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The Cost Function Structure of Dutch Dairy Farms: Effects of Quota abolition and Price Volatility

Author

Listed:
  • Samson, G.S. (Sabrina)
  • Gardebroek, Koos
  • Jongeneel, Roelof A.

Abstract

This paper investigates potential impacts on milk production of Dutch dairy farms if feed prices increase, milk prices decrease and milk quotas are abolished. A quadratic cost function is estimated using panel data on individual dairy farms of the Dutch FADN. Marginal costs and revenues are evaluated to show the heterogeneous farm-level impact of changing prices on potential production developments. The main finding is that potential increases in milk production when quota are abolished, are offset by a decreasing marginal revenue due to lower milk prices, and increasing marginal costs due to higher feed prices.

Suggested Citation

  • Samson, G.S. (Sabrina) & Gardebroek, Koos & Jongeneel, Roelof A., 2012. "The Cost Function Structure of Dutch Dairy Farms: Effects of Quota abolition and Price Volatility," 126th Seminar, June 27-29, 2012, Capri, Italy 125956, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaa126:125956
    DOI: 10.22004/ag.econ.125956
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    References listed on IDEAS

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    1. Bruno Henry de Frahan & Alexandre Baudry & Rembert De Blander & Philippe Polomé & Richard Howitt, 2011. "Dairy farms without quotas in Belgium: estimation and simulation with a flexible cost function," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 38(4), pages 469-495, October.
    2. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, October.
    3. Daan L. Ooms & Jack H. M. Peerlings, 2005. "Effects of EU dairy policy reform for Dutch dairy farming: a primal approach using GMM estimation," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 32(4), pages 517-537, December.
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    Keywords

    Agricultural and Food Policy; Industrial Organization; Political Economy;
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