Estimating Labour Demand Functions and Supply Response of Dairy Farms in Tamil Nadu
2011
Saravanakumar, V. | Jain, D.K. | Sirohi, Smita
The rise in cost of inputs and prices of milk have put upward pressure on the cost and price for dairy farms which results in supply distortion and widen the demand-supply gap. Since dairying is practised as a subsidiary occupation, it is important to study the relative changes in factor and product prices to assess utilization of inputs as well as stabilization of milk supply. The present study has analyzed the responsiveness of milk supply with respect to factor and product prices in the Tamil Nadu state. Normalized restricted quadratic profit function has been used to analyze the data. The own price elasticities of variable ‘inputs’ have been found negative for green fodder (−0.4974), dry fodder (−0.1307), concentrate (−1.5858) and human labour demand (−0.5078). Higher magnitude of own price elasticities than cross price elasticities implies that milk producers are more responsive to own price of inputs. The higher magnitude of concentrate and labour demand with respect to milk price has indicated that changes in prices of these inputs are significantly affecting the milk supply. The price instruments have been found to have more impact during flush season than lean season.
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