nonallotment years. Walsh [20] derived a short run
acreage price elasticity of .2. Cromarty [6] obtained
a supply price elasticity (based on production) of
.361 while Cochrane’s [4] judgment estimate was .2
to .3. The cross acreage elasticities and direct price
elasticities for yield were adapted from a much larger
simulation model developed by Ray [18]. The earlier
econometric simulation model included submodels
for feed grains, wheat, soybeans, cotton and tobacco.
The cross supply elasticities were derived by changing
a crop’s price by 10 percent, noting the change in the
acreage of competing crops and deriving the implied
cross acreage elasticity for the crop. The direct price
elasticities for yields were derived in a similar manner.
Demand Elasticities
The elasticity of feed grain demand was set at
-.25 [3] in the short run and -.50 in the long run.
Wheat flour price elasticity was estimated by Fox [8]
at -.067, and a short run elasticity of -.10 (-.20 in long
run) was used in the model. Gomme [10] suggests
that wheat feed demand is relatively price responsive
and is influenced to a considerable extent by feed
grain prices. The short run elasticities used are -.50
for the direct price elasticity and .45 for the cross
elasticity with respect to feed grain prices. Houck and
Mann’s [13] estimate of the domestic demand
elasticity for soybeans of -.35 was used (.70 in the
long run). Cromarty [6] estimated price elasticity'
of cotton mill consumption at -.30 and Lowenstein’s
[16] estimate was -.23. The short run estimate used is
-.25 with -.50 for the long run. Price elasticities for
export demands are assumed to be -2.00 in the long
run and -.4 in the short run except for soybeans
which has a short run elasticity of -.5. The price
AexibiHties used to determine individual Hvestock
prices were taken directly from Brandow [3, p. 65].
Livestock Supplies
A matrix of parameters that measure the
production response by class of Hvestock to changes ∣
in Hvestock prices and to changes in prices and/or
production of livestock feeds would be highly
desirable for use in a simulation model.
Unfortunately, no internally consistent and
integrated set of livestock supply parameters is
available. However, Hassler [11], Shepherd et al [24]
and Tweeten, Heady and Mayer [25] have developed
procedures that incorporate feeding rates, phasing a
commodity cycles, supply elasticities for individual
Hvestock commodities and length of production
periods to estimate the impact of changes in feed
suppHes and prices on production of the various
Hvestock classes. Hassler used a set of equations to
determine the equilibrium allocation of surplus feed
production among livestock classes at a fixed price
level for feed. Tweeten, Heady and Mayer implicitly
allocated excess feed production resulting from an
unrestricted production poHcy by determining the
maximum rate of production expansion of various
Hvestock categories consistent with livestock supply
elasticities and expansion rates. Shepherd et al
considered Hvestock supply elasticities feeding rates
and length of feeding period in their allocation of
estimated surplus feed grains resulting from a free
market structure to the various classes of Hvestock.
A comparative analysis of these studies suggested
that the difference between estimated and base
concentrates fed to Hvestock would initially be
a∏ocated to Hvestock classes as follows: beef, 15
percent; pork, 55 percent; sheep and mutton, .5
percent; poultry meat, 19.5 percent; eggs, 5 percent;
dairy, 5 percent; and other Hvestock, O percent. Hog,
broiler and turkey production are assumed to exhibit
the greatest initial response to changed feed suppHes
and prices. The production periods for hogs and
poultry are short and grains make up a large
proportion of their total rations. In the short run
cattle expansion (contraction) is moderate, but
adjustments in breeding stocks, feeding facihties, etc.,
allow marked changes in cattle production with the
passage of time. In keeping with the implications of
the Tweeten, Heady and Mayer analysis, the
proportion of excess (deficit) concentrates allocated
to cattle production is gradually adjusted so that after
about seven years 40 percent of the surplus (deficit)
feed is allocated to beef while 30 percent is allocated
to pork.
Feed conversion rates for the various classes of
Hvestock were adjusted sHghtly downward from their
1967-79 averages. Assumed levels of total
concentrates fed per 100 pounds of Hveweight
production for the Hvestock classes are as foUows: a∏
beef, 245 pounds; pork, 480 pounds; sheep, 150
pounds; chickens, 300 pounds; turkeys, 475 pounds;
milk, 844 pounds; and eggs, 600 pounds per 100
dozen. The base feeding rates were a∏owed to
respond to changes in feed grain prices with an
elasticity of -.1.
Production Expenses and Incomes
Each crop expense is calculated as the product of
acreage and that crop’s production expense per acre.
Expenses per acre for each crop are adjusted for
changes in the crop’s price with the same short run
elasticities as are used for yield. In the long run these
elasticities are tripled to reflect longer term
adjustments including changes in the use of
polyperiod inputs such as machinery.
171