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Price Enhancement, Returns Variability, and Supply Response in the U.S. Dairy Sector

Published online by Cambridge University Press:  05 September 2016

Cameron S. Thraen  and
Jerome W. Hammond
Cameron S. Thraen
Affiliation:
Department of Agricultural Economics and Rural Sociology, Ohio State University
Jerome W. Hammond
Affiliation:
Department of Agricultural and Applied Economics, University of Minnesota
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Abstract

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.

Keywords

dairyrisk aversionasset theorypolicy
Type
Submitted Articles
Information
Journal of Agricultural and Applied Economics , Volume 19 , Issue 2 , December 1987 , pp. 83 - 92
Copyright
Copyright © Southern Agricultural Economics Association 1987

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