Estimating Price Distortions Caused by Canadian Wheat Board Initial Payment Policy

Clark, Jim; Fleming, Catherine S.

doi:10.1111/j.1744-7976.1990.tb03525.x

Cited by 5 publications

(4 citation statements)

References 2 publications

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“…Conceptually Bardsley and Cashin correctly identify the government guarantee as a type of put option; however, the Black-Scholes option pricing model will overprice the option when price averaging is part of the model. Clark and Fleming (1990) analyze price distortions in CWB initial payment price policy using a Tobit procedure that specifically recognizes the truncation introduced in prices with the initial payment price guarantee. This indirectly acknowledges that the guarantee acts as a put.…”

Section: Conceptual Financial Models In Poolingmentioning

confidence: 99%

Compatibility of Government Guarantees with Flexibility in Canadian Wheat Price Pooling

Unterschultz

Novak²

2001

Canadian J Agri Economics

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Financial option theory is used to evaluate Canadian Wheat Board (CWB) price pooling and associated government guarantees. Price guarantees and final payments on the pool can be viewed as special financial derivative products. Financial models are used to evaluate alternative pricing flexibility alternatives within the constraints of the CWB price pooling system and at the same time to provide a measure of the CWB dollars at risk associated with offering these contracts. Flexible pricing alternatives are incompatible with a government price guarantee that is valuable. The CWB dollar risk associated with flexible pricing could be substantial. Les auteurs recourent à la théorie des contrats d'option pour évaluer le système de fixation de prix communs par la Commission canadienne du blé (CCB) et les garanties connexes du gouvernement. On peut considérer les prix garantis et les paiements finals du pool comme un type particulier de produits dérivés. Des modèles financiers permettent d'évaluer d'autres méthodes qui autoriseraient lafluctuation des prix dans les contraintes du système de pool de la CCB, mais serviraient aussi à mesurer les risques financiers de la CCB associés à la proposition de contrats. Les autres méthodes de fixation des prix sont incompatibles avec une garantie valable du gouvernement au niveau des prix. La CCB courrait le risque de pertes importantes si elle adoptait une politique de variation des prix.

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Section: Conceptual Financial Models In Poolingmentioning

confidence: 99%

Compatibility of Government Guarantees with Flexibility in Canadian Wheat Price Pooling

Unterschultz

Novak²

2001

Canadian J Agri Economics

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“…5 is not equal to the price rational producers would predict. Clark and Fleming (1990) considered this problem in detail and concluded that the truncation of price due to initial payments as being floors is small. Therefore, this problem is ignored in this paper.…”

Section: Notesmentioning

confidence: 99%

Restricted Estimation of Crop and Summerfallow Acreage Response in Saskatchewan

Clark

Klein

1992

Canadian J Agri Economics

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A systems model is used to estimate acreage responses for crops and summerfallow in the province of Saskatchewan. Summerfallow is modeled as a storage function, which subsequently is supported by statistical results. Short‐ and long‐run elasticities of acreage responsiveness are estimated. In addition, several issues relating to elasticity calculations and adding‐up restrictions are discussed. Un modèle par systèmes est utilisé pour estimer l'évolution prévisible des superficies en culture et en jachère dans la province de Saskatchewan. Dans le modèle, la jachère est considérée comme fonction de stockage, hypothée subséquemment confortée par les résultats de l'analyse statistique. Les élasticitts a court et à long terme des surfaces affectés aux diverses cultures ‐ et à la jachére ‐ sont estimées. En outre, les auteurs passent en revue plusieurs questions touchant les calculs d'élasticité et les restrictions de totalisation.

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“…However, as Nerlove (1956) noted, farmers react not only to last year's price, but also to the price they expected that depends on the last year's price with a limited extent. And Clark and Fleming (1990) and Yang et al (2015) argued that price support policy issued by the government that sets the price floors for crops would alter farmers' price expectations. But in the literature on price policy in China, the main method of incorporating the price policy is to construct dummy variables for estimation (Zhang et al, 2020), which might be rough as it ignores the impact of floor prices on farmers' price expectations.…”

Section: Introductionmentioning

confidence: 99%

Rice yield response to climate and price policy in high-latitude regions of China

Clark

Tian

et al. 2022

Food Sec.

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Climate change has renewed interest in the production capacity of agriculture. Few researchers paid attention to price policy and heteroscedasticity in yield model. We incorporate rice price policy into the yield model at the expected price using a Tobit procedure and take Kalman filter theory to explore useful information, and then estimate the rice yield response to climate and rice price using a spatial autoregressive combined model in high-latitude regions of China from 1992 to 2018. Meanwhile, we apply two different Breusch-Pagan tests to examine heteroscedasticity. Our results suggest that spatial correlation of the error term is a more critical source of heteroscedasticity and cannot be completely solved by only allowing spatially autocorrelated errors due to possible technology diffusion effects. The results also show that rice price support policy is useful for constructing rice expected prices, and the price elasticities of rice and corn on rice yield are 0.194 and -0.097, respectively. Among climate variables, the total growing degree days in the growing season has positive effects, and monthly accumulated growing degree days also matter, especially in June. Precipitation in July and August has a significant effect with an inverse U shape. Projections of future climate change suggest that rice yield will mainly increase, ranging from 0.095% to 1.769%, but the rate of increase in yield will slow down in the higher-rate global warming. This study shows how price policy could be incorporated into yield response model and highlights the importance of climate factors and crop price policy for rice yield.

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Estimating Price Distortions Caused by Canadian Wheat Board Initial Payment Policy

Abstract: Limited Dependent variable regression techniques are used to measure price distortitons caused by initial payments as price floors. The result indicate that the degree of uncertainty producers have regarding the price floor is the critical issue in the level of price distortions.

Cited by 5 publications

References 2 publications

Compatibility of Government Guarantees with Flexibility in Canadian Wheat Price Pooling

Compatibility of Government Guarantees with Flexibility in Canadian Wheat Price Pooling

Restricted Estimation of Crop and Summerfallow Acreage Response in Saskatchewan

Rice yield response to climate and price policy in high-latitude regions of China

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