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

Bhattacharya, Poulomi and Rath, Badri Narayan and Dash, Arun Kumar (2016) Supply Response of Milk Production: Analysis and Implications for BRIC Countries. Applied Econometrics and International Development, 16 (1). pp. 179-192. ISSN 1578-4487

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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.

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