| Structure of the U.S. peanut industry and history of domestic peanut policies are described. Intermediate product category (edible or crush), final product use location (U.S. or abroad), and, for crushed nuts, location of crushing facility are found to separate markets to which distinct policies have been applied. Policies applied in the farmers' stock market, including a quota with additional production allowed, a two-tier price support mechanism with nonrecourse government crop-collateral loan program, minimum domestic sales prices, minimum CCC resale and redemption prices, and contracting requirements, are shown to also differentiate nuts sold at other market levels. Previous work concerning economic analysis of domestic peanut policies is reviewed, but no model capable of such product differentiation was discovered.;Quantitative relationships required of a model endogenously determining prices and quantities in the various markets, as well as Treasury outlays, are identified. Based on both the review of literature and original estimation, these functions are specified. Behavioral relationships estimated include planted quota area response, planted additional area response, domestic edible stock consumption, domestic edible stock inventory, domestic oil stock inventory, total nut exports, oil stock exports, domestic crude oil consumption, domestic crude oil inventory, export demand for crude oil, crushing margin, mill-port nut transport margin, and mill-port oil transport margin. Predictive ability of these functions is investigated over sample periods and for a single year out of sample. A multimarket equilibrium model capable of stochastically simulating "free-market" prices and quantities over a five-year period is presented. |
