Better supply elasticities improve commodity policy: The federal response to the Covid-19 pandemic

Raghav Goyal, Michael K Adjemian and William Secor

Food Policy, 2025, vol. 135, issue C

Abstract: Accurate supply parameters are essential for policy analysis, especially since they often support taxpayer-funded relief programs costing billions of dollars. This study incorporates a broader dataset than traditional methods and applies modern, straightforward econometric techniques to estimate marketing and supply elasticities for the U.S.’s top crops: corn and soybeans. While rarely examined, marketing elasticities, at 3.27% for corn and 2.86% for soybeans, capture the rate at which producers market harvests based on expected cash-futures basis changes. A 3SLS approach estimates supply elasticities for corn and soybeans at 0.28 (95% CI: 0.09–0.47) and 0.12 (95% CI: 0.007–0.22), respectively; we use these elasticities to show that USDA’s COVID-19 compensation programs underestimated losses to the producers of both commodities.

Keywords: Supply; Elasticity; Shocks; Corn; Soybeans; COVID-19 (search for similar items in EconPapers)
JEL-codes: I30 I38 Q02 Q11 Q18 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfpoli:v:135:y:2025:i:c:s0306919225001423

DOI: 10.1016/j.foodpol.2025.102937

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