Supply Response Model Research Articles

Soybean supply response model in sub-optimal land in Tanjab Timur district: Application of the meta response function

Soybean production in Jambi Province in the last decade tends to decline. This requires attention and assessment to find solutions to existing problems. The objective of study is to (1) evaluate the use of inputs and their effect on production, as well as investigate the ability of production factors, such as land and other factors to analyze supply responses; and (2) analyze soybean supply response variable to the components of input costs, gross revenue, and other variables, to produce a soybean supply response model in sub-optimal land types: Application of Meta-Response Functions. This research was done from April 2021 to June 2021 on peat land types (sub-optimal). Stratified random sampling is used based on land area. Appropriate qualitative and quantitative data analysis methods are used, calledthe Meta Response Function, which in their application are distinguished based on the research objectives, namely in the first objective using the Production Function Empirical Model, and in the second using the Meta-Response Model. The results showed that soybean farmers on peatland in the research area respond to changes in input use efficiently. Output supply is a response to soybean production. On input demand, many are sensitive to the use of labor, maintenance/harvesting labor. Theobtained production elasticity completes part of the data base needed to evaluate the policy implicationsof using alternative inputs from soybean supply and input demand.

Soybean Supply Response Model In Sub-Optimal Land In Tanjab Timur District: Application Of The Meta Response Function

Soybean production in the Tanjab Timur region has been on a downward trend for nearly a decade. This requires attention and assessment to find solutions to existing problems. The objective of study is to (1)evaluate the use of inputs and their effect on production, as well as investigate the capacity of production factors, such as landand other factors to analyze supply responses; and (2) analyze soybeansupply response variable to the components of input costs, gross revenue, and other variables, to produce a soybean supply response model in sub-optimal land types: Application of Meta-Response Functions. This research was conducted in 2021 on peatland types (sub-optimal). Stratified random sampling is used for the land area.Appropriate qualitative and quantitative data analysis methods are used, called the Meta Response Function, which in their application is distinguished from the research objectives, namely in the first objective using the Production Function Empirical Model, and in the second using the Meta-Response Model. The results showed that soybean farmers on peatland in the research area respond to changes in input use efficiently. In terms of output supply, it responds to soybean production. In terms of input demand, many variables aresensitive to the use of labor, maintenance, and harvesting labor. Production elasticity completes the policy section of the database foranalysis of the policy impact of applying alternative inputs on soybeansupply and input demand.

Price and Non-price Decision-making Factors of Sunflower Production in Karnataka: An evidence from Nerlove's Supply Response Model

Karnataka is the leading state in sunflower production in our country. Many studies have been conducted on the supply response of crops, but limited studies were carried out on sunflower crops. The study was conducted to assess the decision-making factors, viz., price and non-price factors, which influence farmers' land allocation to sunflower crops in the Karnataka state. The study found that the price factors were not significantly crucial for area allocation to sunflower crops but mainly depended on non-price factors such as lagged area, lagged production, lagged yield and rainfall/irrigation facilities in the state. The study suggested that the government agencies like SAU; Department of Agriculture, Government of Karnataka; Extension units, and Karnataka Oilseeds Federation should arrange for the buyback of sunflower oilseeds with processors/oil millers that could help farmers to expand the area under oilseed crops in general and sunflower crop in particular in the state.

Shortage of pulses in India: understanding how markets incentivize supply response

PurposeThis paper aims to understand the significant farm and market-level factors that incentivize the adoption and marketing of pulses influencing its supply response to changing demand.Design/methodology/approachThe authors first use a modified Nerlovian supply response model using secondary data to identify the major price and non-price factors influencing the supply of pigeon pea, black and green gram in the major pulses growing states in India. Second, using primary qualitative data the authors map the pulses value chain from farm to retail to identify the how proportional and fixed transaction costs (FCTs) influence market participation of pulses growers and limit the transmission of price and quality information.FindingsThe supply response model shows some positive influence of price on area allocation for pigeon pea and black gram and some negative effects of yield and price increase of competing crops on pigeon pea acreage. However, for the most part, the area of Kharif pulses is inelastic to prices in the long run. Irrigation, rainfall and yields in the lag year are shown to have a significant influence on area allocation for pulses. The market study reveals that low yields, low landholding size and geographical disadvantages of high agro-climatic risk and poor connectivity hinder market access of pulses farmers relative to other crops. Market power in favor of buyers and poor price and quality information is a disadvantage to sellers, influencing their ability to participate in markets.Research limitations/implicationsA quantitative study would be required to identify the magnitude of farm and market-level transaction costs.Originality/valueThis study helps to understand the supply response of pulses and gives suggestions to direct policy to rectify this.

