Showing papers in "American Journal of Agricultural Economics in 1987"

Agricultural household models : extensions, applications, and policy

Abstract: This book presents the basic model of an agricultural household that underlies most of the case studies undertaken so far. The model assumes that households are price-takers and is therefore recursive. The decisions modeled include those affecting production and the demand for inputs and those affecting consumption and the supply of labor. Comparative results on selected elasticities are presented for a number of economies. The empirical significance of the approach is demonstrated in a comparison of models that treat production and consumption decisions separately and those in which the decisionmaking process is recursive. The book summarizes the implications of agricultural pricing policy for the welfare of farm households, marketed surplus, the demand for nonagricultural goods and services, the rural labor market, budget revenues, and foreign exchange earnings. In addition, it is shown that the basic model can be extended in order to explore the effects of government policy on crop composition, nutritional status, health, saving, and investment and to provide a more comprehensive analysis of the effects on budget revenues and foreign exchange earnings. Methodological topics, primarily the data requirements of the basic model and its extensions, along with aggregation, market interaction, uncertainty, and market imperfections are discussed. The most important methodological issues - the question of the recursive property of these models - is also discussed.

Econometric Estimation of Producers' Risk Attitudes

Abstract: General methods are proposed for the identification and econometric estimation of the parameters of the distribution of risk attitudes in a producer population. The proposed methods also provide the basis for the development of statistical tests of model specification and of behavioral hypotheses. Econometric risk attitude estimation is shown to be possible under less restrictive conditions than previously believed. A moment-based version of the general model is applied to Indian data, and the econometrically estimated risk attitudes are presented and compared to experimental results for a similar group of producers.

Asymmetry in Farm-Retail Price Transmission for Major Dairy Products

Abstract: 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.

Land Ownership Security and Farm Investment in Thailand

Abstract: The article discusses the impact of land ownership security on farm investment and land improvements. Ownership security enhances capital formation by providing better incentives and improved access to credit. Data from three provinces in Thailand are used to support theoretical propositions and estimate the impact of ownership security. Econometric analysis shows that in two provinces, ownership security induces significantly higher capital/land ratios. In a third province, with a well-developed, informal credit market, ownership security is less important and the impact on capital formation is less significant. Land-improving investments are shown to be significantly affected by ownership security.

Time and the Recreational Demand Model

Abstract: In this paper, a theoretically consistent approach to including time costs in recreational demand models is developed. The demand model is conditional on the recreationist's labor market situation. For individuals at corner solutions in the labor market, utility maximization is subject to two constraints, leading to a demand function with travel costs and travel time as independent variables. With interior solutions in the labor market, time is valued at the wage rate and combined with travel costs to produce one “full cost” variable. In an illustration, welfare measures based on the new model are estimated for a sample of sportfishermen.

Undocumented Mexico—U.S. Migration and the Returns to Households in Rural Mexico

Abstract: This paper presents estimates of net income gains to a sample of households in rural Mexico from sending migrants illegally to the United States, correcting for sample selectivity bias, and it examines the role of expected income gains in driving illegal Mexico—U.S. migration. There is no evidence that people who migrate illegally to the United States are above-average contributors to household income, either as workers in Mexico or as Mexico—U.S. migrants. However, other things being equal, villagers who are in the best position to contribute to household income as workers in Mexico are positively selected not to migrate to the United States.

Household Consumption of Food-Away-From-Home: Total Expenditure and by Type of Food Facility

Abstract: Consistent with prior expectations based on household production theory, household income, time value, size and composition, and the environment in which production and consumption occurred were all important determinants of total household expenditures on food-away-from-home. However, the importance of these factors varied by type of food facility: conventional restaurants, fast-food facilities, and other commercial establishments. Decomposition of the tobit elasticities indicated the differential importance of market participation effects of household size, income, and time value by level of the variable and by type of food facility.

