—This study analyzes the impacts of price incentives, costs and management awareness on maize supply in the North Central and the South regions of the United States. Diverting from previous studies, we convert Cobb-Douglas production functions to supply functions in the profit maximizing condition for two regions and use prices and costs to represent the incentives and management indices of farmers in our models. We examine the effects of prices and costs on the decision-making processes of farmers and the corresponding maize supply, where the models simultaneously consider climate and technology improvement elements in addition to price and cost elements. Given the background that climatic and socioeconomic conditions are different in the two regions, analyzing and understanding the regional impact divergence could have significant implications to the United States and the world in the context of securing the stability of the market price and food supply of the crop, as well as adapting to the progress of climate change. We found the South region in the short-term is more responsive to changes in maize prices than the North region, opposite from the results examined in the medium-term scenario and the long-term scenario, reflecting the differences in regional management awareness. While the changes in labor costs and machinery costs in the North region have larger impacts in all scenarios, changes in chemical fertilizer costs have larger impacts in the South region in all scenarios. All in all, further research should be conducted to ensure the stability of the long-term food security.
—Price incentives, costs, management awareness, profit maximizing condition, stability of the market price and food supply, food security.
Xiang Li is with Chiba University, 263-8522 Japan (e-mail: email@example.com).
Cite: Charles McMillan and Xiang Li, "Impacts of Price Incentives, Costs and Management Awareness on Maize Supply in Two Regions of the USA," International Journal of Trade, Economics and Finance vol.6, no.5, pp. 254-258, 2015.