SOUTHERN JOURNAL OF AGRICULTURAL ECONOMICS December, 1971 A SIMULTANEOUS EQUATION APPROACH TO PRODUCTION RESPONSE: Delta Region

Soybeans occupy the unique position of common of adjustments from the previous year's operation in denominator in crop production for much of the response to changes in expected relative profitability, Eastern half of the U.S. The interdependence be- acreage availability, and the Federal farm commodity tween the soybean economy and those of corn, programs [1]. cotton, and rice means that policy changes directed toward one crop can have very decided effects upon This is expressed by four equations 2 in the model, the others. with planted acreage response for soybeans, cotton, rice, and corn assumed to be jointly determined. The Effective policy and program decisions need con- simultaneity occurs among acreages allocated to com-tinuing research as input in formulating and evalua- peting crops, given a fixed total acreage in any one ting these decisions. Detailed analyses of inter- and year but not perfectly invariant among years. This intraregional interdependence among crops, and of contrasts with the usual market applications, where production alternatives involving soybeans, are prices and quantities are assumed to be jointly deter-especially needed because it is no longer certain that mined. an expanding demand will provide a safety valve fo