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© 1994 Oxford University Press and the Foundation for the European Review of Agricultural Economics

research-article

The impact of price support on set-aside responses to an increase in price uncertainty*

ROB FRASER

Rob Fraser Agricultural Economics School of Agriculture University of Western Australia Nedlands, WA 6009 Australia

Received May 1, 1993;

Summary

This paper examines the impact of increased price uncertainty on the decision to set aside croppable land. It is shown that the standard response of increased set-aside may not occur if the commodity in question is also subject to a price-support policy. In this situation, conflicting effects on the set-aside decision arise because an increase in underlying price uncertainty may increase not just the variability but also the expected level of producer prices

Keywords: price support, set-aside, price uncertainty


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