Evaluating the Farmer’s-Share-of-the-Retail-Dollar Statistic

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.