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SUPPLY RESPONSES IN THE SOUTH AUSTRALIAN POTATO INDUSTRY
Author(s) -
Mules T.J.,
Jarrett Frank G.
Publication year - 1966
Publication title -
australian journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 0004-9395
DOI - 10.1111/j.1467-8489.1966.tb00606.x
Subject(s) - cash , economics , distributed lag , lag , elasticity (physics) , econometrics , monetary economics , agricultural economics , macroeconomics , computer network , materials science , computer science , composite material
The potato industry in South Australia is characterised by very unstable prices. One hypothesis for this instability is that potato growers' acreage responses follow a cobweb pattern, that is, a one year lag of acreage to price. This hypothesis is tested, together with a two year lag and a distributed lag. The distributed lag model seems the most satisfactory and gives a short‐run elasticity of acreage to price of 0.36 and a long‐run elasticity of 1.09. An alternative to the lagged price hypothesis is the "constant cash return" hypothesis which postulates that potatoes are grown to provide a certain cash income to permit farm development. This explanation of acreage response only seems relevant in the dairying and fat lamb areas of the State.