Public Intervention and Producer Supply Response: Discussion

The Martin-Warley paper tests the ability of five Canadian marketing boards (pork, fluecured tobacco, broilers, turkeys, and eggs) to reduce market instability by checking four market variables: industry output and gross revenue, and producer and consumer prices for two time periods-one before and one after a significant institutional change toward more market control by the boards. A control group is comprised of U. S. data for the same time periods. Relevant statistical tests were used. Their conclusions were that the ability of market boards to produce market stability was highly suspect and certainly not to be assumed as one of their inherent characteristics. Despite their modest claims of inadequate analytical treatment and inability to show definitely that boards do stabilize markets, their paper is a useful and intelligent expose of one of the basic problems dealing with government (political) intervention in the food system. The boards, in general, have power to control production, producer entry, and farm prices-yet they seem to fail in achieving their main task of guiding the food system effectively. They appear to succeed in their function of providing adequate farm incomes if firm volume is great enough, yet they seem to ignore the impact of their actions on consumer food budgets and inflation. It is to the authors' credit that they point out these problems, and, moreover, suggest that the next round of inquiry about boards should be in their operational structures and roles rather than in measuring a single performance criterion. Several questions could be raised in reviewing the authors' paper, the key one being whether or not there are feasible alternatives (politically and economically) to marketing boards if their demonstrable performance according to well-defined policy ends is questionable. Perhaps the situation has deteriorated to such a degree that flexibility is nil. The options may be simply to minimize whatever negative consequences that can be identified, or do away with boards entirely. However, a third alternative to the existing institutional structure would be to analyze what might happen if the Canadian boards were to follow a pattern similar to the State of Cali ornia marketing orders. These board me be s are elected from the industry, meetings are monitored by economists from the California State Department of Food and Agiculture, and board actions are subject to review by that department's director who has final authority over operations of the board. Essentially, boards are concerned with advertising, promotion, some research, and data collection; they do not set prices, nor do they now practice supply-control programs. They are funded from commodity-wide assessments set by referendum of growers or grower/ handlers for a commodity. Corollary questions raised by MartinWarley are whether Canadian boards still operate in the broad public interest for which they were initiated. The answer to this depends in large measure on the political power of Canadian agriculture, not in analytical probings of economic efficiency. Equity problems are interesting to analyze, yet solutions to these will be found through channels of advocacy rather than objective economic analysis. Another question relates to the structure of the Canadian food system once the production level is presumably well regulated. Lack of evidence for stability leads one to question again the myth that farm level efficiencies are passed on willy-nilly to consumers. Stickiness of margins, paths of price decline different from those of price increases based on demand and income elasticities, and the role of labor unions could well explain most of the reasons why the authors of this paper felt frustrated at not being able to produce more viable evidence. Finally, a more intelligent use of forward contracting could lend a stabilizing force to the goal of market stabilization. A question is: Could the regional boards work in concert L. T. Wallace, formerly Director of the California State Department of Food and Agriculture, is with the Cooperative Extension Service at the University of California, Berkeley.