Seasonal variability and a farmer's supply response to protein premiums and discounts

This article extends the analysis of the impact of a system of protein premiums and discounts to that on a farmer’s planned production. Despite an unambiguously negative impact on expected profits of equally likely premiums and discounts, supply response to the introduction of such a system is shown to depend on the level of seasonal variability faced by the farmer. In particular, farmers in regions which are more seasonally unreliable are likely to feature a negative supply response, whereas those in regions which are more seasonally reliable are likely to feature a positive supply response. Consequently, it is suggested that, overall, protein payments for wheat may have encouraged a shift of wheat‐growing activity away from more seasonally unreliable areas.


Subject(s):
Issue Date:
1998
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/117220
Published in:
Australian Journal of Agricultural and Resource Economics, Volume 42, Issue 1
Page range:
25-33
Total Pages:
9




 Record created 2017-04-01, last modified 2017-04-04

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