Marketing Performance of U.S. Farmers: A Discussion

Abstract

Tomek and Peterson, who have spent many years studying agricultural pricing, summarize important findings from the literature as well as simulation work in which they were involved. Like many agricultural economists, Tomek and Peterson are prone to an assertion of market efficiency. Citing from the theoretical and empirical literature they suggest that the following characteristics do not imply market inefficiency: (1) large changes in price, (2) returns to storage that are lower than costs in most locations, (3) the existence of cattle and hog price cycles, and (4) that some traders in some markets earn positive economic profits. Tomek states that I am predisposed to conclude that the seeming inefficiencies found in empirical analyses are likely the result of idiosyncracies of the sample and model specifications and hence that futures markets in the