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Acreage Decisions Under Risk: The Case of Corn and Soybeans

Author

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  • Chavas, Jean-Paul
  • Holt, Matthew T.

Abstract

An acreage supply response model is developed under expected utility maximization. The resulting framework is used to specify and estimate a system of risk-responsive acreage equations for corn and soybeans in the U.S. Particular attention is given to the truncation effects of government price supports on the distribution of corn and soybean prices. Also, a wealth variable is included in the acreage equations. The empirical results indicate that risk and wealth variables play an important role in cornsoybean acreage decisions. The analysis also shows that cross-commodity risk reduction is important in acreage allocation decisions.

Suggested Citation

  • Chavas, Jean-Paul & Holt, Matthew T., 1990. "Acreage Decisions Under Risk: The Case of Corn and Soybeans," 1990 Quantifying Long Run Agricultural Risks and Evaluating Farmer Responses to Risk Meeting, January 28-31, 1990, Sanibel Island, Florida 271540, Regional Research Projects > S-232: Quantifying Long Run Agricultural Risks and Evaluating Farmer Responses to Risk.
  • Handle: RePEc:ags:rrsr90:271540
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    References listed on IDEAS

    as
    1. B. Wade Brorsen & Jean-Paul Chavas & Warren R. Grant, 1987. "A Market Equilibrium Analysis of the Impact of Risk on the U.S. Rice Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(4), pages 733-739.
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