A Supply Response Model for Perennial Crops

Abstract

The production of perennial crops involves planting, removal, yield, and time dimensions not similarly encountered in annual crops. A model is developed to provide a structural base for estimating response relationships that encompass these dimensions. The model rests on assumptions of rational producer behavior which takes account of possible actions of other producers and of the aggregate effect of these actions on total production and profits. Because important data series often are not available, modifications of the basic model are suggested to facilitate estimation within a more restricted empirical framework. The model is illustrated by an application to asparagus, a perennial vegetable crop. I N VIEW OF the rather extensive volume of literature pertaining to agricultural supply response, the special problems associated with formulating supply models for perennial crops have until very recently received surprisingly little attention.' Prior to 1960 there were almost no attempts to estimate such supply functions.> Some new ground was broken in a 1962 study by French and Bressler [14] which developed supply response for lemons in terms of new planting and removal relationships. This type of model developmen t, with modifications or simplifications, was later applied by other researchers to United States apples [8], cherries [11], pears [24], and tung nuts [18], with varying success. Much of the recent research on perennial crop supply response has related to commodities typically produced in less developed areas-mainly coffee, cocoa, and rubber. Studies by Arak [2, 3], Bateman [4,5], and Behrman [6] in particular have made significant advances in formulating perennial crop supply models, with special reference to these tropical or warm area commodities.

Estimating the Contribution of New Seed Cultivars to Increases in Crop Yields: A Case Study for Corn

“…Most importantly, all variables are observed, and therefore parameters can be estimated using observed data. This model is so called Nerlove model, which has been widely applied to estimate this dynamic process in crop production [25,[30][31][32][33].…”

The role of subsidy policies in achieving grain self-sufficiency in China: a partial equilibrium approach

“…Grain production is determined by grain planted area and yield, and the area and yield equations are specified as an extended Nerlovian model which includes a subsidy variable to capture the impacts of the subsidy policies on the grain supply response (Nerlove 1956;French and Mathews 1971;Froster and Mwanaumo 1995;Mushtaq and Dawson 2002;Jeffrey et al 2009). Although the Chinese government provides subsidies for different purposes, these subsidies work via the same mechanism.…”

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

“…In summary, producers are reluctant to pull out healthy trees even in the face of severe falls in profitabilitys, and, in view of asset fixity arguments and the high cost of establishing orange trees, it is unlikely that observable fluctuations in returns, at least those over the sample period, would greatly influence removal decisions relative to the influences of age and seasonal conditions. The applied work by Curran This crude procedure, which was also used by French and Matthews (1971) and the BAE (1977), might be extended to estimate the numbers in additional age classes. However, it is less likely to be valid for older age classes and there is a loss of data and degrees of freedom involved in both the calculation of each additional age class and the inclusion of additional variables in the empirical equation.…”

“…A fourth model, and this is the one used by French and Matthews (1971), assumes that adjustment costs affect all new plantings in such a way that actual plantings are a fixed fraction of desired plantings, i.e. partial adjustment of all right-hand terms of (8).…”

“…The little work which has been done in the area -notably French and Bressler (1962), French and Matthews (1971), and Baritelle and Price (1974) in the U.S.A., and Rae and Carman (1975) in New Zealand -has suffered from theoretical difficulties and, invariably, data problems. This study is no exception.…”