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The impact of US fresh milk production standards on dairy trade

Listed author(s):
  • P. Dorian Owen

    ()

    (Department of Economics, University of Otago)

  • Niven Winchester

    ()

    (Department of Economics, University of Otago and Joint Program on the Science and Policy of Global Change, Massachusetts Institute of Technology)

We analyse the impact of proposed changes in US legislation to allow greater use of dairy concentrate products in the production of fresh milk products. This change could potentially have a large impact on dairy trade as US tariffs on concentrated dairy products are low relative to average dairy tariffs. Our investigation builds a global model that identifies six dairy commodities and includes a detailed specification of the production of fresh milk products. We find that proposed changes in US legislation may lead to large proportional changes in US imports of concentrated milk products from some sources. However, as proposed changes in US regulations will only facilitate a small increase in the use of concentrated milk products in the production of fresh milk products, there are only small changes in global dairy production. We supplement results from our simulation model with a gravity analysis. Our results indicate that trade in concentrated milk products is positively related to aggregate dairy tariffs and negatively related to concentrated milk tariffs. This suggests that large tariffs on some dairy commodities influence the overall pattern of dairy trade.

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File URL: http://www.otago.ac.nz/economics/research/otago076675.pdf
File Function: First version, 2011
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Paper provided by University of Otago, Department of Economics in its series Working Papers with number 1117.

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Length: 24 pages
Date of creation: Dec 2011
Date of revision: Dec 2011
Handle: RePEc:otg:wpaper:1117
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Web page: http://www.business.otago.ac.nz/econ
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