Dynamic programming : applications to agriculture and natural resources

Abstract: I Introduction.- 1 The Management of Agricultural and Natural Resource Systems.- 1.1 The Nature of Agricultural and Natural Resource Problems.- 1.2 Management Techniques Applied to Resource Problems.- 1.2.1 Farm management.- 1.2.2 Forestry management.- 1.2.3 Fisheries management.- 1.3 Control Variables in Resource Management.- 1.3.1 Input decisions.- 1.3.2 Output decisions.- 1.3.3 Timing and replacement decisions.- 1.4 A Simple Derivation of the Conditions for Intertemporal Optimality.- 1.4.1 The general resource problem without replacement.- 1.4.2 The general resource problem with replacement.- 1.5 Numerical Dynamic Programming.- 1.5.1 Types of resource problem.- 1.5.2 Links with simulation.- 1.5.3 Solution procedures.- 1.5.4 Types of dynamic programming problem.- 1.6 References.- 1.A Appendix: A Lagrangian Derivation of the Discrete Maximum Principle.- 1.B Appendix: A Note on the Hamiltonian Used in Control Theory.- II The Methods of Dynamic Programming.- 2 Introduction to Dynamic Programming.- 2.1 Backward Recursion Applied to the General Resource Problem.- 2.2 The Principle of Optimality.- 2.3 The Structure of Dynamic Programming Problems.- 2.4 A Numerical Example.- 2.5 Forward Recursion and Stage Numbering.- 2.6 A Simple Crop-irrigation Problem.- 2.6.1 The formulation of the problem.- 2.6.2 The solution procedure.- 2.7 A General-Purpose Computer Program for Solving Dynamic Programming Problems.- 2.7.1 An introduction to the GPDP programs.- 2.7.2 Data entry using DPD.- 2.7.3 Using GPDP to solve the least-cost network problem.- 2.7.4 Using GPDP to solve the crop-irrigation problem.- 2.8 References.- 3 Stochastic and Infinite-Stage Dynamic Programming.- 3.1 Stochastic Dynamic Programming.- 3.1.1 Formulation of the stochastic problem.- 3.1.2 A stochastic crop-irrigation problem.- 3.2 Infinite-stage Dynamic Programming for Problems With Discounting.- 3.2.1 Formulation of the problem.- 3.2.2 Solution by value iteration.- 3.2.3 Solution by policy iteration.- 3.3 Infinite-stage Dynamic Programming for Problems Without Discounting.- 3.3.1 Formulation of the problem.- 3.3.2 Solution by value iteration.- 3.3.3 Solution by policy iteration.- 3.4 Solving Infinite-stage Problems in Practice.- 3.4.1 Applications to agriculture and natural resources.- 3.4.2 The infinite-stage crop-irrigation problem.- 3.4.3 Solution to the crop-irrigation problem with discounting.- 3.4.4 Solution to the crop-irrigation problem without discounting.- 3.5 Using GPDP to Solve Stochastic and Infinite-stage Problems.- 3.5.1 Stochastic problems.- 3.5.2 Infinite-stage problems.- 3.6 References.- 4 Extensions to the Basic Formulation.- 4.1 Linear Programming for Solving Stochastic, Infinite-stage Problems.- 4.1.1 Linear programming formulations of problems with discounting.- 4.1.2 Linear programming formulations of problems without discounting.- 4.2 Adaptive Dynamic Programming.- 4.3 Analytical Dynamic Programming.- 4.3.1 Deterministic, quadratic return, linear transformation problems.- 4.3.2 Stochastic, quadratic return, linear transformation problems.- 4.3.3 Other problems which can be solved analytically.- 4.4 Approximately Optimal Infinite-stage Solutions.- 4.5 Multiple Objectives.- 4.5.1 Multi-attribute utility.- 4.5.2 Risk.- 4.5.3 Problems involving players with conflicting objectives.- 4.6 Alternative Computational Methods.- 4.6.1 Approximating the value function in continuous form.- 4.6.2 Alternative dynamic programming structures.- 4.6.3 Successive approximations around a nominal control policy.- 4.6.4 Solving a sequence of problems of reduced dimension.- 4.6.5 The Lagrange multiplier method.- 4.7 Further Information on GPDP.- 4.7.1 The format for user-written data files.- 4.7.2 Redimensioning arrays in FDP and IDP.- 4.8. References.- 4.A Appendix: The Slope and Curvature of the Optimal Return Function Vi{xi}.