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Estimating Agricultural Supply Response with the dynamic sectormodel SILAS-dyn

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  • Ali Ferjani

    (Agroscope Research Station, Ettenhausen, Switzerland)

  • Albert Zimmermann

    (Agroscope Research Station, Ettenhausen, Switzerland)

Abstract

The rapid ascent of commodity prices between late 2005 and 2008 led to renewed debate about what drives the demand and supply for basic food commodities. This paper examines the supply response to the output prices shocks for 22 commodity products in 3 regions of Switzerland by using a dynamic model system of Swiss agriculture (SILAS-dyn). The results suggest that almost all of the estimated own-price supply elasticities are inelastic (lower than one). Milk production appears to have one of the lowest elasticities, the short term supply response only reaches a value of 0.3. Fix input factors and non-economic reasons reduce the economic incentives of changes in milk price. For most of the activities, the response values over a longer time period lie between 0.5 and 1.0. In the case of crop activities, the differences between short and long term values are lower than in animal production. Almost all cross-price supply elasticities are negative (as expected) and near zero. They only play a role in the case of price changes of the main products.

Suggested Citation

  • Ali Ferjani & Albert Zimmermann, 2013. "Estimating Agricultural Supply Response with the dynamic sectormodel SILAS-dyn," Journal of Socio-Economics in Agriculture (Until 2015: Yearbook of Socioeconomics in Agriculture), Swiss Society for Agricultural Economics and Rural Sociology, vol. 6(1), pages 155-176.
    • Handle: RePEc:cha:ysa001:v:6:y:2013:i:1:p:155-176
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    More about this item

    Keywords

    Supply elasticity; short term; long term; dynamic recursive; Switzerland;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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