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Location and Marketing under Marketing Assistance Loan and Loan Deficiency Payment Programs

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  • Alexander E. Saak

Abstract

Marketing assistance loan (MAL) and loan deficiency payment (LDP) programs differ in their treatment of basis. This paper analyzes marketing decisions under these programs when producers are differentiated by location with respect to the terminal market. The developed model may help explain the observed lack of an association between the county loan rate and the share of a county's production enrolled in MAL programs. Under certain conditions, multiple equilibria are shown to emerge. The effects of MAL and LDP programs on welfare and policy implications are discussed.

Suggested Citation

  • Alexander E. Saak, 2002. "Location and Marketing under Marketing Assistance Loan and Loan Deficiency Payment Programs," Food and Agricultural Policy Research Institute (FAPRI) Publications 02-wp297, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  • Handle: RePEc:ias:fpaper:02-wp297
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    References listed on IDEAS

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    1. Bruce A. Babcock & Dermot J. Hayes & Phillip Kaus, 1998. "Are Loan Deficiency Payments Too Low In Iowa?," Center for Agricultural and Rural Development (CARD) Publications 98-bp20, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    2. Dermot J. Hayes & Bruce A. Babcock, 1998. "Loan Deficiency Payments or the Loan Program?," Center for Agricultural and Rural Development (CARD) Publications 98-bp19, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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