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Estimates of Demand Relationships for Apricots and Apricot Products

By Ben C. French, Ali Eryilmaz and Kathryn Blackman


Apricots are a unique commodity in that they are used in four ways: for fresh markets and for canning, freezing, and drying. This article formulates a model of the demand system for this commodity and presents FIML and 2SLS estimates of the simultaneous components of the system. The empirical findings include estimates of price flexibilities and elasticities and equations that predict prices and allocations among product forms, given the annual production. Key words: apricots, derived demand, econometric model, processed fruit, pure flexibilities. Apricots are canned, frozen, dried, and mar-keted fresh. The prices received by processors and growers are determined by an interrelated structure of derived demands, grower alloca-tion decisions, and processor-grower bargain-ing. This article formulates a conceptual model of the structure of this system and presents estimates of price elasticities (or price flexi-bilities) for the four product forms at processor and farm levels. While the empirical findings are specific to apricots, the modeling approach is applicable to other processed fruit and veg-etables. Background Information Over 95 % of U.S. apricot production is in Cal-ifornia. The balance is grown in Washington and Utah (primarily Washington) with most of the Washington-Utah crop sold for fresh use. Table 1 shows the quantities of apricots produced in California over the period 1956 to 1989 (years grouped to save space) and the allocation of the output among the four utili-zation forms. Table 2 shows the quantities pro

Year: 2014
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