Volatility in the international food markets: implications for global agricultural supply and for market and price policy
Agricultural countries usually produce multiple crops, but a particular area of land is allocated to the production of a certain crop. Understanding how producers make decision to allot acreage among crops and how decisions about land use are affected by changes in prices and their volatility is fundamental for both policy design and for estimation models of the behavior of agricultural producers. The profitability of a land allocated to a certain crop is affected by the volatility of the crop’s price that in turn affects the acreage allocation decision of the producer. To address this, the present paper estimates global acreage response equations for major agricultural commodities (wheat, maize, soybeans and rice) using two related databases: globally aggregated time series and cross-country panel databases. The paper addresses the debate of agricultural market regulation from the perspective of agricultural producers. The findings of this study reveal that, while higher output prices are incentives to improvements in the global crop supply, output price volatility, on the other hand, discourages agricultural investment in terms of cropland expansion. Depending on respective crop, short-run acreage elasticities range between 0.05 and 0.25 whereas price volatility tends to reduce acreage response of all crops except of soybeans. Thus, price volatility management tools, which could include market regulation but also other market based tools like futures contracts or contract farming, need to be customized to specific crops and countries.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 0531 / 596 5501
Fax: 0531 / 596 5599
Web page: http://www.gewisola.de/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Timilsina, Govinda & Beghin, John C. & van der Mensbrugghe, Dominique & Mevel, Simon, 2010.
"The Impacts of Biofuels Targets on Land-Use Change and Food Supply: A Global Cge Assessment,"
Staff General Research Papers
32206, Iowa State University, Department of Economics.
- Govinda R. Timilsina & John C. Beghin & Dominique van der Mensbrugghe & Simon Mevel, 2012. "The impacts of biofuels targets on land‐use change and food supply: A global CGE assessment," Agricultural Economics, International Association of Agricultural Economists, vol. 43(3), pages 315-332, 05.
- Timilsina, Govinda R. & Beghin, John C. & van der Mensbrugghe, Dominique & Mevel, Simon, 2010. "The impacts of biofuel targets on land-use change and food supply : a global CGE assessment," Policy Research Working Paper Series 5513, The World Bank.
- David Roodman, 2006.
"How to Do xtabond2: An Introduction to "Difference" and "System" GMM in Stata,"
103, Center for Global Development.
- David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
- Davison, Cecil W. & Crowder, Bradley M., 1991. "Northeast Soybean Acreage Response Using Expected Net Returns," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 20(1), April.
- Samira Bakhshi & Richard S. Gray, 2012. "Acreage Response to Whole Farm Income Stabilisation Programmes," Journal of Agricultural Economics, Wiley Blackwell, vol. 63(2), pages 385-407, 06.
- Sandmo, Agnar, 1971. "On the Theory of the Competitive Firm under Price Uncertainty," American Economic Review, American Economic Association, vol. 61(1), pages 65-73, March.
- Braulke, Michael, 1982. "A Note on the Nerlove Model of Agricultural Supply Response," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 23(1), pages 241-44, February.
- Miranda, Mario J & Helmberger, Peter G, 1988. "The Effects of Commodity Price Stabilization Programs," American Economic Review, American Economic Association, vol. 78(1), pages 46-58, March.
- Friederike Greb & Nelissa Jamora & Carolin Mengel & Stephan von Cramon-Taubadel & Nadine Würriehausen, 2012.
"Price transmission from international to domestic markets,"
Courant Research Centre: Poverty, Equity and Growth - Discussion Papers
125, Courant Research Centre PEG, revised 08 Oct 2012.
- Greb, Friederike & Jamora, Nelissa & Mengel, Carolin & von Cramon-Taubadel, Stephan & Wurriehausen, Nadine, 2012. "Price transmission from international to domestic markets," Discussion Papers 137101, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
- Michael J. Roberts & Wolfram Schlenker, 2009. "World Supply and Demand of Food Commodity Calories," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1235-1242.
- Beddow, Jason M. & Pardey, Philip G. & Alston, Julian M., 2009. "The Shifting Global Patterns of Agricultural Productivity," Choices, Agricultural and Applied Economics Association, vol. 24(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.
- Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
- Arellano, Manuel & Bond, Stephen, 1991.
"Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations,"
Review of Economic Studies,
Wiley Blackwell, vol. 58(2), pages 277-97, April.
- Tom Doan, . "RATS program to replicate Arellano-Bond 1991 dynamic panel," Statistical Software Components RTZ00169, Boston College Department of Economics.
- Coyle, Barry T., 1993. "On Modeling Systems Of Crop Acreage Demands," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(01), July.
When requesting a correction, please mention this item's handle: RePEc:ags:gewi13:156097. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.