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Price/Quality Relationships in the Malting Barley Market

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Title: Price/Quality Relationships in the Malting Barley Market
Author: Crabtree, John A.; Wilson, William W.
Description: An important factor in the market for malting barley is that of the multitude of quality variables which bear impact upon the valuation of particular shipments. Daily prices vary across samples for some fairly small differences in quality. The randomness of pricing across shipments is a source of frustration for producers as well as processors. The objective of the study conducted in this article was to analyze statistically the relationships among various quality factors and malting barley prices in order to develop and to estimate a statistical model for the measurement of the implicit prices for selected quality factors. The implicit price of a quality attribute is an economic concept similar to premiums and discounts that are commonly used in the grain trade. Implicit prices are those that indicate the market determined value of a quality attribute such as protein or plumpness. Differentials reflect the ability of barley to germinate in the malt house. These affect the barley malt market price. Prices vary across grades and varieties and in response to kernel plumpness and the level of protein. Certain varieties of barley are recommended for brewing and malting. the article goes into the empirical procedures for estimating price relationships, the characteristics of sales and malting barley at the Minneapolis Grain Exchange and the estimated equations and marginal implicit prices for plumpness and protein. This is study, an important observation on the behavior of these marginal implicit prices was that the premium for plumpness increased during the first 3 years of the study and the discounts for protein had increased every year form 7.2 cents per bushel to 13 cents per bushel for a 1% change in protein.
Date: 1983
Subject: Marketing
Permalink: http://hdl.handle.net/10365/4790

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