Andrew A. Washington

THE PRODUCTION THEORY APPROACH TO IMPORT DEMAND ANALYSIS: A COMPARISON OF THE ROTTERDAM MODEL AND THE DIFFERENTIAL PRODUCTION APPROACH

Results indicate that, when comparing the unconditional derived-demand elasticities to the unconditional consumer demand elasticities, significant differences emerge due to the differences in the first-stage estimation procedure between the differential production approach and the Rotterdam model. In comparing the consumer demand price/cross-price elasticities to the derived-demand price/cross-price elasticities, it is clear that use of the Rotterdam model when a production approach should be used can lead to overestimation, underestimation, and incorrect signs in deriving unconditional price effects.

AN EVALUATION OF THE EFFECTIVENESS OF THE FLORIDA COOPERATIVE'S SEASONAL PRICING PLAN ON SEASONAL PRODUCTION VARIABILITY

From 1993 - 1995, Florida dairy cooperatives implemented a seasonal pricing plan in an attempt to decrease the variability in seasonal production. Farmers that participated in the seasonal pricing plan were able to reduce seasonality in each year when compared to 1992 by as much as 20 percent. For farmers that did not participate, seasonality increased in each year by as much as 32 percent. Overall, the seasonal pricing plan was effective in reducing seasonality for those farmers that chose to participate in the plan and that its limited short-run success was the result of seasonality increases by non-participating farms.

Practices Used by Dairy Farmers to Reduce Seasonal Production Variability

The objective of this analysis was to identify the production practices used by farmers to change seasonal production. Production practices included milk production per cow, proportion of cows milking, number of first lactation animals entering the herd, number of cows leaving the herd, number of days to first breeding, and calves born. Farms that participated in a seasonal pricing plan during 1993, 1994, and 1995 decreased production practice seasonality in response to price premiums, which caused a decrease in production seasonality compared to nonparticipating farms. Participating farms showed a preference for adjusting entering first lactation animals and number of calves born, but did make adjustments in other practices as well.