First-Handler Grain Cooperative Elasticities: Output Supply, Factor Demands, and Factor Substitution, 1983-1991

This report is the first of a multi-part investigation that attempts to quantify the impacts of market and policy changes upon first-handler grain cooperatives in the United States. The response of grain cooperatives to their changing market and policy environment from 1983 to 1991 is quantified. An economic model is constructed to measure grain cooperative output supply response, changes in grain cooperative factor demands, and substitution rates among the factors of production employed by grain cooperatives in four major United States grain producing regions. The model assumes that grain cooperatives employ three basic factors of production (intermediate inputs, labor, and capital) to provide three services/products (grain sales or merchandising, grain storage, and farm supply sales). A discussion of the important findings of the model in the light of the events transpiring in the grain industry during the study period and important model implications is also included.