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Supply Response of Milk Production: Analysis and Implications for BRIC Countries


  • Badri Narayan RATH
  • Aruna Kumar DASH


This paper examines the supply response of milk production in BRIC countries using annual data for the period 1992 to 2010. The results derived from panel data analysis support a strong positive supply response of milk prices to the number of milking animals and total milk yield. The study also finds a strong association between price of substitutes between chicken meat and milk. The non-price factors like membership in WTO and exports have a positive impact on supply response in terms of number of milking animals. The study unfolds that export of milk have a favorable impact on the supply response both in terms of number of milking animals and milk yield. The analysis suggests that milk supply in BRIC countries is responsive to the price factors and hence price support and subsidies programmes for dairy farmers in BRIC need to more visible and effective. Such results clearly make a case for introduction of Minimum Support Price (MSP) for milk famers in BRIC countries. Milk producers in BRIC countries can take advantage of the enhanced market access provided by WTO and simultaneously increase their herd size.

Suggested Citation

  • 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).
  • Handle: RePEc:eaa:aeinde:v:16:y:2016:i:1_14

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    References listed on IDEAS

    1. Imai, Katsushi S. & Gaiha, Raghav & Thapa, Ganesh, 2011. "Supply response to changes in agricultural commodity prices in Asian countries," Journal of Asian Economics, Elsevier, vol. 22(1), pages 61-75, February.
    2. Munshi, Kaivan D. & Parikh, Kirit S., 1994. "Milk supply behavior in India: Data integration, estimation and implications for dairy development," Journal of Development Economics, Elsevier, vol. 45(2), pages 201-223, December.
    3. Badi H. Baltagi, 2006. "Estimating an economic model of crime using panel data from North Carolina," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(4), pages 543-547.
    4. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
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    More about this item


    Milk; Dairy sector; Supply response; Prices; Panel EC2SLS; BRIC;

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models


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