Effects of Initial Payment Policy on the Welfare of Saskatchewan Wheat and Barley Producers

Abstract

This paper calculates the historical ex ante producer surplus of initial payments acting as price floors to Saskatchewan wheat and barley producers. To do this, a Nerlovian-type partial adjustment model and rational expectations are used. The Nerlovian model is somewhat unique in that it is argued that the Nerlovian partial adjustment model can be expanded to a multi-product partial adjustment model, and this is strongly supported by the data. The calculation of the ex ante producer surplus to Saskatchewan producers indicates that initial payment policy is causing only minor market distortions.Dans le prtsent document, on Ctablit la partie exctdentaire des paiements par anticipation initiaux B la production qui servent de prix plancher aux producteurs de blC et d'orge de la Saskatchewan. Pour cela, on s'est bask sur un modble a ajustement partiel de type Nerlovian et les attentes rationnelles. Le modble Nerlovian est particulier en ce sens qu'on suppose que le modkle a ajustement partiel peut s'etendre a de nombreux produits, ce que confirment nettement les donnCes. Le calcul de la part excidentaire du paiement original verse aux producteurs de la Saskatchewan revkle que la politique du paiement initial n'entraine que de trks 1Cgbres perturbations sur le marchC. of the GATT negotiations is on the trade-distorting impacts of domestic agricultural policies. The most commonly used measure of the level of government transfer of income to the domestic agricultural sector is the producer subsidy equivalent (PSE).