MEASURING HOW NZ DAIRY FARMERS REACT TO VOLATILE PRICES BY ANALYSING FARMER RESPONSES OVER A PERIOD OF TIME USING PANEL DATA.

Muhammad Imran Siddique1, Peter Tozer1, Nicola Shadbolt1

1Massey University, Palmerston North, New Zealand

 

ABSTRACT

Since 2006, milk prices, on average, have increased but there has been a great deal of price volatility in global dairy trade prices as well as New Zealand farm gate milk prices. Higher milk price can lead to higher profits if New Zealand dairy farmers respond to these price changes accordingly and adjust their input costs. The prime objective of this paper is to identify how farmers react to volatile prices during this period and this can be done by analysing farmer responses over a period of time using panel data. Farms that were both technical and scale efficient did not significantly change the three inputs (land, labour, and number of cows) but these farms slightly adjusted inputs to find the optimal point of their production. The majority of farms that were only scale efficient substantially varied these three inputs irrespective of price fluctuations and sought optimal scale rather than technical efficiency. Irrespective of price fluctuations, the inefficient farms kept increasing or decreasing inputs and ended up with low technical


BIOGRAPHY

Massey University Professor, delivering farm and agribusiness management research and education, particular interest in farm business strategy and business analysis and cooperatives; Elected director of Fonterra Cooperative and represents NZ in the International Farm Comparison Network (IFCN) in Dairying. Nicola is a Fellow of the New Zealand Institute of Primary Industry Management and the Australian Institute of Company Directors. Shareholder/ Director/Manager of farming and forestry ventures, a mix of share and cash leasing arrangements within 5 equity partnerships – including 1000 dairy cows plus sheep, beef, deer & forestry. She has just been made an Officer of the New Zealand Order of Merit.

Print Friendly, PDF & Email

IFMA

The objective of the International Farm Management Association is to further the knowledge and understanding of farm business management and to exchange ideas and information about farm management theory and practice throughout the world. The IFMA is a non profit-making organisation and currently the Association has members in over 50 countries.

Congress Managers

Please contact the team at Conference Design with any questions regarding the Congress.

Photography Credits

Tourism Tasmania, Barnbougle Dunes, Ray Joyce, Health Holden, Graham Freeman, Joe Shemesh, Glenn Gibson, Hobart City Council, Nick Osborne, National Trust Tasmania, Dale Baldwin, Brian Dullaghan, Rob Burnett, Alistair Bett, Alice Bennett, Wai Nang Poon, Chris Crerar, Kathy Leahy, Flow Mountain Bike, Tasmanian Parks & Wildlife Service, James Bowden, Masaaki Aihara, Sean Feennessy, Bruce Irwin, Liz Knox