An econometric model is used to estimate the net relationship between changes in the farm-level price of milk and changes in the retail prices of four major dairy products-fluid milk, butter, cheese, and ice cream. Results indicate that the farm-retail price transmission process in the dairy sector is asymmetric. Retail dairy product prices adjust more rapidly and more fully to increases in the farm price of milk than to decreases. The role in pricing asymmetry of retail demand versus farm supply shifts is tested via a Chow-type test. Asymmetry is tested using the Houck procedure for estimating nonreversible functions.

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Asymmetry in Farm-Retail Price Transmission for Major Dairy Products

There is growing interest in using perennial grasses as renewable fuels for generating electricity and for producing bio-ethanol. This paper examines the costs of producing two bioenergy crops, switchgrass and miscanthus, in Illinois for co-firing with coal to generate electricity. A crop-productivity model, MISCANMOD, is used together with a GIS to estimate yields of miscanthus across counties in Illinois. Spatially variable yields, together with county-specific opportunity costs of land, are used to determine the spatial variability in the breakeven farm-gate price of miscanthus. Costs of transporting bioenergy crops to the nearest existing power plant are incorporated to obtain delivered costs of bioenergy. The breakeven delivered cost of miscanthus for an average yield of 35.76 t ha−1 in Illinois is found to be less than two-thirds of the breakeven price of switchgrass with an average yield of 9.4 t ha−1. There is considerable spatial variability in the breakeven farm-gate price of miscanthus, which ranges between 41 and 58 $ t−1 across the various counties in Illinois. This together with differences in the distances miscanthus has to be shipped to the nearest power plant causes variability in the costs of using bioenergy to produce electricity. The breakeven cost of bioenergy for electricity generation ranges from 44 to 80 $ t−1 DM and is considerably higher than the coal energy-equivalent biomass price of 20.22 $ t−1 DM that power plants in Illinois might be willing to pay. These findings imply a need for policies that will provide incentives for producing and using bioenergy crops based on their environmental benefits in addition to their energy content.

Costs of producing miscanthus and switchgrass for bioenergy in Illinois

This book explores the outstanding issues in global agricultural trade policy and evolving world production and trade patterns. Its coverage of agricultural trade issues ranges from the details of cross-cutting policy issues to the highly distorted agricultural trade regimes of industrial countries and detailed studies of agricultural commodities of economic importance to many developing countries. The book brings together the background issues and findings to guide researchers and policymakers in their global negotiations and domestic policies on agriculture. The book also explores the key questions for global agricultural policies, both the impacts of current trade regimes and the implications of reform. It complements the recent agricultural trade handbook that focuses primarily on the agricultural issues within the context of the World Trade Organization (WTO) negotiations (Ingco and Nash 2004).

Global Agricultural Trade and Developing Countries

Ecological issues related to ozone: agricultural issues.

http://ir.lib.cyut.edu.tw:8080/bitstream/310901800/8373/1/Oil+Price+and+Global+Food+Prices--Applied+Energy--+third+revised.pdf

Modeling the relationship between the oil price and global food prices

Organization (WTO) negotiations, it is useful to look at the direct and indirect impacts of U.S. farm programs on agricultural production and trade. U.S. agricultural support, as reported to the WTO, exceeded $58 billion in 1997. Most of the support was reported in the green box as "minimally trade distorting," while about $6.2 billion was reported in the amber box as potentially "trade distorting."' However, amber box program expenditures greatly expanded in 1998 and 1999 due in part to generally lower commodity prices. With increased farm program expenditures, the market impacts of major programs need to be evaluated relative to potential production and trade distortions as background for WTO negotiations. This paper examines the links from four U.S. agricultural programs to agricultural production and trade. Programs discussed are production flexibility contracts, crop insurance, marketing loans, and disaster assistance. To the extent that programs expand domestic production, the impacts can be partially transmitted to world markets through increased exports and lower prices. With the elimination of deficiency payments and the introduction of production flexibility contract payments in the 1996 Farm Act, commodity-specific links between income support payments and production were largely eliminated (Young and Westcott). Production flexibility contract payments are not related to current production and prices. Nonetheless, these payments raise farmers' wealth, which may subsequently impact agricultural investment decisions. The 1996 Act retained the non-

