A Model of Supply Response in the Australian Orange Growing Industry*

Abstract

A model of the Australian orange growing industry to explain changes in plantings, removals, the number and age composition of trees and orange production is developed and estimated. Most of the variation in plantings is explained by the expected profitability of growing oranges, the current stocks of bearing and nonbearing trees, and removals of trees last year. Estimates of the elasticities of response of plantings and production to price changes are low and there are long time lags. An illustrative application of the model projects future developments in the industry for alternative assumptions about the profitability of growing oranges.

Rubber Acreage Supply Response in Thailand: a Cointegration Approach

“…The model is applied to the US asparagus industry and a single, reduced-form equation is obtained which specifies acreage as a function inter alia of lagged own price and lagged acreage but the structural parameters are under-identified. Extensions of this model include Rae and Carman (1975), Alston et al (1980), French et al (1985), Bushnell and King (1986), Kinney et al (1987), French and King (1988), French and Willett (1989), French and Nuckton (1991), Carman and Craft (1998) and Devadoss and Luckstead (2010). Wickens and Greenfield (1973) argue that the application of the Nerlovian supply response model causes difficulties in quantifying investment and harvesting decisions.…”

Estimating perennial crop supply response: A methodology literature review

“…For example, several articles have estimated net planting functions that include non‐bearing acreage—the acreage still in the establishment period—as a covariate (Kalaitzandonakes & Shonkwiler, 1992; Pompelli & Castaneda, 1994). Alternatively, the planting function may control for the proportion of acreage that is “old” (French & Bressler, 1962) or a suite of similar variables breaking down stocks by age (Alston et al., 1980). Typically, researchers do not interact these with price variables, implying that these capital variables affect planting/removal decisions but do not change how sensitive those decisions are to price.…”

An Empirical Analysis of the Supply Response of Coconut by Vector Error Correction Approach: Cross Country Comparison

“…However, the structural parameters in the model were under-identified. Extensions of this model were employed in later studies by Alston, et al, (1980) on Australian orange industry; Bushnell and King, (1986) on almond ;Petersen, (1993) on apple; Elnagheeb and Florkowski, (1993) on the pecan industry; Carman and Craft, (1998) on avocado; Devadoss and Luckstead, (2010) on apple, etc. Hartley, et al, (1987) and Akiyama and Trivedi, (1987) were the first to note that there is a qualitative difference between new planting and replanting investment decisions.…”