ISHS Acta Horticulturae 223: X International Symposium on Horticultural Economics
THE ECONOMICS OF PRODUCTION AND MARKETING IN THE US POTATO INDUSTRY: GROWERS' SUPPLY RESPONSE |
| Authors: | J.F. GUENTHNER, R.J. FOLWELL |
| Abstract:
U.S. potato prices are very volatile due to an inelastic demand and varying elasticities of supply in different production areas. If growers have a better understanding of supply response in the different areas, given national demand, they may be able to reduce their price risk. A 78 equation econometric model of the U.S. potato industry was developed. The model specified acreage-planted equations for 17 production areas. Explanatory variables in the supply equations included: lagged acreage, lagged price, lagged price range, lagged alternate crop prices, and a dummy variable for shifting price expectations at higher price levels. For the spring and summer crops, fall-crop production the previous year was another explanatory variable. Overall, acreage response was more elastic in production areas where there are many alternate crops. | |
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