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Imputing Dairy Producers' Quota Discount Rate Using the Individual Export Milk Program in Quebec

Author

Listed:
  • Doyon, Maurice
  • Brodeur, Catherine
  • Gervais, Jean-Philippe

Abstract

Trade liberalization scenarios are often evaluated using sophisticated programming models that rely on a number of assumptions related to demand and supply parameters. One challenge researchers often encounter in the calibration of dairy trade liberalization models is to identify the supply response of producers under production quotas. The existence of production quotas in the Canadian dairy industry implies departures from standard marginal cost pricing. Under traditional net present value models, an assumption about the discount factors attached to production quotas must be made to infer the supply response of Canadian dairy producers following a change in the economic environment (e.g., import tariffs). The Individual Export Milk (IEM) program in Quebec generated an opportunity to estimate dairy producers’ discount factors for production quotas conditional on different assumptions about structural parameters such as producers’ risk preferences and cost efficiency.

Suggested Citation

  • Doyon, Maurice & Brodeur, Catherine & Gervais, Jean-Philippe, 2006. "Imputing Dairy Producers' Quota Discount Rate Using the Individual Export Milk Program in Quebec," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue Issue 7, pages 1-11, November.
  • Handle: RePEc:ags:cafric:46382
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    File URL: http://ageconsearch.umn.edu/record/46382/files/doyon7-2_1_.pdf
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    References listed on IDEAS

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    1. Giancarlo Moschini & Karl D. Meilke, 1988. "Sustainable Rates of Return for Milk Quotas in Ontario," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 36(1), pages 119-126, March.
    2. Calum Turvey & Alfons Weersink & Craig Martin, 2003. "The Value of Dairy Quota under a Commercial Export Milk Program," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 51(1), pages 69-83, March.
    3. Tomek, William G. & Peterson, Hikaru Hanawa, 2000. "Risk Management in Agricultural Markets: A Survey," Staff Papers 121140, Cornell University, Department of Applied Economics and Management.
    4. 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, July.
    5. Kevin Chen & Karl Meilke, 1998. "The Simple Analytics of Transferable Production Quota: Implications for the Marginal Cost of Ontario Milk Production," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 46(1), pages 37-52, March.
    6. William G. Tomek & Hikaru Hanawa Peterson, 2001. "Risk Management in Agricultural Markets: A Review," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 21(10), pages 953-985, October.
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    Citations

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    Cited by:

    1. Abbassi, Abdessalem & Larue, Bruno, 2012. "Multiple Marginalization and Trade Liberalization: The Case of the Canadian Dairy Industry," Working Papers 148592, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
    2. Abbassi, Abdessalem & Larue, Bruno, 2011. "Trade liberalization and inter-provincial dumping in a spatial equilibrium model: the case of the Canadian dairy industry," MPRA Paper 30363, University Library of Munich, Germany.
    3. Abdessalem Abbassi & Olivier Bonroy & Jean-Philippe Gervais, 2008. "Dairy Trade Liberalization Impacts in Canada," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(3), pages 313-335, September.
    4. Maurice Doyon & Virginie Simard & Kent D. Messer & Lota D. Tamini & Harry M. Kaiser, 2008. "An Experimental Analysis of Modifications to the Centralized Milk Quota Exchange System in Quebec," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(3), pages 295-312, September.

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