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The Responsiveness of U.S. Rice Acreage to Price and Production Costs

Published online by Cambridge University Press:  28 April 2015

Michael E. Salassi
Michael E. Salassi*
Affiliation:
Department of Agricultural Economics and Agribusiness, Louisiana Agricultural Experiment Station, Louisiana State University Agricultural Center, Baton Rouge, LA
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Abstract

Ordinary least squares and seemingly unrelated regression procedures were used to analyze the impacts of changes in rice prices and production costs on U.S. rice planted acreage. National and regional response models were estimated over the 1970-92 period. Supply-inducing prices of rice were estimated as a function of effective rice support prices and seasonal average market prices. Expected production costs per acre were estimated using lagged actual total variable cash production expenses per acre adjusted by the previous 3-year average annual change in variable expenses. Estimated short-run price and production cost elasticities were found to be inelastic at the national level. However, the magnitude of the production cost elasticities were found to be greater than the price elasticities. Estimated long-run elasticities at the U.S. level were inelastic for changes in price but elastic for changes in production costs. Although acreage response varied across regions, similar relationships were found between price and production cost elasticities.

Keywords

Riceacreage response functionprice elasticityproduction cost elasticity
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 27 , Issue 2 , December 1995 , pp. 386 - 399
Copyright
Copyright © Southern Agricultural Economics Association 1995

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