Three essays on agricultural supply analysis

Md Zabid Iqbal

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: The three essays of this dissertation focus estimating agricultural supply response to price. Using country-specific data and estimating both static and dynamic supply models, this dissertation research provides new estimates and perspectives on global agricultural supply response. The first essay examines the endogeneity of futures prices in supply analysis of four main agricultural crops namely corn, rice, wheat, and soybeans, by revisiting the recent literature that finds substantial endogeneity bias when global crop supply is regressed on futures prices. Our results indicate that the endogeneity of futures price does not affect the estimates of global crop supply responses but affects the estimates of the US crop supply responses. The second essay investigates how the short- and long-run global growing area of corn, soybeans, wheat, and rice respond to international crop output futures prices, price volatilities, and production cost changes by adopting a dynamic heterogeneous panel model. The results indicate that the short- and long-run elasticity estimates of growing-area response with respect to price are considerably lower than the estimates obtained using traditional models. The third essay examines the extent to which crop output prices received by producers and other factors explain changes in intensive and extensive agricultural land use of all crops globally produced. We adopt both static and dynamic panel models to analyze land use response and estimate the respective model using a first-differenced (FD) estimator and a dynamic panel generalized instrumental variable or generalized method of moments (GMM) estimator. The results from FD and dynamic panel GMM estimators indicate that of the total land use response to prices, the response at the intensive margin accounts for a 62-90% of the total response. These results imply that most of the growth in world harvested land 2004 to 2013 resulted from intensification rather than conversion of land that had not previously been cropped.

Date: 2017-01-01
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