Increase in milk price volatility experienced by Flemish dairy farmers: A change in risk profile

Frankwin van Winsen, Erwin Wauters, Ludwig H. Lauwers, Yann de Mey, Steven Van Passel and Mark Vancauteren

No 115758, 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland from European Association of Agricultural Economists

Abstract: This paper reports on the increased volatility in the milk price received by Flemish dairy farmers and its consequence on the risk profile of selected Flemish dairy farms. The volatility of the milk price has doubled since January 2007. It is suggested that this increasing volatility could have a significant impact on the risk profile of dairy farms. Indeed our results show that the risk profile is changing depending on the volatility and average price for milk. However this change is not very substantial compared to some other subsectors. Also we show that in our case study of selected farms that if the milk price volatility doubles an average milk price increase of about 12% compensates for the increased volatility on return on assets. Finally this paper demonstrated the importance of regarding risk and return together when making normative statements on the consequences of milk price volatility.

Keywords: Demand and Price Analysis; Livestock Production/Industries (search for similar items in EconPapers)
Pages: 12
Date: 2011-09-02
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae11:115758

DOI: 10.22004/ag.econ.115758

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