Seminars

Geoffrey Cockfield

University of Southern Queensland

Examining differences in Australian and US agricultural policy: Advocacy, institutions and instruments

Abstract Australia and the US are both developed, anglophone, Euro-colonial nations with similar agricultural production systems and some common export commodities. Both countries have cultural and political narratives about the importance of agriculture and rural communities, both were influenced by the resurgent market ideology of the 1980s and participate in WTO and a range of bi-lateral agreements. Australia is also relatively exposed to US cultural and political trends and ideas. Despite these commonalities and the potential for policy transfer, the agricultural policies of the two countries are notably different. In particular, Australia has drastically reduced effective support to farmers with almost no on-going agricultural programs, in contrast to the extensive programs in the US.

Marc Bellemare

University of Minnesota

Producer Attitudes toward Output Price Risk: Experimental Evidence from the Lab and from the Field

AbstractIn a seminal article, Sandmo (1971) showed that when faced with a risky output price, a risk-averse producer would in theory hedge against price risk by producing less than she would if she instead had been faced with a certain price equal to the mean of the risky price distribution. A number of agricultural and food policy instruments (e.g., administrative pricing, buffer stocks, marketing boards, and variable tariffs) as well as a substantial amount of research contributions are predicated on the idea that producers dislike output price volatility. We test Sandmo’s prediction experimentally, both in the lab with US college students and in the field with Peruvian farmers. We find no support for Sandmo’s prediction, either in the whole sample or in the restricted sample of risk-averse subjects. Moreover, we find that our subjects increase their production in response to price risk at the extensive margin but decrease it in response to price risk at the intensive margin. Looking at alternative explanations for our subjects’ behavior, we find no support for the safety-first decision criterion or for the hypothesis that our subjects maximize expected profit rather than expected utility, but we find suggestive evidence in support of prospect theory.

Jesse Tack

Kansas State University

 

Jayson Lusk

Purdue University

Filley-Garey Seminar