No abstract

A two-stage approach is used to estimate sensitivity of corn, wheat, and soybean yields to changes in price; and land idled, Estimated elasticity o; demand" for fertilizer pm acr~with respect to expected output price equals 0.47, 0.10, and 0.82 for corn, wheat, and soybeans. Upper estimates of the elasticity of yield with respect to fertilizer equals +0.58, +0.29, and +0.16 for corn, wheat, and soybeans. Yields are found to be quite insensitive to price changes. Fertilizer demands and yields are insensitive to land idled under farm programs.

Previous empirical research on crop supply response has given insufficient attention to the fundamentally different nature of supply response under farm programs versus competitive markets. A simple theoretical model is presented which highlights the program participation option in the farmer's acreage allocation decision. The model also provides the basis for different expected supply elasticities under "free market" and "farm program" regimes for corn and soybeans. Econometric supply estimation for Corn Belt states for 1948-80 using a temporally disaggregated approach confirms a greater supply elasticity for corn and a lower supply elasticity for soybeans under acreage-restricting feed grain programs.

Planted wheat acreage supply elasticities are estimated for each of several leading wheat-producing states. Estimates of elasticities for the aggregate of these states are 0. 77, 0.45, and 0.52 for spring wheat, winter wheat, and all wheat, respectively, but there is considerable heterogeneity among states. Acreage allotments and marketing quotas appear to have destroyed the role of prices in allocating acreage between wheat and other crops during the years 1950 and 1954-64. Estimates were obtained using multiple regression analysis of time-series data for the period 194�74. This period was subdivided in order to take account of changing farm programs.

This paper considers the role of competitive storage in markets for annually harvested field crops. A quarterly model is presented that considers the allocative role of storage both within and between crop years. Rational price expectations are endogenous variables calculated by a recursive method. Forward stochastic simulations using the model generate data that can be used to characterize the distributions of the variables. In the base case, the model is assigned parameter values from a quarterly econometric model of the U.S. soybean market. The results shed light on the distributions of the quarterly variables, including the rational price expectations, and show how these distributions are affected by changes in the carrying charge.