Estimating Agricultural Supply Response with the dynamic sectormodel SILAS-dyn

Ali Ferjani and Albert Zimmermann
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Ali Ferjani: Agroscope Research Station, Ettenhausen, Switzerland
Albert Zimmermann: Agroscope Research Station, Ettenhausen, Switzerland

Journal of Socio-Economics in Agriculture (Until 2015: Yearbook of Socioeconomics in Agriculture), 2013, vol. 6, issue 1, 155-176

Abstract: The rapid ascent of commodity prices between late 2005 and 2008 led to renewed debate about what drives the demand and supply for basic food commodities. This paper examines the supply response to the output prices shocks for 22 commodity products in 3 regions of Switzerland by using a dynamic model system of Swiss agriculture (SILAS-dyn). The results suggest that almost all of the estimated own-price supply elasticities are inelastic (lower than one). Milk production appears to have one of the lowest elasticities, the short term supply response only reaches a value of 0.3. Fix input factors and non-economic reasons reduce the economic incentives of changes in milk price. For most of the activities, the response values over a longer time period lie between 0.5 and 1.0. In the case of crop activities, the differences between short and long term values are lower than in animal production. Almost all cross-price supply elasticities are negative (as expected) and near zero. They only play a role in the case of price changes of the main products.

Keywords: Supply elasticity; short term; long term; dynamic recursive; Switzerland (search for similar items in EconPapers)
JEL-codes: C61 Q11 Q18 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:cha:ysa001:v:6:y:2013:i:1:p:155-176

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