Dairy farms without quotas in Belgium: estimation and simulation with a flexible cost function
AbstractThis paper evaluates the farm-level supply and income effects from removing milk quotas and reducing producer prices with increasing direct compensatory payments. Using a panel of Belgian dairy farms, we first estimate a multi-output multi-input flexible cost function that generates a U-shaped marginal cost curve for each farm of the sample. We then embed each farm cost function in a profit-maximisation programming model that is built and calibrated for each farm in the sample. Accounting for farm heterogeneity, the simulations show how dairy farms without quotas may respond differently to changes in prices and structural changes that may take place within the dairy sector. A quota removal with a 20 per cent reduction in milk prices keeps aggregate milk supply and farm income at about the same level of the 2006 reference year. , Oxford University Press.
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Bibliographic InfoArticle provided by Foundation for the European Review of Agricultural Economics in its journal European Review of Agricultural Economics.
Volume (Year): 38 (2011)
Issue (Month): 4 (October)
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- Samson, G.S. (Sabrina) & Gardebroek, Koos & Jongeneel, Roelof A., 2012. "The Cost Function Structure of Dutch Dairy Farms: Effects of Quota abolition and Price Volatility," 126th Seminar, June 27-29, 2012, Capri, Italy 125956, European Association of Agricultural Economists.
- Hansen, Kristiana & Frahan, Bruno Henry de, 2011. "Evaluation of Agro-Environmental Policy through a Calibrated Simulation Farm Model," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114577, European Association of Agricultural Economists.
- De Blander, Rembert & Frahan, Bruno Henry de, 2011. "Analysis of Technical and Policy Changes for Belgian Dairy Farms Using an Estimated Augmented SGM Cost Function," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114546, European Association of Agricultural Economists.
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