Development of a Market Benchmark Price for Agmas Performance Evaluations

AgMasReport 1998-02

27 Pages Posted: 30 Oct 2000

See all articles by Darrel L. Good

Darrel L. Good

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics

Scott H. Irwin

University of Illinois at Urbana-Champaign

Thomas E. Jackson

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics

Date Written: 1/26/1999

Abstract

The purpose of this research report is to identify the appropriate market benchmark price to use to evaluate the pricing performance of market advisory services that are included in the annual AgMAS pricing performance evaluations. Five desirable properties of market benchmark prices are identified. Three potential specifications of the market benchmark price are considered: the average price received by Illinois farmers, the harvest cash price, and the average cash price over a two-year crop marketing window. The average cash price meets all of the desired properties, except that it would not be easily implementable by producers. It can be shown, though, that the price realized via a more manageable strategy of "spreading" sales during the marketing window very closely approximates the average cash price. Therefore, it is determined that the average cash price meets all five selection criteria, and is the most appropriate market benchmark to be used in evaluating the pricing performance of market advisory services.

JEL Classification: C81, D40, D82, G14, Q11, Q12, Q13, Q14

Suggested Citation

Good, Darrel L. and Irwin, Scott and Jackson, Thomas E., Development of a Market Benchmark Price for Agmas Performance Evaluations (1/26/1999). AgMasReport 1998-02, Available at SSRN: https://ssrn.com/abstract=244510 or http://dx.doi.org/10.2139/ssrn.244510

Darrel L. Good

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics ( email )

1301 W. Gregory Drive
326 Mumford Hall, MC-710
Urbana, IL 61801
United States

Scott Irwin (Contact Author)

University of Illinois at Urbana-Champaign ( email )

344 Mumford Hall
1301 W. Gregory Dr.
Urbana, IL 61801
United States
217-333-6087 (Phone)

HOME PAGE: http://https://scotthirwin.com/

Thomas E. Jackson

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics ( email )

1301 W. Gregory Drive
434a Mumford Hall
Urbana, IL 61801
United States
(217) 333-2792 (Phone)
(217) 333-5538 (Fax)

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