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Dynamic Adjustment in the U.S. Dairy Industry

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  • Howard, Wayne H.
  • Shumway, C. Richard

Abstract

A dual model is used to examine the dynamic structure of the U.S. dairy industry. Properties implied by the theory of the competitive firm and independent adjustment of two quasi-fixed inputs, labor and herd size, are tested and not rejected. Instantaneous adjustment, however, is soundly rejected for each quasi-fixed input. Input adjustment to optimal levels is estimated to take about two years for labor and ten for cows. Quality adjustments of the labor and cow series do not fully embody the technological change that has occurred in this industry over the study period.

Suggested Citation

  • Howard, Wayne H. & Shumway, C. Richard, 1987. "Dynamic Adjustment in the U.S. Dairy Industry," Faculty Paper Series 257881, Texas A&M University, Department of Agricultural Economics.
    • Handle: RePEc:ags:tamufp:257881
    DOI: 10.22004/ag.econ.257881
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    2. Meilke, Karl D. & Weersink, Alfons, 1991. "An Analysis of the Effects of Government Payments to Grain and Oilseeds Producers on Cropping Decisions," Working Papers 244081, Agriculture and Agri-Food Canada.
    3. Meilke, Karl D. & Sarker, Rakhal & Le Roy, Danny G., 1996. "Analyzing The Potential For Increased Trade In Dairy Products: A Canadian Perspective," Proceedings of the 2nd Agricultural and Food Policy Systems Information Workshop, 1996: Understanding Canada\United States Dairy Disputes 16959, Farm Foundation, Agricultural and Food Policy Systems Information Workshops.
    4. Kivanda, Lena & Fox, Glenn, 1993. "Falsification and the Practice of Agricultural Production Economists: A Methodological Assessment," Department of Agricultural Economics and Business 258724, University of Guelph.
    5. Graham, John D. & Stennes, Brad & MacGregor, Robert J. & Meilke, Karl & Moschini, Giancarlo, 1990. "The Effects of Trade Liberalization on the Canadian Dairy and Poultry Sectors," Working Papers 244045, Agriculture and Agri-Food Canada.
    6. Yang, Sansi & Shumway, C. Richard, 2014. "Dynamic Adjustment in U.S. Agriculture under Climate Uncertainty," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170609, Agricultural and Applied Economics Association.
    7. Templeton, Deborah J. & Griffith, Garry R. & Piggott, Roley R. & O'Donnell, Christopher J., 2004. "Measuring the Impact of Staple Strength-Enhancing Technologies on Australian Wool Producer Profits: A Duality-Based Approach," Working Papers 12922, University of New England, School of Economics.
    8. Lin, Ni & Shumway, C. Richard, 2000. "Asset Fixity In U.S. Agriculture: Robustness To Functional Form," Ag Econ Series 12967, Washington State University, School of Economic Sciences.
    9. Matteo Manera, 2006. "Modelling factor demands with SEM and VAR: an empirical comparison," Journal of Productivity Analysis, Springer, vol. 26(2), pages 121-146, October.
    10. Agbola, Frank W., 2005. "Optimal intertemporal investment in Australian agriculture: An empirical investigation," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 6(2), pages 1-11.
    11. Buhr, Brian L. & Kim, Hanho, 1997. "Dynamic adjustment in the US beef market with imports," Agricultural Economics, Blackwell, vol. 17(1), pages 21-34, October.
    12. D. Verreth & G. Emvalomatis & F. Bunte & A. Oude Lansink, 2015. "Dynamic and Static Behaviour with Respect to Energy Use and Investment of Dutch Greenhouse Firms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(4), pages 595-614, August.
    13. Davison, Cecil W. & Arnade, Carlos Anthony & Hallahan, Charles B., 1989. "Box-Cox Estimation of U.S. Soybean Exports," Journal of Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, vol. 41(3), pages 1-9.
    14. Frank W. Agbola & Stephen R. Harrison, 2005. "Empirical investigation of investment behaviour in Australia's pastoral region," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(1), pages 47-62, March.
    15. D’Antoni, Jeremy M. & Mishra, Ashok K. & Blayney, Donald, 2013. "Assessing participation in the Milk Income Loss Contract program and its impact on milk production," Journal of Policy Modeling, Elsevier, vol. 35(2), pages 243-254.
    16. Morrison, Catherine J., 1997. "Economic performance, cost economies and pricing behaviour in the US and Australian meat products industries," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 41(3), pages 1-23.
    17. Rungsuriyawiboon, Supawat & Zhang, Yanjie, 2018. "Examining the economic performance of Chinese farms: A dynamic efficiency and adjustment cost approach," Economic Analysis and Policy, Elsevier, vol. 57(C), pages 74-87.
    18. Agbola, Frank W., 1999. "The Structure of Production and Investment in Australia's Pastoral Zone," 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand 122327, Australian Agricultural and Resource Economics Society.

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    Keywords

    Livestock Production/Industries;

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