Abdessalem Abbassi, Ahlem Dakhlaoui and Lota D. Tamini
The purpose of this paper is to develop a partial equilibrium model for the Tunisian dairy sector according to “quantity formulation” and “price formulation” and to show their…
Abstract
Purpose
The purpose of this paper is to develop a partial equilibrium model for the Tunisian dairy sector according to “quantity formulation” and “price formulation” and to show their equivalence under the assumption of perfect competition.
Design/methodology/approach
This model incorporates domestic policies, that is, producers' price support and subsidies to milk collection centres and trade policies, that is, TRQ and ad valorem tariffs. The authors illustrate theoretically and numerically how to incorporate the minimum price policy at the farm level for the Tunisian dairy sector according to the price formulation approach.
Findings
Two scenarios for the removal of a minimum price policy are analysed and show that producers' surplus loss varies between 78.6 and 127.8 million dinars. The overall welfare implications of removing a minimum price policy are negative and range between 13.3 and 18.2 million dinars.
Research limitations/implications
This study could not include all of the detailed factors in the Tunisian dairy sector.
Originality/value
Based on the numerical results obtained in the study, the authors recommend that public authorities maintain the minimum price policy because it prevents a decrease in raw milk producers' surplus. Moreover, this policy is effective because it generates excess raw milk production, estimated at 28.23% in 2010, that can be used for various homemade dairy products. Under an effective minimum price policy, the formal processing sector absorbs all the excess raw milk only if the public authorities allocate grants to encourage investment in new milk collection centres and in milk drying equipment, especially in disadvantaged rural regions. The latter economic policy coupled with a minimum price policy not only guarantees a higher income for raw milk producers but also may represent a development factor for underprivileged rural areas.
Details
Keywords
Lota D. Tamini, Maurice Doyon and Micheline M. Zan
The purpose of this paper is to document the level of risk in the Québec egg sector (conventional and specialty eggs) and analyze the optimal choices of Québec egg producers that…
Abstract
Purpose
The purpose of this paper is to document the level of risk in the Québec egg sector (conventional and specialty eggs) and analyze the optimal choices of Québec egg producers that must allocate limited resources to production of different types of eggs.
Design/methodology/approach
A quadratic programming approach applied to expected mean-variance models is used to analyze the impact of risk on decision to invest when the resources must be allocated to different type of production that have different risk levels. The model is calibrated using monthly data from 2009 to 2016.
Findings
Results indicated multiple uncertainty sources (technological, cost of production, price of eggs) that vary according to the types of eggs. Given risk aversion parameters, producer would favor production modes with the lowest producers’ price variance, which correspond to free-run eggs. Results also indicated that in response to a greater intensity of risk aversion, the course of action producers may choose is to increase the relative production of free-run eggs.
Research limitations/implications
The empirical limits of this research are found in the lack of quality data on producer prices and costs for specialty eggs. Future research could explore the relationship between the growing impact of egg for processing, which price is based on the US price, and its relationship with specialty eggs.
Practical implications
The findings of the study will be useful for policy makers and managers of eggs supply chain. This is important, given the recent announcement by Canadian’s large retailers and fast food companies to increase cage free eggs offering and, in some cases, eventually only selling these types of eggs.
Originality/value
This study adds to the understanding of the role of risk and uncertainty in the investment decision of egg producers and different mode of production, as well as in the development of the growing production of specialty eggs in Canada. It fills a gap in the literature regarding the impact of risk in Canadian egg production. This gap is likely explained by the perception of a lack of risk in this supply managed sector in Canada and its small size relative to other supply managed sector.