- III Dynamic Programming Applications to Agriculture.- 5 Scheduling, Replacement and Inventory Management.- 5.1 Critical Path Analysis.- 5.1.1 A farm example.- 5.1.2 Solution using GPDP.- 5.1.3 Selected applications.- 5.2 Farm Investment Decisions.- 5.2.1 Optimal tractor replacement.- 5.2.2 Formulation of the problem without tax.- 5.2.3 Formulation of the problem with tax.- 5.2.4 Discussion.- 5.2.5 Selected applications.- 5.3 Buffer Stock Policies.- 5.3.1 Stochastic yields: planned production and demand constant.- 5.3.2 Stochastic yields and demand: planned production constant.- 5.3.3 Planned production a decision variable.- 5.3.4 Selected applications.- 5.4 References.- 6 Crop Management.- 6.1 The Crop Decision Problem.- 6.1.1 States.- 6.1.2 Stages.- 6.1.3 Returns.- 6.1.4 Decisions.- 6.2 Applications to Water Management.- 6.3 Applications to Pesticide Management.- 6.4 Applications to Crop Selection.- 6.5 Applications to Fertilizer Management.- 6.5.1 Optimal rules for single-period carryover functions.- 6.5.2 Optimal rules for a multiperiod carryover function.- 6.5.3 A numerical example.- 6.5.4 Extensions.- 6.6 References.- 7 Livestock Management.- 7.1 Livestock Decision Problems.- 7.2 Livestock Replacement Decisions.- 7.2.1 Types of problem.- 7.2.2 Applications to dairy cows.- 7.2.3 Periodic revision of estimated yield potential.- 7.3 Combined Feeding and Replacement Decisions.- 7.3.1 The optimal ration sequence: an example.- 7.3.2 Maximizing net returns per unit of time.- 7.3.3 Replacement a decision option.- 7.4 Extensions to the Combined Feeding and Replacement Problem.- 7.4.1 The number of livestock.- 7.4.2 Variable livestock prices.- 7.4.3 Stochastic livestock prices.- 7.4.4 Ration formulation systems.- 7.5 References.- 7.A Appendix: Yield Repeatability and Adaptive Dynamic Programming.- 7.A.1 The concept of yield repeatability.- 7.A.2 Repeatability of average yield.- 7.A.3 Expected yield given average individual and herd yields.- 7.A.4 Yield probabilities conditional on recorded average yields.- IV Dynamic Programming Applications to Natural Resources.- 8 Land Management.- 8.1 The Theory of Exhaustible Resources.- 8.1.1 The simple theory of the mine.- 8.1.2 Risky possession and risk aversion.- 8.1.3 Exploration.- 8.2 A Pollution Problem.- 8.2.1 Pollution as a stock variable.- 8.2.2 A numerical example.- 8.3 Rules for Making Irreversible Decisions Under Uncertainty.- 8.3.1 Irreversible decisions and quasi-option value.- 8.3.2 A numerical example.- 8.3.3 The discounting procedure.- 8.4 References.- 9 Forestry Management.- 9.1 Problems in Forestry Management.- 9.2 The Optimal Rotation Period.- 9.2.1 Deterministic problems.- 9.2.2 Stochastic problems.- 9.2.3 A numerical example of a combined rotation and protection problem.- 9.3 The Optimal Rotation and Thinning Problem.- 9.3.1 Stage intervals.- 9.3.2 State variables.- 9.3.3 Decision variables.- 9.3.4 Objective function.- 9.4 Extensions.- 9.4.1 Allowance for distributions of tree sizes and ages.- 9.4.2 Alternative objectives.- 9.5 References.- 10 Fisheries Management.- 10.1 The Management Problem.- 10.2 Modelling Approaches.- 10.2.1 Stock dynamics.- 10.2.2 Stage return.- 10.2.3 Developments in analytical modelling.- 10.3 Analytical Dynamic Programming Approaches.- 10.3.1 Deterministic results.- 10.3.2 Stochastic results.- 10.4 Numerical Dynamic Programming Applications.- 10.4.1 An application to the southern bluefin tuna fishery.- 10.4.2 A review of applications.- 10.5 References.- V Conclusion.- 11 The Scope for Dynamic Programming Applied to Resource Management.- 11.1 Dynamic Programming as a Method of Conceptualizing Resource Problems.- 11.2 Dynamic Programming as a Solution Technique.- 11.3 Applications to Date.- 11.4 Expected Developments.- 11.5 References.- Appendices.- A1 Coding Sheets for Entering Data Using DPD.- A2 Program Listings.- A2.1 Listing of DPD.- A2.2 Listing of FDP.- A2.3 Listing of IDP.- A2.4 Listing of DIM.- Author Index.

