Price Enhancement: Returns Variability and Supply Response in the U.S. Dairy Sector
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Publisher:Ohio State University. Department of Agricultural, Environmental, and Development Economics
Series/Report no.:Ohio State University. Department of Agricultural Economics and Rural Sociology. ESO (Economics and Sociology Occasional Paper). No. 1383
Dairy producers operating in the U.S. have been protected against market price variability by the Federal price support program for over 35 years. During the late 1970s tax outlays to operate this program grew at a rapid rate. While many authors have addressed the economic implications of the existing dairy price support program few have explicitly considered the relationship between risk aversion, capital investment, milk production, and support price policy in this process. This paper considers the role of uncertainty and risk averse behavior and suggests that these elements are crucial to an economic analysis of the current program and future dairy policy issues.
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