Economic Models For Dairy Policy Analysis

Milk is one of the most supported agricultural commodities, and world dairy markets are characterised by a high degree of distortion. Although there is a strong case for dairy policy reform, a clear understanding of the dairy sector's specific characteristics and of policy measures' operational features is necessary for any reform process to be successful. This report is an attempt to improve such understanding through an analysis of the trade and economic effects of the main policy measures applied to the dairy sector. In particular, it examines the effects of both milk price support measures and milk quota systems. The removal of individual policy measures is modelled in order to assess the impact of international dairy trade liberalisation on production, consumption, trade, prices, income, and welfare. The primary focus of this report is the impact of policies and reform in the OECD area, although the consequences for other economies are also examined. In addition, this report offers economic insights into the workings of complex dairy policy measures and provides a discussion of the potential of the dairy sector -- globally and in individual countries -- as it adjusts to liberal trading conditions

This textbook integrates three related fields in economics, namely agricultural/forestry economics, environmental economics, and international trade, by foregrounding cost-benefit analysis as a significant policy tool. Exploring how welfare measures can be used in the analysis of agricultural, trade, and other economic policies, Applied Welfare Economics, Trade, and Agricultural Policy Analysis fills a gap in the literature on agricultural policy analysis by explaining the economic efficiency improvements and income transfers of various agricultural policy reforms in the United States, Canada, and the European Union. G. Cornelis van Kooten addresses methods of identifying and measuring economic surpluses (costs and benefits), the precautionary principle, identification of an appropriate discount rate, the importance of non-market values, and the role of agriculture in trade negotiations and climate change. Applied Welfare Economics, Trade, and Agricultural Policy Analysis draws on new research, brings attention to the existing literature, and includes review questions that challenge programming skills. The techniques developed in this text can be applied to the development and reform of agricultural policies in various regions in response to trade negotiations and many other situations involving government policy.

The historical and theoretical setting; Macro-micro relationships; National policy perspectives on modeling farm behavior; Institutions and implications for micromodels; Risk management in models of the farm; Simulation models; Optimizating models; Use of farm models in extension activities; Needs of the future.