & von Braun, Joachim, 2013. "Short-term global crop acreage response to international food prices and implications of volatility," Discussion Papers 145308, University of Bonn, Center for Development Research (ZEF).
    2. Haile, Mekbib G. & Kalkuhl, Matthias & Braun, Joachim von, 2013. "Inter-and intra-annual global crop acreage response to prices and price risk," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149695, Agricultural and Applied Economics Association.
    3. Mekbib G. Haile & Matthias Kalkuhl & Joachim Braun, 2014. "Inter- and intra-seasonal crop acreage response to international food prices and implications of volatility," Agricultural Economics, International Association of Agricultural Economists, vol. 45(6), pages 693-710, November.
    4. Bakhshi, Samira & Kerr, William A., 2009. "Is There Supply Distortion In The Green Box? An Acreage Response Approach," Working Papers 51093, Canadian Agricultural Trade Policy Research Network.
    5. Haile, Mekbib G. & Kalkuhl, Matthias & Braun, Joachim von, 2013. "How does food supply respond to high and volatile international food prices? An empirical evaluation of inter- and intra- seasonal global crop acreage response," 2013 Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 161472, African Association of Agricultural Economists (AAAE).

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    Keywords

    Agricultural and Food Policy; International Relations/Trade; Production Economics; Risk and Uncertainty;
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