Inter- and Intra-Seasonal Crop Acreage Response to International Food Prices and Implications of Volatility

Posted: 11 Jun 2014

See all articles by Mekbib Haile

Mekbib Haile

University of Bonn - Center for Development Research (ZEF)

Matthias Kalkuhl

University of Bonn - Center for Development Research (ZEF); Potsdam-Institut für Klimafolgenforschung (PIK)

Joachim von Braun

University of Bonn - Department of Economic and Technological Change

Date Written: April 2, 2014

Abstract

Understanding how producers make decisions to allot acreage among crops and how decisions about land use are affected by changes in prices and their volatility is fundamental for predicting the supply of staple crops and, hence, assessing the global food supply situation. This study makes estimations of monthly (i.e., seasonal) versus annual global acreage response models for the world's principal staple food crops: wheat, corn, soybeans, and rice. Primary emphasis is given to the magnitude and speed of the allocation process. Estimation of intra-annual acreage elasticity is crucial for expected food supply and for input demand, especially in the light of the recent short-term volatility in food prices. The econometric results indicate that global crop acreage responds to crop prices and price risks, input costs as well as a time trend. Depending on respective crop, short-run elasticities are about 0.05 to 0.40; price volatility tends to reduce acreage for some of the crops; comparison of the annual and the monthly acreage response elasticities suggests that acreage adjusts seasonally around the globe to new information and expectations. Given the seasonality of agriculture, time is of an essence for acreage response. The analysis indicates that acreage allocation is more sensitive to prices in the northern hemisphere spring than in winter and the response varies across months.

Suggested Citation

Haile, Mekbib and Kalkuhl, Matthias and von Braun, Joachim, Inter- and Intra-Seasonal Crop Acreage Response to International Food Prices and Implications of Volatility (April 2, 2014). Agricultural Economics, Vol. 45, 2014. Available at SSRN: https://ssrn.com/abstract=2447625

Mekbib Haile (Contact Author)

University of Bonn - Center for Development Research (ZEF) ( email )

Walter-Flex-Str. 3
Bonn, NRW 53113
Germany

Matthias Kalkuhl

University of Bonn - Center for Development Research (ZEF) ( email )

Walter-Flex-Str. 3
Bonn, NRW 53113
Germany

Potsdam-Institut für Klimafolgenforschung (PIK) ( email )

Telegraphenberg
Potsdam, Brandenburg 14412
Germany

Joachim Von Braun

University of Bonn - Department of Economic and Technological Change ( email )

Walter-Flex-Str. 3
Bonn, 53113
Germany

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