A Model of Producer Participation in Farm Commodity Programs

28 Pages Posted: 16 Nov 2007

See all articles by Marinos E. Tsigas

Marinos E. Tsigas

U.S. International Trade Commission

Thomas W. Hertel

Purdue University - Center for Global Trade Analysis; Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP)

Paul V. Preckel

Purdue University - Department of Agricultural Economics

Date Written: July 1996

Abstract

The paper develops a model of producer participation in farm commodity programs. In the model, producers maximize profits subject to a common technology, but a differentiated resource endowment. As a result, in equilibrium, some producers participate in the program, while others do not. The model is calibrated to data for the U.S. wheat sector to assess the impact of the freeze on program yields instituted under the 1985 Farm Bill. We find that the yield freeze substantially lowered variable input use and raised net returns, for participants and non-participants. This is a striking result, given proposals by some farm groups to reverse this policy.

Keywords: Agricultural policy, Farm commodity programs, Commodity program participation

JEL Classification: Q18

Suggested Citation

Tsigas, Marinos E. and Hertel, Thomas W. and Preckel, Paul V., A Model of Producer Participation in Farm Commodity Programs (July 1996). Available at SSRN: https://ssrn.com/abstract=1030346 or http://dx.doi.org/10.2139/ssrn.1030346

Marinos E. Tsigas (Contact Author)

U.S. International Trade Commission ( email )

500 E Street SW
Washington, DC 20436
United States

Thomas W. Hertel

Purdue University - Center for Global Trade Analysis ( email )

Department of Agricultural Economics
1145 Krannert Building
West Lafayette, IN 47907-1145
United States
765-494-4199 (Phone)
765-494-9176 (Fax)

Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP) ( email )

5735 S. Ellis Street
Chicago, IL 60637
United States

Paul V. Preckel

Purdue University - Department of Agricultural Economics ( email )

1145 Krannert Building
West Lafayette, IN 47907-1145
United States
765-494-4240 (Phone)
765-494-4240 (Fax)

HOME PAGE: http://www.agecon.purdue.edu/academic/agec652/index.htm

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