Supply Response of Milk Production: Analysis and Implications for BRIC Countries

Poulomi Bhattacharya, Badri Rath and Aruna Dash ()

Applied Econometrics and International Development, 2016, vol. 16, issue 1

Abstract: This paper examines the supply response of milk production in BRIC countries using annual data for the period 1992 to 2010. The results derived from panel data analysis support a strong positive supply response of milk prices to the number of milking animals and total milk yield. The study also finds a strong association between price of substitutes between chicken meat and milk. The non-price factors like membership in WTO and exports have a positive impact on supply response in terms of number of milking animals. The study unfolds that export of milk have a favorable impact on the supply response both in terms of number of milking animals and milk yield. The analysis suggests that milk supply in BRIC countries is responsive to the price factors and hence price support and subsidies programmes for dairy farmers in BRIC need to more visible and effective. Such results clearly make a case for introduction of Minimum Support Price (MSP) for milk famers in BRIC countries. Milk producers in BRIC countries can take advantage of the enhanced market access provided by WTO and simultaneously increase their herd size.

Keywords: Milk; Dairy sector; Supply response; Prices; Panel EC2SLS; BRIC (search for similar items in EconPapers)
JEL-codes: C23 Q11 Q17 (search for similar items in EconPapers)
Date: 2016
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