DYNAMIC SUPPLY RESPONSE : IMPLICATIONS FOR INDONESIA SOYBEAN CROP

The purpose of the study is to explore the supply response model of the soybean crop in terms of alternative specifications also implications economics. To apply model, considerations through the availability of production lags concept also the existence of expected price and gross revenue because of producer’s response explanatory preference on movement economic situation. The results showed that the existing lags were due mostly to the problems also quick adjustment expenditure rather than correcting expected time. The quantitative result was the same as gross margins and prices alternative specification as the availability of economic decisions. Meanwhile, elasticities price found through the model response specification tended around a fourth of the model applying price specification. The model response specification produced more explanation in terms of production also elasticity of input expenditure.

PNS34 IMPACT of Drug Price Formation Mechanism on Medicine Availability: Evidence from China

In the past 20 years, China placed directly strict government control on pharmaceutical pricing. A new policy which required deregulation on drug prices was introduced in China in 2015. The objective of this study was to measure the impact of this price formation mechanism reform on medicine availability drawing on Chinese experience. Nerlove supply response model was used for empirical analysis based on expectation theory. Product-level data were obtained from provincial centralized purchase platform in Shandong province, China from 2012 to 2017. The drug price in the lag period (0.046, p<0.01), the generic competition (0.404, p<0.01) and the drug demand in the lag period (0.773, p<0.01) had significant positive impact on the current drug supply. The price expectation and potential market share were the main basis for drug supply decision. The establishment of market-determined price mechanism in China could release clear market expectation, which was conducive to improving the medicine availabillity.

ANALISIS RESPON PENAWARAN KOMODITI KEDELAI DI KABUPATEN TANJAB TIMUR

This study aims (1) to assess the factors of production and their effects on soybean production, and to investigate the ability of input levels, such as area and others to explain the response of production; and (2). assess the response of farmer supply to input prices, receipt of gross expectations, from related variables, and other exogenous variables.&#x0D; This research was conducted in 2017 in East Tanjab Regency. The method of analysis in its application is sorted based on the research objectives namely the Empirical Model of the Response Response Function. From the research, the results obtained from the soybean supply response model are strongly influenced by many factors. Among internal and external factors such as soybean prices, use of inputs, and seasons, which are quite relevant where soybean production increases because soybean prices increase. It also added that soybean production decreases when the input variables used are not in accordance with the provisions. As expected it was also found that the harvested area was also a significant determinant of crops. Furthermore it was found that soybean production increased during the rainy season. This finding is consistent with the fact that water availability is an important factor for soybean plants. The analysis also explained that soybean farmers in tidal land in the study area responded to the change in the use of efficient inputs. Supply of output is a response to soybean production. On input requests, many are sensitive to the use of labor, maintenance / harvesting labor. The elasticity of production obtained complements the part of the data base needed to evaluate the policy implications of using alternative inputs from soybean supply and input demand.&#x0D; Keywords: soybean, production, function

A Time Series Analysis for Supply Response Scenario of Food Grains in Bangladesh: The Quest of Structural Changes

Using time-series data, we examined the structural stability and supply response scenario of cereal food production for the last five decades. Analyzes revealed that growth in the area for Aus, Aman, and Boro rice slowed in the period 1971/72-1983/84, but surprisingly the production growth accelerated due to amazing technological advancements and the implementation of government subsidies on complementary inputs. Applying the Nerlovian supply response model, the result showed that, lagged area for Aus, Boro, and wheat was positive and significant, implying that the preceding year area under Aus, Boro, and wheat had a significant influence on land allocation for the following year. The lagged relative yield of Boro and Aus turned out positive implying that in Boro season farmers took into consideration the lagged relative yield of Boro vis-a-vis wheat in the allocation of land for Boro rice and wheat cultivation. The negative price risk variable further implied farmers’ risk aversion response towards price fluctuation. The yield risk variable was found negative for Boro and wheat, implying that this factor did not influence the cultivation of these two crops. Meanwhile, although Bangladesh achieved marginally food security, government and policymakers should focus on stabilizing the market price at harvest time to realize sustainable food security in the future, and researchers should prioritize breaking the yield ceiling as well as developing different stress-tolerant varieties. In the same way, steps should be taken through public and private partnerships to disseminate different crop varieties so that productivity could be enhanced at the desired level.

