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Decomposition of Milk Supply Response into Technology and Price-Induced Effects

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  • Don P. Blayney
  • Ron C. Mittelhammer

Abstract

An economically relevant aggregate production function and an aggregate profit function are used to decompose milk supply response into technology and price effects. Decomposing milk supply response in this way provides insights into dairy industry efficiency and its impact on the effectiveness of price support programs as well as the extent to which aggregate milk production will expand despite prices motivating supply curtailment. An empirical analysis of supply response decomposition for the state of Washington is presented. Expected market price effects were obtained but were overwhelmed by technology effects resulting in milk output expansion when price signals motivated supply reduction.

Suggested Citation

  • Don P. Blayney & Ron C. Mittelhammer, 1990. "Decomposition of Milk Supply Response into Technology and Price-Induced Effects," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(4), pages 864-872.
    • Handle: RePEc:oup:ajagec:v:72:y:1990:i:4:p:864-872.
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    File URL: http://hdl.handle.net/10.2307/1242618
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    Citations

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    Cited by:

    1. Adelaja, Adesoji O. & Miller, Tracy & Taslim, Mohammad, 1998. "Land Values, Market Forces, and Declining Dairy Herd Size: Evidence from an Urban-Influenced Region," Agricultural and Resource Economics Review, Cambridge University Press, vol. 27(1), pages 63-71, April.
    2. Holland, David W. & Martin, R.P., 1993. "Output Change In U.S. Agriculture: An Input-Output Analysis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 25(2), pages 1-13, December.
    3. Poulomi BHATTACHARYA & Badri Narayan RATH & Aruna Kumar DASH, 2016. "Supply Response of Milk Production: Analysis and Implications for BRIC Countries," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 16(1).
    4. Munir Ahmad & Boris E. Bravo-Ureta, 1995. "An Econometric Decomposition of Dairy Output Growth," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(4), pages 914-921.
    5. Tauer, Loren W., 1993. "Segmenting the Milk Market into bST-Produced and Non-bST-Produced Milk," Staff Papers 121326, Cornell University, Department of Applied Economics and Management.
    6. Vangelis Tzouvelekas & Peter Midmore & Konstantinos Giannakas & Konstantinos Mattas, 1999. "Decomposition of Olive Oil Production Growth into Productivity and Size Effects : A Frontier Production Function Approach," Cahiers d'Economie et Sociologie Rurales, INRA Department of Economics, vol. 51, pages 5-21.
    7. Eswaramoorthy, K., 1991. "U.S. livestock production and factor demand: a multiproduct dynamic dual approach," ISU General Staff Papers 1991010108000010523, Iowa State University, Department of Economics.
    8. Kivanda, Lena & Fox, Glenn, 1993. "Falsification and the Practice of Agricultural Production Economists: A Methodological Assessment," Department of Agricultural Economics and Business 258724, University of Guelph.
    9. Baaken, Dominik & Hess, Sebastian, 2021. "Forecasting Regional Milk Production Quantity: A Comparison of Regression Models and Machine Learning," 2021 Conference, August 17-31, 2021, Virtual 315117, International Association of Agricultural Economists.

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