ESTIMATION OF AN AGRICULTURAL HOUSEHOLD MODEL FOR SOUTHERN MINNESOTA FARMS

Consumer/Household Economics,

THE IMPORT DEMAND FOR U.S. BURLEY TOBACCO IN EUROPEAN MARKETS

International Relations/Trade,

LONG-RUN PRICE RISK IN U.S. AGRICULTURAL MARKETS

The last three years have realized significant structural changes in the U.S. agricultural policy environment. These changes include nearly complete planting flexibility and the elimination of target-price-based income support for agricultural producers. Many have questioned the extent to which such policy changes may influence the variability of agricultural prices. This analysis uses price series dating from 1944 to develop a multivariate framework to evaluate the long-run (inter-season) determinants of endogenous variability for the prices of corn, wheat, and soybeans. An annual measure of price variability is calculated from monthly spot market cash prices for each of the three commodities. The generalized method of moments estimation technique is used to model the price variability measure as a function of several supply and demand variables hypothesized to be relevant. Several explicit policy variables are tested for their effect on output price variability as well as on the variable parameter estimates. Output price variability is found to be sensitive to stocks, demand shocks, yield shocks, input price variability, and policy factors. Results vary somewhat for corn, wheat, and soybeans. Implications for recent farm policy changes are offered.Agricultural and Food Policy, Demand and Price Analysis,

Where is the 2008 Farm Bill and How Did It Get There?

Agricultural and Food Policy,

SHORT-RUN DEMAND RELATIONSHIPS IN THE U.S. FATS AND OILS COMPLEX

Fats and oils play a prominent role in U.S. dietary patterns. Recent concerns over the negative health consequences associated with fats and oils have led many to suspect structural change in demand conditions. We consider short run (monthly) demand relationships for edible fats and oils. In that monthly quantities of fats and oils are likely to be relatively fixed, we utilize an inverse AIDS specification. Our analysis consists of two components. In the first, we utilize a smooth transition function to model a switching inverse almost ideal demand system (IAIDS) that assesses short-run demand conditions for edible fats and oils in the U.S. Our results suggest that short-run demand conditions for fats and oils experienced a rather rapid structural shift in the early 1990s. Although this shift generally made price flexibilities more elastic, differences in flexibilities across regimes are modest in most cases. Our results suggest that decreases in marginal valuations for most fats and oils in response to consumption increases are rather small. Scale flexibilities are relatively close to -1, suggesting near homothetic preferences for fats and oils. An important distinction occurs for lard and tallow, which exhibit a very elastic scale response. This suggests that scale increases in the consumption of edible fats and oils will significantly decrease consumers' marginal valuation of these animal fats. A second segment of our analysis considers dynamic extensions to the IAIDS model that recognize habit effects. Although nested hypothesis testing supports the dynamic specification over the static IAIDS model, price and scale flexibilities are quite similar to the static case.Demand and Price Analysis,

Rice: Background for 1995 Farm Legislation

This report address considerations in the 1995 farm bill debate for rice, including market conditions, policy proposals, trade agreements, and the interactions between policy and markets for selected commodities. U.S. rice sector income has shown steady growth in recent years, reaching $2.1 billion in 1993/94. However, Government program payments have also grown in importance. Since 1985/86, rice program outlays have averaged$733 million per year, 42 percent of all returns from rice farming. Farm and industry economic health are linked to costs of production which vary significantly across the six rice-producing regions. Because of inflation in the cost of production since the early 1980s, frozen payment yields, reduced target prices, and continued reductions in farm program benefits due to budgetary pressures, some rice farmers have been operating at a loss. Any reductions in current rice program support levels would probably accelerate the trends of a declining number of U.S. rice farms, increasing farm size, and a shift of rice growing from the high-cost production regions along the gulf coast to the upper Delta States, while reducing both the participation rate and dependency on government program revenue

LONG-RUN PRICE RISK IN U.S. AGRICULTURAL MARKETS

The last three years have realized significant structural changes in the U.S. agricultural policy environment. These changes include nearly complete planting flexibility and the elimination of target-price-based income support for agricultural producers. Many have questioned the extent to which such policy changes may influence the variability of agricultural prices. This analysis uses price series dating from 1944 to develop a multivariate framework to evaluate the long-run (inter-season) determinants of endogenous variability for the prices of corn, wheat, and soybeans. An annual measure of price variability is calculated from monthly spot market cash prices for each of the three commodities. The generalized method of moments estimation technique is used to model the price variability measure as a function of several supply and demand variables hypothesized to be relevant. Several explicit policy variables are tested for their effect on output price variability as well as on the variable parameter estimates. Output price variability is found to be sensitive to stocks, demand shocks, yield shocks, input price variability, and policy factors. Results vary somewhat for corn, wheat, and soybeans. Implications for recent farm policy changes are offered