Production Response to Technological and Price Changes: A Study of Wheat and Cattle Farming in Southern Brazil
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Date
1971-08
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Publisher
Ohio State University. Department of Agricultural, Environmental, and Development Economics
Abstract
This paper analyses the impact of the price changes on resource allocation on representative wheat and cattle farms in Southern Brazil with the help of a programming model that includes alternative productions, sales and investment activities under various technologies, More specifically it evaluates the possible impact of changing the support prices of wheat now maintained under a program to stimulate wheat production in Brazil. Optimal and parametric results for short run and long run price changes show that under current support programs a wheat-soybean combination will continue to replace livestock production and that attempts to reduce support prices would lead to a transition away from wheat to soybean production or livestock production on improved pasture. Analysis of resource use shows that there is a seasonal unemployment and scarcity of labor and that cash use is not sensitive to changes in the short run. The internal rates of return to capital use also indicate that current interest rates charged to farmers are very low when compared to capital productivity, and are being heavily subsidized.