Volatility in the international food markets: implications for global agricultural supply and for market and price policy

Mekbib Haile and Matthias Kalkuhl

No 156097, 53rd Annual Conference, Berlin, Germany, September 25-27, 2013 from German Association of Agricultural Economists (GEWISOLA)

Abstract: Agricultural countries usually produce multiple crops, but a particular area of land is allocated to the production of a certain crop. Understanding how producers make decision to allot acreage among crops and how decisions about land use are affected by changes in prices and their volatility is fundamental for both policy design and for estimation models of the behavior of agricultural producers. The profitability of a land allocated to a certain crop is affected by the volatility of the crop’s price that in turn affects the acreage allocation decision of the producer. To address this, the present paper estimates global acreage response equations for major agricultural commodities (wheat, maize, soybeans and rice) using two related databases: globally aggregated time series and cross-country panel databases. The paper addresses the debate of agricultural market regulation from the perspective of agricultural producers. The findings of this study reveal that, while higher output prices are incentives to improvements in the global crop supply, output price volatility, on the other hand, discourages agricultural investment in terms of cropland expansion. Depending on respective crop, short-run acreage elasticities range between 0.05 and 0.25 whereas price volatility tends to reduce acreage response of all crops except of soybeans. Thus, price volatility management tools, which could include market regulation but also other market based tools like futures contracts or contract farming, need to be customized to specific crops and countries.

Keywords: Agricultural and Food Policy; Land Economics/Use; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 13
Date: 2013
New Economics Papers: this item is included in nep-agr
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://ageconsearch.umn.edu/record/156097/files/B1-HAILE-Volatility_c.pdf (application/pdf)

Related works:
Journal Article: Volatility in the international food markets: implications for global agricultural supply and for market and price policy (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:gewi13:156097

DOI: 10.22004/ag.econ.156097

Access Statistics for this paper

More papers in 53rd Annual Conference, Berlin, Germany, September 25-27, 2013 from German Association of Agricultural Economists (GEWISOLA) Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().