An Examination of Farm Sector Real Asset Dynamics: 1910–85

Abstract: The dynamic response of real farm asset values to changes in net returns and interest rates is studied using vector autoregression. Results show that a shock in real asset values, real returns to assets, or real interest rates leads to a process in which real asset values overreact. In the initial period, a reaction to a shock immediately occurs followed by a continued build-up in the asset value for up to six years until finally the effect of the one-time, transitory shock begins to die out. The results suggest a market with a propensity for bubbles.

U.S. Soybean Yields: Estimation and Forecasting with Nonsymmetric Disturbances

Abstract: National average soybean yields are skewed with a relatively high chance of low yields. Maximum likelihood estimates support this hypothesis. Revised forecasts which account for skewed yields are positioned higher than forecasts based on the illusion of a symmetric distribution. Also, yield instability has been increasing steadily; the standard deviation of the soybean yield distribution is twenty-five percent higher in the late 1980s than it was in the early 1970s.

Further Toward a Theory of Agricultural Insurance

Abstract: The economic theory of contracts is applied to agricultural insurance to show that, given full information, Pareto-optimal insurance contracts are actuarially fair, provide full coverage, and differ for each individual. The information problems of moral hazard and adverse selection prevent Pareto optimality from being attained. Several "second-best" solutions to these problems are applied to agricultural insurance. It is shown that information collection and the application of contract design principles are "second-best" solutions which may achieve the benefits of insurance at less cost than the current practice of public subsidies. In theory, agricultural insurance is an efficient risk-sharing mechanism. In practice, however, agricultural insurance has been a costly means of transferring risk from farmers to governments and/or other insurers. To induce farmers to participate in agricultural insurance, governments have borne significant subsidy costs (Hazell, Pomareda, and Valdes, p. 295). In a recent study, Ahsan, Ali, and Kurian (AAK) concluded that public subsidies are necessary to make agricultural insurance viable. They also showed that insurance will increase output relative to a case with no insurance. Thus, insurance is beneficial, particularly in less developed countries where increasing food supplies is a policy goal. For this reason, they concluded that public subsidization of insurance also is desirable. Their conclusions are derived from a simplified model of production with one output and one input. In this article, we consider a more general production model with multiple inputs and outputs; we show that AAK's conclusion about the benefits of insurance may not hold depending on the nature of the inputs and outputs as defined by the production function. Carl H. Nelson is an assistant professor of agricultural economics

The Household Responsibility System Reform in China: A Peasant's Institutional Choice

Abstract: Since 1978, the Chinese government has implemented a series of major reforms, including diversification of the rural economy, production specialization, crop selection in accordance with regional comparative advantage, expansion of free markets, and a marked rise in state procurement prices. These reforms have brought about dramatic changes in China's rural areas. However, the most important change was the emergence and eventual prevalence of the household responsibility system (HRS), which restores the individual household and replaces the production team system as the unit of production and accounting in rural areas. After the chaos of the Cultural Revolution, China's moderate leaders started to reconsider China's rural policies. Although the government admitted that solving the labor management problems within production teams was the key to improving productivity and recommended measures to relate rewards to performance more closely, the HRS was considered the reverse of the socialist principle of collective farming and was prohibited (Editorial Board of China Agriculture Yearbook 1980, p. 58). The official position at that time maintained that the production team was to remain the basic unit of production and accounting. Nevertheless, toward the end of 1978, first secretly and later with the blessing of local authorities, a small number of production teams in Anhui Province, which was frequently victimized by flood and drought, began to experiment with contracting land, other resources, and output quotas to individual households.

Long-Run Profit Functions for Multiproduct Firms

Abstract: A long-run specification of the multiproduct profit function is developed from the restricted profit function. The multiproduct restricted profit function and the envelope condition are used to estimate the optimal, long-run levels of the quasi-fixed factor. Formulas for long-run Marshallian elasticities of substitution and transformation, economies of scope, product-specific and overall economies of scale, and economic measures of capacity utilization are developed for the translog functional form. The methodology is illustrated by a case study of the New England otter trawl industry.

Dynamic Animal Economics

Abstract: Market equilibrium dynamics of herd inventory management are derived for homogenous female populations. Short-run supply is backward bending in response to permanent changes in demand and is rising in response to transitory changes in demand. Increasing inventories are associated with high and falling prices and decreasing inventories with low and rising prices, but there is no market instability in this. These unusual intertemporal substitution effects follow from both rational expectations and appropriately formulated cobweb models and go part of the way toward explaining hog and cattle inventory cycles.