Modeling Price Volatility and Supply Response of Beef in Indonesia

Beef is one of the strategic livestock commodities in Indonesia. As demand increases, the price of beef increases and tends to be volatile. The increased volatility in beef prices could influence production decision and the supply of beef. This study aimed to investigate the price volatility and the impact of price volatility on the supply response of beef in Indonesia. This study used secondary data obtained from various related institutions. Volatility was estimated using the GARCH (p,q) model and the supply response model using OLS model. The empirical results indicated that among the estimated GARCH models, the GARCH (2,3) seemed to be particularly appropriate to describe the beef price supply response. Beef price volatility in Indonesia was found to be low and persistent in the long run. Price uncertainty appeared to have a substantial negative effect on Indonesian beef production. The slow adjustment of farmers to demand and supply shocks indicate the importance of import as a temporary policy to fulfill the demand of beef in the short and medium-run.

Agricultural production planning approach based on interval fuzzy credibility-constrained bi-level programming and Nerlove supply response theory

Abstract: When planning agricultural production, planting area and water allocation are two major subjects faced by decision makers. In this study, a framework integrated Nerlove supply response model (Nerlove model) and interval fuzzy credibility-constraint bi-level programming (IFCBP) model is developed for planning the agricultural production in arid and semi-arid regions. Through Nerlove model, the planning process of crop planting area was described as an economic problem for forecasting farmers' behavior rather than an optimization problem for allocating farmland resources, and the relationship between crop planting area and market price can be obtained and further provide credible future crop planting area information. The IFCBP model can not only deal with uncertainties presented as interval and fuzzy numbers but also examine the credibility of the constraints and handle tradeoffs between two-level decision makers. To solve the IFCBP model, a solution method based on the interval interactive algorithm and credibility-cut method is proposed. Then, to verify the validity of the developed framework and solving method for agricultural production planning, they were applied to a real-case in the middle reaches of the Heihe River basin, northwest China. The forecasting results obtained from Nerlove model have better performance in predicting the future planting area of corn and vegetable than wheat, indicating that wheat plays a more vulnerable role in the decision-making process of planting area owing to its higher substitutability. The results show that the proposed framework can tackle two-level decision makers’ concerns under uncertainties featured as inexact and fuzzy numbers, which can help regional managers plan future resources effectively. Furthermore, a comparison was made between IFCBP and two corresponding single-level models in this study. The comparison indicates that the developed model provides an effective tradeoff between two decision makers from different decision-making levels in IFCBP. The developed framework provides managers an effective way to plan agricultural production in arid and semi-arid regions, and the developed model and related thinking may help solve similar problems.

English

This study aimed to investigate the impacts of fluctuations in agricultural production, consumption and marketing bottlenecks on main food prices in Gadarif State, east of Sudan in the period of 1996 to 2011. On the supply side, an adjusted Nerlovian model of supply response was used to calculate elasticities of prices of selected agricultural products. On the consumption side, the distribution of the agricultural supply among local consumption and external export was analyzed. The price margin of these products was calculated to explain how this margin is shared by the different market players. With reference to results of this study, supply response analysis of sorghum and sesame showed that production did not respond to finance or price factors, indicated by the low elasticities. Analysis of marketing channels of the above crops showed that the various fees and taxes imposed on different crops have weakened the competitiveness of export of these crops and hindered farmers from gaining reasonable revenues. Thus, prices of these crops in some seasons exceeded the world prices. Results of the price margin showed that the real producers receive the minimum price margin as compared to the other market players. Key words: Supply response, price margin, market channels, agricultural surplus, competitiveness. &nbsp

Factors Impacting Crop Acreage Decision: A Case Study of North Dakota Agriculture

