The response of global agricultural supply to prices and price variability: a panel data analysis

This study investigates the responsiveness of global cropland to changes in output prices and the uncertainty therein. The study provides a global short- and long-term acreage and yield elasticity which hints at how major agricultural commodity producers respond to the recent high food prices and volatility. Using cross-country panel data for the period 1961-2010, this paper investigates the global supply impacts of output prices and their volatility. Besides providing updated estimates of supply responses to own and competing price expectations, it also estimates growth trends that are informative to policy in understanding the likely extensive and intensive margin changes because of crop price changes. Estimation of acreage response to input and output prices as well as output price volatilities is a necessary step but not sufficient to predict the global food supply effect of possible developments in output prices and their volatility. In addition to the acreage allocation response that agricultural producers make towards price changes, they also react to expected changes in terms of yield response. While acreage as well as yield responses to own output prices are positive, the response towards output price volatilities is modest. Thus, besides via acreage changes, the global food supply response to expected prices comes from yield changes, both affecting global food supply and food security.


Issue Date:
2013
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/161473
Total Pages:
20




 Record created 2017-04-01, last modified 2017-08-27

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