The Necessity for Substitute Prices Recreation Demand Analyses

Abstract: Omitting substitute prices from a travel cost model is shown to cause a significant bias in consumer surplus estimates. Three sets of travel cost models are developed from a common data base representing 60,000 day-users of U.S. Army Corps of Engineer reservoirs in Kansas and Missouri. The firzt set of models omitted substitute prices; the latter two sets included them. An analysis of variance test showed that consumer surplus estimates from the first set of models were significantly higher than the other two (F = 26.2 with 2, 20 degrees of freedom). The theoretical and practical implications of these findings are discussed. Economic theory postulates that the demand for a good is a function of its price, the price of related goods and services, and income. Still, many empirical estimates of demand for recreation sites have ignored the price of substitute recreation sites. The most common technique for estimating recreational demand is the travel cost model (TCM). A comprehensive literature review of the TCM conducted by Dwyer, Kelly, and Bowes showed that only six of twenty clearly defined TCM demand functions included substitute prices as an argument in the demand function. Most of the models they reviewed were old, but considerable debate remains about incorporating substitutes in the TCM. Consider the diversity of approaches that have recently been used to incorporate substitute prices into TCM demand functions. When modeling recreation demand at Corps of Engineer reservoirs, Desvousges, Smith, and McGivney omitted any

An Econometric Analysis of the Effects of Human Capital on Size and Growth among Dairy Farms

Abstract: The analysis of size distributions of firms has long been important both inside and outside of agriculture. The study of farm size has focused on economies of scale, optimal "efficient" size, technical change, descriptions of distributions, and informal considerations of policy. Outside of farming, the emphasis has been on the relationships between size and growth. In both literatures, there has been some awareness of the role of the firm operator in firm size and growth. In this paper we examine herd size and herd growth for a large sample of southern dairy farms. Our emphasis is on the relationship of human capital of the operator to the crosssectional size and growth patterns. Other related work considers size/growth issues in more detail (Sumner and Leiby). Our research relates to several literatures that have evolved along distinct paths. These include the analysis of the size distribution of farms (see Stanton), the role of human capital in agriculture and earnings distributions, and the analysis of the size distribution of business firms.

Relative Prices and Money: Further Results for the United States

Abstract: Empirical results support the hypothesis that agricultural prices respond faster than manufactured product prices to a change in money supply in the United States. Sims' vector autoregression (VAR) technique was applied in examining this hypothesis. The monte-carlo integration method was used to test the significance of the impulse responses generated by the VAR technique.

The Poultry Market: Demand Stability and Industry Structure

Abstract: The stability of the demand for poultry meat and specification issues in its estimation are explored. The analysis concludes that the demand for poultry meat shifted out in the early 1970s. At the same time, the demand relationship between poultry and pork changed from substitution to independence. A second conclusion is that poultry price is predetermined for demand in annual U.S. data, while quantity is not. A predetermined price suggests several market structures. Exogeneity tests are performed to distinguish among them. The results are consistent with a competitive, constant returns-to-scale-industry facing elastic factor supplies.

Does Agricultural Extension Pay? The Training and Visit System in Northwest India

Abstract: The paper presents the results from a study of the effect of the Training and Visit (T&V) System of agricultural extension on farm productivity. Two adjacent areas in northwest India, one with T&V extension and one with an older system, are compared, utilizing farm-level data. Econometric analysis demonstrates that the T&V area had a wheat yield advantage of 9.33% after four years of T&V extension. The baseline yield differential was calculated as 3.01%. The gain attributable to T&V is shown to imply a return of at least 15% to the incremental investment in extension with high probability.

Multiple Objectives in Agricultural Planning: A Compromise Programming Application

Abstract: This article shows how multiobjective programming, compromise programming, and filtering techniques can be used to tackle some problems found in agricultural planning. A real case involving the establishment of workers' cooperatives within an agrarian reform program in Andalusia (Spain) is studied. The underlying problem is to find a compromise between the following objectives: employment, seasonal labor, and business profitability. The multiobjective programming approach is used to find the efficient set among these objectives, and after a filtering procedure, a compromise between the objectives is established based on the compromise programming approach.

Fertilization under Uncertainty: An Analysis Based on Producer Yield Expectations

Abstract: Optimal nitrogen fertilizer levels are computed for a sample of Texas Coastal Bend grain sorghum producers based on their assessed subjective conditional yield and price probabilities, utility measures, and cost information. Producers' mean yield expectations were substantially greater than experimental yield response and their perceptions of the effects of nitrogen on yield variability were contrary to usual characterization of nitrogen as a risk-increasing input. Optimal fertilizer levels based on expected utility maximization represent actual fertilizer use somewhat better than those based on expected profit maximization. However, both calculated levels were high relative to actual fertilizer use.

