Seasonal variability and a farmer's supply response to protein premiums and discounts

Robert Fraser

    Research output: Contribution to journalArticle

    Abstract

    This article extends the analysis of the impact of a system of protein premiums and discounts to that on a farmer's planned production. Despite an unambiguously negative impact on expected profits of equally likely premiums and discounts, supply response to the introduction of such a system is shown to depend on the level of seasonal variability faced by the farmer. In particular, farmers in regions which are more seasonally unreliable are likely to feature a negative supply response, whereas those in regions which are more seasonally reliable are likely to feature a positive supply response. Consequently, it is suggested that, overall, protein payments for wheat may have encouraged a shift of wheat-growing activity away from more seasonally unreliable areas.
    Original languageEnglish
    Pages (from-to)25-33
    JournalAustralian Journal of Agricultural and Resource Economics
    Volume42
    Issue number1
    DOIs
    Publication statusPublished - 1998

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