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Milk Supply Response in Delaware

Published online by Cambridge University Press:  10 May 2017

G. Joachim Elterich  and
Sharif Masud
G. Joachim Elterich
Affiliation:
Department of Agricultural and Food Economics, University of Delaware
Sharif Masud
Affiliation:
Department of Agricultural and Food Economics, University of Delaware
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Abstract

Milk supply response by dairy farmers in Delaware was analyzed employing distributed lag price structures for number of milk cows and milk production per cow. A polynominal distributed lag model is fitted to quarterly data with deflated prices for the period 1966 to 1978. The variations in the number of milk cows is explained by about 98 percent. Farmers react positively to milk prices after 1–2 years, while wages and feed prices have a negative impact on cow numbers. Milk production per cow shows positive adjustments to milk prices after 6 to 15 months. Technology and feed prices influence also milk production While the short-run price elasticity of milk production is only .2, the long-run aggregate elasticity grows to 2.8 percent. Intermediate-run projections of milk supply were also performed with the model.

Type
Research Article
Information
Journal of the Northeastern Agricultural Economics Council , Volume 9 , Issue 1 , April 1980 , pp. 41 - 45
Copyright
Copyright © Northeastern Agricultural and Resource Economics Association 

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Footnotes

The authors are indebted for valuable suggestions to an earlier draft by Dr. M. Kottke, University of Connecticut, Dr. A. Novakovic, Cornell University, Dr. G. Cole, University of Delaware and an anonymous reviewer. Mr. Bruce Madariaga assisted aptly in some of the statistical aspects of the paper which is gratefully acknowledged. Published as miscellaneous paper #885, the Delaware Agricultural Experiment Station.

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