Competencies and Qualities of Agricultural Economics Graduates Sought by Agribusiness Employers

Abstract: Interest in preparing students for successful careers in agribusiness management has been increasing over the past decade. Recent curriculum revisions in many agricultural economics programs have been in the agribusiness area. As these changes are considered, however, the question often heard is, "what skills do these graduates need?" Litzenberg and Schneider first approached this subject in a study of Texas cooperatives in 1983. Their results, although regional in scope and limited only to cooperative firms, initiated an interest in measuring the relative importance of the characteristics of successful agribusiness managers. With this study, they expanded the scope of the earlier work both in terms of the number of characteristics considered

Farm Size and Growth in Canada

Abstract: In this paper, we empirically examine the relationship between farm size and growth in Canada over the period 1966-81. The analysis is undertaken by testing Gibrat's "Law of Proportionate Effect." Gibrat offered the hypothesis that the percentage growth rates of firms are independent of their initial size. Thus, growth is a purely stochastic process that arises from the cumulative effect of the random operation of a multitude of forces acting independently of each other. An important outcome of models based on Gibrat's law is that the stochastic process results in a size distribution of firms which is skewed and not unlike the size distribution actually observed. In particular, it is well known that, depending on the precise formulation, the operation of Gibrat's law leads to a skewed size distribution which is either log normal (Prais) or pareto (Steindl, Ijiri and Simon). Although it is difficult to determine the exact form of observed size distributions, it is generally agreed that either of the above provides a reasonable approximation to reality, depending on the industry or sector being observed. By contrast, a deterministic model of firm growth based strictly on standard cost theory "either predicts the facts incorrectly or it makes no prediction at all" (Ijiri and Simon, p. 10). Although there are models combining cost theory with assumptions about the adjustment process which result in skewed size distributions (e.g., Lucas), the testing of Gibrat's law remains as an important point of departure for the analysis of firm growth. An additional feature of models based on

Rent Seeking in International Trade: The Great Tomato War

Abstract: This paper presents a model of international rent-seeking activities by producers in both exporting and importing nations. The model is applied to the winter vegetable trade between the United States and Mexico. An analysis is made of the attempts to form export/import coalitions. Reasons for these failures are given. Due to past failures to impede trade, essentially free trade in winter vegetables between the two countries exists.

Targeted Agricultural Export Subsidies and Social Welfare

Abstract: Global export subsidies are known to be welfare reducing. This paper demonstrates that a small targeted subsidy can increase the welfare of the subsidizing country by exploiting differences in excess demand elasticities. Targeted export subsidies can also increase the subsidizing country's welfare by exploiting transportation cost differences, excess supply elasticities of competitors, or excess demand elasticities of markets supplied by competitors when markets are shared. An empirical model of the world wheat market illustrates the theoretical conclusions. An optimal targeted subsidy scheme causes a small increase in U.S. welfare but with major disruptions in world trade flows.

Pricing and Storage of Field Crops: A Quarterly Model Applied to Soybeans

Abstract: This paper considers the role of competitive storage in markets for annually harvested field crops. A quarterly model is presented that considers the allocative role of storage both within and between crop years. Rational price expectations are endogenous variables calculated by a recursive method. Forward stochastic simulations using the model generate data that can be used to characterize the distributions of the variables. In the base case, the model is assigned parameter values from a quarterly econometric model of the U.S. soybean market. The results shed light on the distributions of the quarterly variables, including the rational price expectations, and show how these distributions are affected by changes in the carrying charge.

Agricultural Price Policy in General Equilibrium Models: Results and Comparisons

Abstract: A number of alternative policies toward agricultural prices, food subsidies, and intersectoral allocation of investment are analyzed with computable general equilibrium models for six countries. The models generally allow us to trace the intersectoral and intertemporal growth effects of these policies as well as their income distribution effects across social groups. The results obtained are shown to be eventually quite different from those derived from partial equilibrium and multimarket approaches. Sensitivity analysis to alternative specifications of the mechanism of wage determination shows that the real income effects of price policies are critically dependent upon the particular theory of wage determination used.

Potential Benefits of Agricultural Research and Extension in Peru

Abstract: The benefits of agricultural research and extension are examined in an ex ante consumer-producer surplus framework for five commodities in Peru The effects of demand shifts over time and government pricing policies on research and extension benefits are considered Data for the analysis include the results of research and extension questionnaires administered at seven sites in Peru The projected rates of return to research and extension indicate substantial returns to public investments