How Decoupled Is U.S. Agricultural Support for Major Crops

The Farm Security and Rural Investment Act of 2002 (2002 Farm Act), which governs agricultural programs through 2007, was signed into law in May 2002. This report presents an initial evaluation of the new legislation's effects on agricultural commodity markets, based on sectorwide model simulations under alternative policy assumptions. The analysis shows that loan rate changes under the marketing assistance loan program of the 2002 Farm Act initially result in an increase in total planted acreage of eight major program crops. This increase in plantings, however, is relatively small (less than 1 percent), partly due to the inelasticity of acreage response in the sector. In the longer run, the simulations indicate that overall plantings of the eight program crops studied are lower under the 2002 Farm Act than under a continuation of the 1996 Farm Act. This result mostly reflects larger enrollment in the Conservation Reserve Program and increased plantings of dry peas and lentils, although planted acreage for the eight program crops is reduced by less than 0.6 percent. The effects of the 2002 Farm Act on the livestock sector and retail food prices are relatively small. Farm income is increased, mostly due to higher government payments to the sector under the new law.

The 2002 farm act: provisions and implications for commodity markets

Annual models for U.S. farm prices for corn and wheat are developed based on market factors as well as government agricultural commodity programs. The pricing relationships utilize a stocks-to-use modeling framework to capture the effects of market supply and demand factors on price determination. This formulation is augmented by factors that represent the changing role of agricultural policies, particularly government price support and stockholding programs. For wheat, international market effects as well as wheat feed use and related crosscommodity pricing considerations also are included. Model properties and model performance measures are presented. Additionally, recent price-forecasting applications of the models are discussed. The relatively simple structure of the estimated price models and their small data requirements lend themselves to use in price-forecasting applications in conjunction with market analysis of supply and demand conditions. In particular, the models have been implemented into USDAis short-term market analysis and long-term baseline projections. In these applications, the models provide an analytical framework to forecast prices and a vehicle for making consistency checks among the Departmentis supply, demand, and price forecasts.

Price Determination for Corn and Wheat: The Role of Market Factors and Government Programs

The 1996 Farm Act gives farmers almost complete planting flexibility, allowing producers to respond to price changes to a greater extent than they had under previous legislation. This study measures supply responsiveness for major field crops to changes in their own prices and in prices for competing crops and indicates significant increases in responsiveness. Relative to 1986-90, the percentage increases in the responsiveness of U.S. plantings of major field crops to a 1-percent change in their own prices are wheat (1.2 percent), corn (41.6 percent), soybeans (13.5 percent), and cotton (7.9 percent). In percentage terms, the increases in the responsiveness generally become greater with respect to competing crops' price changes. The 1996 legislation has the least effect on U.S. wheat acreage, whereas the law may lead to an average increase of 2 million acres during 1996-2005 in soybean acreage, a decline of 1-2 million acres in corn acreage, and an increase of 0.7 million acres in cotton acreage. Overall, the effect of the farm legislation on regional production patterns of major field crops appears to be modest. Corn acreage expansion in the Central and Northern Plains, a long-term trend in this important wheat production region, will slow under the 1996 legislation, while soybean acreage expansion in this region will accelerate. The authors used the Policy Analysis System-Economic Research Service (POLYSYS-ERS) model that was jointly developed by USDA's Economic Research Service and the University of Tennessee's Agricultural Policy Analysis Center to estimate the effects of the 1996 legislation.

Paul C. Westcott

Papers

How Decoupled Is U.S. Agricultural Support for Major Crops

The 2002 farm act: provisions and implications for commodity markets

Price Determination for Corn and Wheat: The Role of Market Factors and Government Programs

Supply response under the 1996 farm act and implications for the u.s. field crops sector

The 2002 Farm Act: Provisions And Implications For Commodity Markets