Cost-Based Model of Seasonal Production, with Application to Milk Policy, A

David Hennessy and Jutta Roosen

Food and Agricultural Policy Research Institute (FAPRI) Publications (archive only) from Center for Agricultural and Rural Development (CARD) at Iowa State University

Abstract: Milk production is seasonal in many European countries. While quantity seasonality poses capacity management problems for dairy processors, a European Union policy goal is to reduce price seasonality. After developing a model of endogenous seasonality, we study the effects of three E.U. policies on production decisions. These are private storage subsidies, production removals, and production quotas. When cost functions are seasonal in a specified way, then arbitrage opportunities interact with storage subsidies to reduce both price and consumption seasonality. But production seasonality likely increases because storage subsidies promote temporal market integration. Conditions are identified under which product market interventions increase quantity seasonality.

Keywords: efficiency; market intervention; quota; stabilization; storage subsidies. (search for similar items in EconPapers)
Date: 2003-01
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: A Cost‐Based Model of Seasonal Production with Application to Milk Policy (2003)
Working Paper: Cost-Based Model of Seasonal Production, with Application to Milk Policy, A (2003)
Working Paper: Cost-Based Model of Seasonal Production, with Application to Milk Policy, A (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ias:fpaper:03-wp323

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