Evaluating the Farmer’s-Share-of-the-Retail-Dollar Statistic
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Conventional wisdom appears to support the thesis that declines in USDA’s farmer’s share-of-the-retail-dollar (FS) statistics are indicators of low returns to agricultural
production. We estimate changes in cattle and hog FS statistics and their relationship with
producer surplus (PS) for changes in various exogenous factors. The method accounts
for correlations among structural parameter estimates while simulating multivariate
distributions of joint parameter realizations. The simulations indicate that relationships
between FS and PS depend on the source of exogenous shocks. The lack of informational
content in FS statistics suggests these data should not be used for policy purposes.