Price and Profit: Investigating a Conundrum

Corn and soybean prices do not differ significantly among farms participating in the Illinois farm business farm management (FBFM) program from 1996 through 2005. While consistent with the literature, the finding is inconsistent with farmers' opinion of the importance of price. A conundrum exis...

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Veröffentlicht in:Applied economic perspectives and policy 2008-06, Vol.30 (2), p.352-359
Hauptverfasser: Zulauf, Carl R., Schnitkey, Gary, Norden, Carl T., Davidson, Erick
Format: Artikel
Sprache:eng
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Zusammenfassung:Corn and soybean prices do not differ significantly among farms participating in the Illinois farm business farm management (FBFM) program from 1996 through 2005. While consistent with the literature, the finding is inconsistent with farmers' opinion of the importance of price. A conundrum exists. However, the study also finds that price and profit per acre are positively related when a given farm is examined over time. Thus, the conundrum can be explained as a difference in perspective: researchers examine variation between price and profit across farms at a point in time while farmers examine this variation within his/her farm over time. Nevertheless, the relationship a farmer observes is likely due to market supply and demand factors, not the farmer's managerial control over the price received.
ISSN:1058-7195
2040-5790
1467-9353
2040-5804
DOI:10.1111/j.1467-9353.2008.00408.x