SUPPLY RESPONSES IN THE SOUTH AUSTRALIAN POTATO INDUSTRY

T.J. Mules and Frank G. Jarrett

Australian Journal of Agricultural Economics, 1966, vol. 10, issue 01, 8

Abstract: The potato industry in South Australia is characterised by very unstable prices. One hypothesis for this instability is that potato growers' acreage responses follow a cobweb pattern, that is, a one year lag of acreage to price. This hypothesis is tested, together with a two year lag and a distributed lag. The distributed lag model seems the most satisfactory and gives a short-run elasticity of acreage to price of 0.36 and a long-run elasticity of 1.09. An alternative to the lagged price hypothesis is the "constant cash return" hypothesis which postulates that potatoes are grown to provide a certain cash income to permit farm development. This explanation of acreage response only seems relevant in the dairying and fat lamb areas of the State.

Keywords: Crop; Production/Industries (search for similar items in EconPapers)
Date: 1966
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ajaeau:22670

DOI: 10.22004/ag.econ.22670

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