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Estimating a Production Function under Production and Output Price Risks: An Application to Beef Cattle in France

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  • Agabriel, Jacques
  • Lherm, Michel
  • Mosnier, Claire
  • Reynaud, Arnaud
  • Thomas, Alban

Abstract

This paper addresses the issue of agricultural production under both output level and output price risks, in a context of random climatic conditions affecting forage used in beef production. It contributes to the empirical literature by applying the framework proposed by Isik (2002) to derive estimating equations from a structural production model with two sources of risks. Flexible functional forms for risk preferences and production technology allow us to identify attitudes toward risk and compute marginal effects of inputs and climate on expected output and production risk. The model is applied on a panel of French cattle farms and estimation results suggest that cattle farmer exhibit strong risk aversion of the CRRA form, and that climate has a significant impact on the performance of animal feeding strategies.

Suggested Citation

  • Agabriel, Jacques & Lherm, Michel & Mosnier, Claire & Reynaud, Arnaud & Thomas, Alban, 2009. "Estimating a Production Function under Production and Output Price Risks: An Application to Beef Cattle in France," TSE Working Papers 09-046, Toulouse School of Economics (TSE).
  • Handle: RePEc:tse:wpaper:22148
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    References listed on IDEAS

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    11. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    12. David A. Hennessy, 1998. "The Production Effects of Agricultural Income Support Policies under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 46-57.
    13. Chi-Chung Chen & Ching-Cheng Chang, 2005. "The impact of weather on crop yield distribution in Taiwan: some new evidence from panel data models and implications for crop insurance," Agricultural Economics, International Association of Agricultural Economists, vol. 33(s3), pages 503-511, November.
    14. Murat Isik, 2002. "Resource Management under Production and Output Price Uncertainty: Implications for Environmental Policy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 557-571.
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    Keywords

    Just and Pope; production and price uncertainty; beef cattle;

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