Mel L. Lerohl

Acreage Response Under Canada's Western Grains Stabilization Program

An aggregate acreage supply model for the Canadian prairies is estimated assuming that farmers base short-run acreage decisions on the ex ante rational expectation and variance of per-hectare revenue. To account for the effects of government intervention, a structural model of the Western Grains Stabilization Program is incorporated into the estimation framework. Results indicate the Program contributed to modest increases in cropped acreage between 1976 and 1990.

Estimating Pricing Games in the Wheat-handling Market in Saskatchewan: The Role of a Major Cooperative

In Canada, grain handling is an important agri-business that has traditionally been cooperative in nature (for example, Saskatchewan Wheat Pool). At the same time the industry is heavily regulated. There has been a dramatic change in the structure of the industry over the past 20 years and there are currently no major cooperatives present in the market. If the “yardstick effect” hypothesis of the role of cooperatives in an imperfectly competitive market is true, the disappearance of cooperatives could result in the ability of remaining firms to exercise market power over producers. To investigate the impact of changes in ownership structure in the market, we estimated two types of pricing games that might have been played between a cooperative, Saskatchewan Wheat Pool (SWP) and an investor-owned firm (IOF), Pioneer Grain (PG) in the Saskatchewan wheat-handling market over the period 1980–2004, with different assumptions about their pricing behavior imposed. We find that SWP and PG have likely been playing a Bertrand pricing game in the market over the period. We thus conclude that SWP, as the largest cooperative in the market, likely played a “yardstick effect” role in the market.

The Alberta hog industry problem of the 1960s: its definition and resolution

The hog industry in Western Canada in 1960s was in a state of turmoil associated with a vague, poorly understood production and marketing problem. Hog production was largely a supplementary farm activity producing an overfat product increasingly shunned by consumers. The structure, and also probably the existence, of the industry was in question. During the following 20 years, the industry changed fundamentally as various groups achieved a better definition and understanding of the problem. A reshaping of the industry was carried out by farmers, the Provincial Government, and a variety of agricultural professionals concerned with industry structure, emerging pork markets, physical characteristics of the product, and creation of a policy environment that provided incentives for output and productivity growth. The outcome has been the development of a viable pork industry in the Province (in spite of some past and continuing hindrances to industry growth) that has substantially solved the problem.

Preferences About Marketing Organic Grain In Alberta

The organic industry in Canada is growing and Alberta organic grain producers have expressed a concern that the marketing system for organic grains in Alberta is poorly organized. This poorly organized system may hinder producers from optimizing market potential. This paper assesses different organizational structures that might assist Alberta organic grain producers in optimizing market potential. The choice of organizational structures that could potentially be used to market organic grain in Alberta is based on the types organizational structures that currently exist in the market, producer motivations, and the obstacles that exist in the market. In performing the assessment; existing organic organizational structures are identified, producer motivations are defined, underlying market forces are revealed, and organizational critical success factors are specified. In the conclusions an assessment is made as to which organizational structure is presently the most suitable option to assist organic grain producers in Alberta. The judgment of appropriate marketing structure may well change as the organic market matures, which it shows promise of rapidly doing.

Assessment of the Effect of the Policy Environment on Farm Decision-Making: Aggregate Acreage Response in the Canadian Prairies Under the Western Grains Stabilization Program

An aggregate acreage supply model for the Canadian prairie provinces is estimated under the assumption that farmers base acreage allocation decisions on the rational ex-ante expectationa and variance of net per hectare revenue. In order to account directly for the effects of government intervention during the period of estimation, a structural model of the Western Grains Stabilization Program is incorporated into the estimation framework. Results indicate that the revenue enhancement and revenue stabilization effects of the program both contributed nearly equally to modest increases in cropped acreage between 1976 and 1990.