Production Rigidity, Input Lumpiness, Efficiency, and the Technological Hurdle of Quebec Dairy Farms

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Authors Bruno Larue, Alphonse Singbo, Sébastien Pouliot
Journal/Conference Name Canadian Journal of Agricultural Economics
Paper Category
Paper Abstract In this paper, we argue that (bilateral) auctions of production quotas induced a rapid convergence in dairy farm size within provinces in the early years of Canada's supply management policy and that this effect was stronger in provinces with a larger number of dairy farms. This contributed to the smallness and homogeneity of Quebec dairy farms relative to dairy farms in Western Canada. In Quebec, most dairy farms still rely on the tie‐stall milking system, while dairy farms in Western provinces are larger and use larger‐scale, lower‐cost technologies. Regulations on Quebec's quota exchange have slowed down the pace at which a farm can acquire production quota, exacerbating the effects of input lumpiness, on dairy farm efficiency. Low trading on the production exchange severely constrains production adjustments, making, scale, allocative, and technical inefficiencies more persistent and investment in herd expansion unprofitable.
Date of publication 2017
Code Programming Language Stata
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