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Product Quality In The Canadian Dairy Industry

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  • Nogueira, Lia
  • Baylis, Katherine R.

Abstract

Supply management has been shown to increase the price of milk. Technological change has induced (and allowed) processors to substitute alternative inputs, many of which can be imported tariff-free, for the traditional ingredients to lower costs and maximize profit. Meanwhile, there has been a great deal of consolidation in the dairy processing industry. We analyse the effect of these trends on cheese quality by measuring the increase in casein imports. Results suggest that supply management is negatively affecting cheese quality, by increasing casein imports due to the higher milk price. Furthermore, we were able to calculate that approximately 9.8% of specialty cheese is produced used casein. A 22% ad valorem tariff is needed to drive casein imports down to zero.

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File URL: http://purl.umn.edu/15844
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Bibliographic Info

Paper provided by University of British Columbia, Food and Resource Economics in its series Working Papers with number 15844.

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Date of creation: 2004
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Handle: RePEc:ags:ubcwps:15844

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Postal: 2053 Main Mall, Vancouver, BC V6T 1Z2
Web page: http://www.landfood.ubc.ca/fre/
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Keywords: Industrial Organization;

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  1. Timothy J. Richards & Scott R. Jeffrey, 1997. "The Effect of Supply Management on Herd Size in Alberta Dairy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 555-565.
  2. Acharyya, Rajat, 1998. "Monopoly and product quality: Separating or pooling menu?," Economics Letters, Elsevier, vol. 61(2), pages 187-194, November.
  3. Timothy J. Richards, 1996. "The Effect of Supply Management on Dairy Productivity," Canadian Journal of Economics, Canadian Economics Association, vol. 29(s1), pages 458-62, April.
  4. Ishikawa, Jota & Spencer, Barbara J., 1999. "Rent-shifting export subsidies with an imported intermediate product," Journal of International Economics, Elsevier, vol. 48(2), pages 199-232, August.
  5. Andrew Schmitz & Troy G. Schmitz, 1994. "Supply Management: The Past and Future," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 42(2), pages 125-148, 07.
  6. L. Lambertini, 1998. "Does Monopoly Undersupply Product Quality?," Working Papers 317, Dipartimento Scienze Economiche, Universita' di Bologna.
  7. Karl Meilke & Rakhal Sarker & Danny Roy, 1998. "The Potential for Increased Trade in Milk and Dairy Products between Canada and the United States under Trade Liberalization," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 46(2), pages 149-169, 07.
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