Output price formation under rational expectations by vegetable Growers in the United States

Survey data on expected and actual prices received by individual vegetable growers in Florida, Michigan, and Texas in 1990 are used to test the rational expectations hypothesis. The use of individual grower data overcomes many of the aggregation, risk premia and model specification issues that have limited previous tests of this hypothesis in agriculture. Overall, price expectations of vegetable growers are found to be inconsistent with the rational expectations hypothesis for the majority of vegetable/state combinations studied.