Title: Dairy farms without quotas in Belgium: estimation and simulation with a flexible cost function
Authors: Henry de Frahan, Bruno ×
Baudry, Alexandre
De Blander, Rembert
Polome, Philippe
Howitt, Richard #
Issue Date: Oct-2011
Publisher: Mouton
Series Title: European Review of Agricultural Economics vol:38 issue:4 pages:469-495
Abstract: This paper evaluates the farm-level supply and income effects from removing milk quotas and reducing producer prices with increasing direct compensatory payments. Using a panel of Belgian dairy farms, we first estimate a multi-output multi-input flexible cost function that generates a U-shaped marginal cost curve for each farm of the sample. We then embed each farm cost function in a profit-maximisation programming model that is built and calibrated for each farm in the sample. Accounting for farm heterogeneity, the simulations show how dairy farms without quotas may respond differently to changes in prices and structural changes that may take place within the dairy sector. A quota removal with a 20 per cent reduction in milk prices keeps aggregate milk supply and farm income at about the same level of the 2006 reference year.
ISSN: 0165-1587
Publication status: published
KU Leuven publication type: IT
Appears in Collections:Research Center of Public Economics, Leuven
× corresponding author
# (joint) last author

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