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Do Efficient Dairy Producers Purchase Quota?

  • Elskamp, Rebecca
  • Hailu, Getu

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.

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File URL: http://purl.umn.edu/148901
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Paper provided by Canadian Agricultural Trade Policy Research Network in its series Working Papers with number 148901.

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Date of creation: Mar 2013
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Handle: RePEc:ags:catpwp:148901
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  1. Richard R. Barichello, 1999. "The Canadian Dairy Industry: Prospects for Future Trade," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 47(5), pages 45-55, December.
  2. Michael Boehlje, 1992. "Alternative models of structural change in agriculture and related industries," Agribusiness, John Wiley & Sons, Ltd., vol. 8(3), pages 219-231.
  3. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
  4. 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.
  5. Roberto Mosheim & C.A. Knox Lovell, 2007. "Scale Economies and Inefficiency of U.S. Dairy Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(3), pages 777-794.
  6. 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. 49(03), December.
  7. 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, 03.
  8. Chen, Kevin Z. & Meilke, Karl D., 1996. "The Simple Analytics of Transferable Production Quota: Implications for the Marginal Cost of Ontario Milk Production," Staff Paper Series 24127, University of Alberta, Department of Resource Economics and Environmental Sociology.
  9. 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(3), pages 439-456, November.
  10. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  11. Morteza Haghiri & James Nolan & Kien Tran, 2004. "Assessing the impact of economic liberalization across countries: a comparison of dairy industry efficiency in Canada and the USA," Applied Economics, Taylor & Francis Journals, vol. 36(11), pages 1233-1243.
  12. Hervé Guyomard & Xavier Delache & Xavier Irz & Louis-Pascal Mane, 1996. "A Microeconometric Analysis Of Milk Quota Transfer: Application To French Producers," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1-4), pages 206-223.
  13. Getu Hailu & Scott Jeffrey & James Unterschultz, 2005. "Cost Efficiency for Alberta and Ontario Dairy Farms: An Interregional Comparison," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 53(2-3), pages 141-160, 06.
  14. 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, 09.
  15. Anwar M. Shaikh & Jamee K. Moudud, 2004. "Measuring Capacity Utilization in OECD Countries: A Cointegration Method," Economics Working Paper Archive wp_415, Levy Economics Institute.
  16. Boots, Maroeska & Oude Lansink, Alfons & Peerlings, Jack, 1997. "Efficiency Loss Due to Distortions in Dutch Milk Quota Trade," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 24(1), pages 31-46.
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