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Spatial Production Concentration, Demand Uncertainty, And Multiple Markets

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  • Saak, Alexander E.

Abstract

The geographic concentration of production of main field crops in several growing regions is a distinctive feature of U.S. agriculture. Among many possible reasons for spatial concentration, I study here the effects of the distribution of end users and terminal markets on acreage allocation. The presence of multiple terminal markets in a growing area may allow for a more flexible marketing plan, along with introducing more idiosyncratic demand uncertainty associated with each consumption point. To take better advantage of future marketing opportunities, growers, depending on their location relative to terminal markets, may adjust the crop mix produced on the farm. I characterize the types of environments that lead to a spatial production concentration of a commodity in a growing area. I also analyze the equilibrium effects of an increase in transportation costs and a shift in acreage available for planting on spatial acreage allocation.

Suggested Citation

  • Saak, Alexander E., 2003. "Spatial Production Concentration, Demand Uncertainty, And Multiple Markets," Hebrew University of Jerusalem Archive 18557, Hebrew University of Jerusalem.
    • Handle: RePEc:ags:hebarc:18557
    DOI: 10.22004/ag.econ.18557
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    References listed on IDEAS

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    1. Alexander E. Saak & David A. Hennessy, 2002. "Planting Decisions and Uncertain Consumer Acceptance of Genetically Modified Crop Varieties," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 308-319.
    2. Darren L. Frechette & Paul L. Fackler, 1999. "What Causes Commodity Price Backwardation?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 761-771.
    3. Martin Benirschka & James K. Binkley, 1995. "Optimal Storage and Marketing Over Space and Time," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(3), pages 512-524.
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