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Is There Supply Distortion In The Green Box? An Acreage Response Approach

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  • Bakhshi, Samira
  • Kerr, William A.

Abstract

The shift of the farm subsidies toward programs classified as being decoupled income supports in the WTO’s URAA raises the question of their true impact on production and trade. In this study, we measured the acreage effects of the Canadian whole farm programs under uncertainty. Based on the theoretical discussions regarding the role of the insurance effect in acreage decisions, we extend the theoretical restrictions examined by Chavas and Holt (1990)which enables us to include this effect in our model specification. Hence, we modified the expected utility maximization framework (under the hypothesis that farmers are risk averse) developed by Chavas and Holt (1990) and derived three distinct effects: market effects, the wealth effect, and the insurance effect.

Suggested Citation

  • 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.
    • Handle: RePEc:ags:catpwp:51093
    DOI: 10.22004/ag.econ.51093
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    Cited by:

    1. Tangermann, Stefan, 2011. "Risk Management in Agriculture and the Future of the EU's Common Agricultural Policy," National Policies, Trade and Sustainable Development 320171, International Centre for Trade and Sustainable Development (ICTSD).
    2. Burdine, Kenneth H. & Maynard, Leigh J., 2012. "Risk Reduction of LGM-Dairy and its Potential Impact on Production," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124180, Agricultural and Applied Economics Association.
    3. Vyn, Richard J. & Haq, Zahoor Ul & Weerahewa, Jeevika & Meilke, Karl D., 2012. "The Influence of Market Returns and Government Payments on Canadian Farmland Values," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(2), pages 1-14, August.
    4. Mosheim, Roberto & Blaney, Don & Burdine, Kenneth H. & Maynard, Leigh J., 2014. "Livestock Gross Margin-Dairy Insurance: An Assessment of Risk Management and Potential Supply Impacts," Economic Research Report 164606, United States Department of Agriculture, Economic Research Service.
    5. Burdine, Kenneth H. & Kusunose, Yoko & Maynard, Leigh J. & Blayney, Donald P. & Mosheim, Roberto, 2014. "Livestock Gross Margin–Dairy: An Assessment of Its Effectiveness as a Risk Management Tool and Its Potential to Induce Supply Expansion," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 46(2), pages 1-12, May.

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    Keywords

    Agricultural and Food Policy; Crop Production/Industries; International Relations/Trade; Production Economics;
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