This study provides an analysis of producers’ crop planting decision behavior in response to econometric factors, the biophysical environment, and biofuel policy mandates. Specifically, we measure the effects due to economic impacts on an area planted with corn from 1990 to 2015. We develop a crop supply response model and estimate that acres planted with corn in the state of North Dakota have increased by 1.2 million over the last twelve years. Also, the value of crop price elasticities indicates a significant impact on corn planted acreage decisions due to change in crop prices. Corn future price and ethanol price elasticities are positively impacted by corn planted acreage whereas corn planted acreage negatively impacts competitive crop price elasticities. We find that impact of climate variables on corn acreage decision is evident. We show that the inclusion of county interaction effect variables significantly improves the model parameters. Key findings also indicate that a 1% increase in soil moisture in month of May led to a 0.1486% increase in corn acreage expansion. Similarly, as maximum temperature increased during the planting season, corn planted acreage expanded significantly. Also, the total rainfall is positively correlated with corn planted acreage as expected. For example, a 1% increase in total rainfall led to a 0.2143% increase in total corn planted acreage.

Maize Supply Response in Vietnam

This study used a supply response model to determine factors affecting maize supply in Vietnam. It estimated response coefficients from semi-annual time-series data for the period 1986-2011. Using three criteria, it chose the rational expectation hypothesis supply response model (Model I) with the separated price expectation formation hypothesis according to the information set at time (t-1) to estimate the supply response model for maize. Farmers used the available information set to form their expected price. Estimated parameters’ results in Model I indicate that the farmers' supply had a positive response to the expected price of maize, but was negative to that of cassava. This means that maize and cassava are close substitutes in the supply response models. Maize production also positively responds to the amount of fertilizer per hectare, maize area, one-period lagged investment, irrigation, trend variable, and agricultural extension policy. Recommended policies include: enhancement of the judicious use of fertilizers and possible establishment of local factories; increase in maize area by changing the crop structure and multiple cropping with long-term industrial trees like perennials and fruit trees; improvement of the irrigation system in two deltas and in high production regions; increase in government support to farmers; increase in government spending on research and development of new maize varieties; and improvement of the extension system to provide farmers the needed market and technological information.

Heterogeneous Welfare Effect of Cotton Pricing on Households in Benin

AbstractSince 2004–2005 the cotton sector in Benin has been experiencing major problems that have caused a decline in production. To help the sector recover, the government intensified its intervention in the form of prices support. This study assesses the impacts of sharp increases in producer prices during the years 2009–2012 on cotton production and the distributional impacts on welfare. Using a partial adjustment model of supply response, we estimate that cotton supply elasticity ranges between 1.3 and 2.6, suggesting that cotton production responds strongly to price incentives. Next, we use concepts of compensating variation and net benefit ratio measures to analyse the welfare implications. We find that an increase in price from 190 FCFA per kg in 2009 to 250 FCFA per kg in 2012 led to a 9.8 percent increase in producers’ welfare. Non‐parametric regressions showed that the increase in cotton prices likely benefited all households across the entire income distribution. However, the gains are larger for rich farmers in the northern regions where cotton is predominant.

Evaluating the effect of price and non-price policy intervention on rice cultivation in Sierra Leone: A supply response model approach

Rice is the main food for over 95 percent of the Sierra Leonean populace. It accounts for the largest portion of the agricultural GDP of the country. On the contrary, its cultivation has been shrinking over the past decades. Consequently, importation now becomes the main source of supplying the grain for local needs since its cultivation or production could no longer meet domestic request. The deterioration in the local cultivation of rice has had severe socio-economic implications such as higher consumer prices and balance of payment burden. Therefore, the main objective of this study is to evaluate the effect of price and other related nonprice policy intervention on rice cultivation in the country. The tools utilized for analyzing the problem comprise, a coefficient of protection analysis as well as a supply response analysis by means of a time series regression (for the period 1980-2011). Major limitations established negatively affecting rice output are price disincentives to cultivators, public expenditure and fertilizer consumption. From the above findings, rice cultivators should be accorded the necessary incentives to keep them more effective in the rice cultivation career. The food policy approach that had over the years depended on huge importation of rice should be reviewed in favor of domestic cultivation. Increasing local cultivation through a meaningful protection of cultivators can independently reduce the price of rice to the advantage of the final consumers. This study also recommends that public funds should be redirected away from rice import toward investments in its domestic cultivation.

