A “Sideways” Supply Response in California Winegrapes

This paper explores growers’ supply response to the 2005 “Sideways effect” demand shock (Cuellar, Karnowsky, and Acosta, 2009) triggered by the 2004 release of the movie Sideways. We use a modified difference-in-difference approach to evaluate the supply response in California and regional supply response differences within California. We use U.S. Department of Agriculture data for the period 1999–2012 and find evidence of a supply response in the post-release period that is consistent with the “Sideways effect” on wine demand. The positive supply response for Pinot Noir is stronger than the negative response for Merlot and concentrated in lower value Central Valley vineyards. (JEL Classifications: D25, Q12)

Do Erratic Rainfalls Hamper Grain Production? Analysis of Supply Response of Rice to Price and Non-Price Factors

Increasing rice production has become one of the ultimate goals for South Asian countries. The yield and area under rice production are also facing threats due to the consequences of climate change such as erratic rainfall and seasonal variation. Thus, the main aim of this work was to find out the supply response of rice in Malaysia in relation to both price and non-price factors. To achieve this target, time series analysis was conducted on data from 1970 to 2014 using cointegration, unit root test, and the vector error correction model. The results showed that the planted area and rainfall have a significant effect on rice production; however, the magnitude of the impact of rainfall is less conspicuous for off-season (season 2) rice as compared to main-season rice (season 1). The speed of adjustment from short-run to long-run for season-1 rice production is almost two-and-a-half years (five production seasons), while for season-2 production, it is only about one-and-a-half year (three production seasons). Consequently, the study findings imply the supply of water to be enhanced through better water infrastructure for both seasons. Moreover, the area under season 2 is continuously declining to the point where the government has to make sure that farmers are able to cultivate the same area for rice production by providing uninterrupted supply of critical inputs, particularly water, seed and fertilizers.

Price transmission and supply response: the case of Indian small cardamom

Market price volatility, the major challenge faced by the cardamom exporters greatly hinders the investment and destabilizes the earning of small holders. The present study attempted to analyse the price transmission between Indian and international markets and study the supply response of small cardamom to changes in price. The co-movement of prices of small cardamom exist between the Indian and international markets after trade liberalisation and the price transmission has been from the international market to the Indian market. The short-run disequilibrium has been found between the Indian and international prices of cardamom, which got corrected with varying speed of adjustment. The positive and significant elasticity of supply of small cardamom with respect to its own two year lagged price has been established. Crop specific price stabilization mechanism would help to overcome the wide fluctuations in prices of small cardamom.