DEVELOPMENT OF A MARKET BENCHMARK PRICE FOR AGMAS PERFORMANCE EVALUATIONS

The purpose of this research report is to identify the appropriate market benchmark price to use to evaluate the pricing performance of market advisory services that are included in the annual AgMAS pricing performance evaluations. Five desirable properties of market benchmark prices are identified. Three potential specifications of the market benchmark price are considered: the average price received by Illinois farmers, the harvest cash price, and the average cash price over a two-year crop marketing window. The average cash price meets all of the desired properties, except that it would not be easily implementable by producers. It can be shown, though, that the price realized via a more manageable strategy of "spreading" sales during the marketing window very closely approximates the average cash price. Therefore, it is determined that the average cash price meets all five selection criteria, and is the most appropriate market benchmark to be used in evaluating the pricing performance of market advisory services.


Subject(s):
Issue Date:
1998
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/14783
Total Pages:
26
Series Statement:
AgMAS Project Research Report 1998-02




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

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