Supply response of wheat in Bangladesh: cointegration and vector error correction analysis

Numerous past studies on wheat cultivation in Bangladesh is criticized for using the weaker Nerlovian Partial Adjustment models and also for analytical interpretation through Ordinary Least Square (OLS) creating spurious results for time series data. This problem can be avoided if Econometric technique of co-integration is used. It is for this the present paper estimates the supply response of wheat in Bangladesh by using the modern technique of co-integration with Vector Error Correction Model (VECM). Our unit root analysis indicates that underlying data series were not stationary and are all integrated of order one, that is I(1). The Johansen multivariate co-integration approach indicates the presence of a co-integrating relationship in the supply response model. Wheat acreage is significantly influenced by price of wheat, and other competing crops such as Boro rice. The non-price factors weather has a highly positive effect on wheat area in the short-run. The wheat supply elasticity’s are found to be inelastic both in the short-and long-run. The long-run and short run price elasticity’s were 0.95 and 0.47, respectively.

Greek meat supply response and price volatility in a rational expectations framework: a multivariate GARCH approach

This paper examines supply response models in a rational expectations framework for each one of the four major Greek meat markets, i.e. beef, broiler, lamb and pork. A multivariate generalised autoregressive conditional heteroskedasticity model with Cholesky decomposition is used to incorporate price volatility into the rational expectations supply response model for each meat category and as a result the conditional covariance matrix remains positive definite without imposing any restrictions on the parameters. The empirical results confirm the existence of rational behaviour by meat producers in the four examined markets and indicate that price volatility is a major risk factor in Greek meat production. Furthermore, the last Common Agricultural Policy reform is found to have a negative impact on beef and lamb production in Greece.

Supply Response Analysis of Pakistani Wheat Growers

Alternative specifications of model of supply response of Pakistani wheat growers and their economic implications are considered in terms of the existences and nature of production lags, and the choice between expected wheat and gross returns as the preferred explanatory of producer’s response to changing economic condition. Data were collected from 1961-2008 by using time series analysis and data were analysis by using SPSS-16.5 version. The analyses indicate that there are lags which are due primarily to the difficulties and cost of rapid adjustment rather than to the time required to revise expectations. The statistical results were similar for the alternative specification of gross margins and wheat as the economic decision available. However, the wheat elasticities derived using the gross margins specification were about a third of those using the wheat specification. The paper used data by using the time series analysis of Wheat response analysis. A longitudinal in depth study is needed for the decision analysis. The gross margin specification yielded additional information in the form of yield and input cost elasticities.The clarified concept of Wheat response analysis presented. Also, the systematized the factors is introduced and tested empirically.

Price volatility and rational expectations in a sectoral framework commodity model: a multivariate GARCH approach

This article explores supply response models in a rational expectations framework with endogenous risk by using a multivariate generalized autoregressive conditional heteroskedasticity model with Cholesky decomposition. This approach allows the incorporation of price volatility as a risk factor into the supply response of a primary commodity sector that is composed of several markets of homogenous products. The model is applied to the Greek meat sector, which is composed of four major meat categories, that is, beef, lamb, pork, and broiler, and thus the model for the entire market includes supply and demand equations for all the four meat markets, which are estimated simultaneously. The empirical results confirm that price volatility is a significant risk factor in Greek meat production and also provide useful implications about the cost factors of production. Furthermore, the empirical findings show that the last reform of the Common Agricultural Policy seems to have had a negative effect on beef and lamb production in Greece.

Estimating the supply response of cotton and cereal crops in smallholder production systems: recent evidence from Mali

AbstractCotton is one of the most important crops in West Africa and is a major catalyst of economic development in rural areas, but the sector has suffered from a decline in the world cotton price after 1999. This article exploits an unusual data set following 82 farmers over 14 years, from 1994 through 2007, to estimate a Nerlovian supply response model for cotton, maize, sorghum, and millet in long‐term rotation. The resulting system of equations is estimated with two‐stage least squares (2SLS), showing that this sample of Malian cotton producers have responded to prices in a relatively inelastic manner, with supply elasticities only about one‐half of those estimated for producers in developed countries. Policy reforms could help producers respond more easily to prices changes, as well as to raise average productivity levels.