Price and Profit: Investigating a Conundrum

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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Bibliographic Details
Published in:Applied economic perspectives and policy Vol. 30; no. 2; pp. 352 - 359
Main Authors: Zulauf, Carl R., Schnitkey, Gary, Norden, Carl T., Davidson, Erick
Format: Journal Article
Language:English
Published: Oxford Blackwell Publishing Inc 01-06-2008
Oxford University Press
Blackwell Publishing
Agricultural and Applied Economics Association
John Wiley & Sons, Inc
Series:Review of Agricultural Economics
Subjects:
Agricultural management
Agriculture
Applied Analyses
Average prices
Corn
Corn prices
Correlations
Crop economics
Crop management
Crops
Farm management
Farmers
Farming
Farms
Measurement techniques
Pricing policies
Profitability
Profits
Q110
Q120
Soybeans
Studies
Supply & demand
Q110
Q120
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Summary: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.
Bibliography:http://dx.doi.org/10.1111/j.1467-9353.2008.00408.x
ark:/67375/HXZ-3J1W0840-4
istex:CC98A0800334EEAE221303674F8AB584EE7FA217
ISSN:1058-7195
2040-5790
1467-9353
2040-5804
DOI:10.1111/j.1467-9353.2008.00408.x