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Do Efficient Dairy Producers Purchase Quota?

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  • Elskamp, Rebecca
  • Hailu, Getu

Abstract

We examine the effect of farm level cost and scale efficiencies on dairy quota exchanges in Ontario. A constrained profit maximization framework is used to illustrate the role of cost efficiency in quota exchanges (i.e., sales and purchases). Using a multinomial logit model, where net quota buyers and net quota sellers are identified our empirical results indicate that variations in cost efficiency do not have a significant effect on purchases milk production quota, whereas scale efficiency does. Younger farmers, farms with underutilized barns space and farms with a recent history of quota purchase tend to buy milk production quota.

Suggested Citation

  • Elskamp, Rebecca & Hailu, Getu, 2013. "Do Efficient Dairy Producers Purchase Quota?," Working Papers 148901, Canadian Agricultural Trade Policy Research Network.
  • Handle: RePEc:ags:catpwp:148901
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    References listed on IDEAS

    as
    1. Antonio Alvarez & Carlos Arias & Luis Orea, 2006. "Explaining Differences in Milk Quota Values: The Role of Economic Efficiency," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 182-193.
    2. Alston, Julian M., 1981. "A Note on the Effects of Non-Transferable Quotas on Supply Functions," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 0(Number 03), pages 1-9, December.
    3. 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.
    4. Alfons Weersink & Calum G. Turvey & Abdulahi Godah, 1990. "Decomposition Measures of Technical Efficiency for Ontario Dairy Farms," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 38(4), pages 1023-1023, December.
    5. Alex Cairns & Karl Meilke, 2012. "Price Ceilings on Milk Production Quota Values: Future or Folly?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 60(1), pages 93-112, March.
    6. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
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    1. Milk quota markets are not efficient
      by Economic Logician in Economic Logic on 2013-06-21 19:48:00

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    Cited by:

    1. Rajsic, Predrag, 2013. "Cost Structure of the Ontario Dairy Industry Revisited: Distributional Aspects," Working Papers 157407, Canadian Agricultural Trade Policy Research Network.

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    Keywords

    Agribusiness; Agricultural and Food Policy; Agricultural Finance; Demand and Price Analysis; Farm Management;

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