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Supply response of corn farmers in Quebec: Analyzing the impact of prices volatility?

Author

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  • Bahareh Mosadegh Sedghy
  • Rémy Lambert
  • Lota Dabio Tamini

Abstract

This study examines the supply response and the effect of price predictability of corn in the province of Quebec. A generalized autoregressive conditional heteroskedasticity (GARCH) process is used to model output price expectations and its volatility. The empirical results show that price predictability has a positive effect on producersÕ decisions. Estimation of supply elasticity illustrates that expected output price is the most important risk factor for corn producers in Quebec.As expected, we found that the Farm Income Stabilization Insurance (ASRA) in Quebec leads producers to be more sensitive to effective prices than to market prices. Our results also show that application of this program causes less sensitivity to input prices than to output prices. Reducing producersÕ risk aversion is another implication of this program.

Suggested Citation

  • Bahareh Mosadegh Sedghy & Rémy Lambert & Lota Dabio Tamini, 2016. "Supply response of corn farmers in Quebec: Analyzing the impact of prices volatility?," Cahiers de recherche CREATE 2016-1, CREATE.
  • Handle: RePEc:lvl:creacr:2016-1
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    References listed on IDEAS

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    More about this item

    Keywords

    Income insurance; price volatility; GARCH; corn supply; effective price; market;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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