Sustainable Rates of Return for Milk Quotas in Ontario

This paper utilizes the capital asset pricing model, together with available econometric estimates of the cost function of Ontario dairy farms, to estimate rates of returns for three types of milk quotas. The estimated rates follow the trend of the interest rate in the economy, and the rate of return on fluid milk quota is higher than the rate of return on industrial milk quotas. Cet article utilise un modèle de formation des prix des actifs, avec des estimées économetriques de la fonction de coûts des producteurs laitiers de ?Ontario, pour estimer les taux de retour associés avec trois differents types de quotas laitiers. Les taux estimés suivent la même tendence que le taux ?intérêt dans ?économie, et le taux de retour du quota pour le lait fluide est plus elevée que les taux de retour du quotas pour le lait industriel.     

无形资产贡献份额法在无形资产评估中的应用研究

针对无形资产的特点,提出无形资产贡献份额法。并在构造两种类型数学模型的基础上,计算出无形资产的贡献份额,进而求出无形资产评估现值。同时从企业层次和宏观层次进行案例分析。     

Expected Economic Effects of BST in The Netherlands

The calculated profitability of using Bovine Somatotropin (BST) on typical dairy farms in The Netherlands ranges from Dfl.160 to 300 per cow per year, assuming 1985 prices and circumstances, and ignoring the costs of BST. A 20% increase in milk production and no change of the feed/milk relation were used for the calculations. BST is more profitable on intensive farms or on farms with more opportunities for alternative uses of land, buildings and labour. The quota system, however, leads to a considerable reduction of profitability. At a national level, and with an unchanged milk price, a 28% adoption rate of BST would increase national income about Dfl.120 million. However, the cost of BST or any decrease in milk price could reduce this amount, even to below zero. It is apparent that some dairy farmers who apply BST will earn more income whereas others will lose income.     

Supply Management and Productivity Growth in Alberta Dairy

Specification of quota licenses as quasi-fixed inputs in a multi-variate flexible accelerator model of dynamic input adjustment reveals supply management's effect on Alberta dairy investment patterns and, thereby, on total factor productivity growth. Estimates of a dynamic dual model of Alberta dairy, using panel data from 1975–91, show that strong complementarity between cattle and quota licenses results in short-run cattle adjustments that are opposite in direction from the long-run adjustments. A model of total factor productivity growth under dynamic input adjustment shows that the distortions to cattle investment caused by investing in quota licenses adversely affects productivity growth. As a result, there is likely to be a significant understatement of single-period estimates of the cost of supply management in the dairy sector.     

Farmers in a deregulated dairy regime: Insights from Ireland's New Entrants Scheme

While the impending review of the European Union (EU) Common Agricultural Policy (CAP) is set to have an impact on all farming sectors across Europe, particularly transformative change is sought by policies relating to dairy farmers. EU milk quota abolition in 2015 will fundamentally revise the terms of dairy production, transitioning from policies of subsidy and protection to a scenario where farmers will produce milk on the open market. Dairy quota abolition essentially represents an economic but also socio-cultural disruption for a sizeable cohort of farmers, requiring adaptation to more market-driven production strategies. Agricultural policy-makers in EU member states are demonstrably preparing for this imminent change and dairy farmers are considering and strategising their responses at farm-level. Our focus in this paper is the interplay between quota abolition and farm-level decision-making in the pre-abolition period. Drawing from a broader mixed-methodological and multi-disciplinary research project, this paper uses qualitative narrative analysis to identify the key determinants arising in dairy farmers’ decision-making processes. How are farmers currently strategising their responses to dairy quota deregulation? Using the qualitative Biographic Narrative Interpretive Method (BNIM), we examine the range of factors determining how a particular group of dairy farmers are strategising their positions on the impending open dairy market. Our analysis highlights how, in the advent of a deregulated dairy production regime, dairy farmers are carefully deliberating their responses at farm level, drawing from policy and market related information, their own personal speculations, and conventional wisdom shared with other members of the farming community. We find that the dairy farmers are influenced not only by motivations to increase productivity and scale but by a tenacious approach to farm sustainability and resilience that is informed by past experiences of farming and seeks to preserve and promote socio-cultural farming values. The paper is of particular interest to policy makers and academics interested in the interchange between policy and farmer behaviour, particularly in the context of current CAP reform.     

The Value of Dairy Quota under a Commercial Export Milk Program

This paper argues that under a commercial export milk program, the market value of quota will be determined by the spread between the domestic market price and the export price, rather than the conventional wisdom that it is determined by the spread between the domestic milk price and the marginal cost of production. Under this new economy, it is argued that ultimately the market price of dairy quota will be priced independently of firm marginal costs, which implies that low-cost (or high-margin) producers will not hold an economic advantage in bidding for quota over higher-cost producers. Regression results are consistent with the hypothesized positive relationship between quota values and the difference between domestic and export milk price. The average export price has generally increased over time and is approximately equal to the marginal cost for an average producer. The results have implications for a World Trade Organization (WTO) challenge. New Zealand and the United States feel the domestic program acts as an export subsidy by cross-subsidizing production of commercial export milk. The results here suggest that the prices for the filled export contracts are approximately the marginal cost of production for the average producer and not lower, as suggested by the challenge. Export contracts were found to have higher price risk than domestically produced milk. The risk is compounded by the short-term nature of most export contracts. The increase in risk for the commercial export milk program (CEM) implies that it is unlikely many farmers will greatly diversify into CEM contracts unless the uncertainty is reduced.     

Explaining Differences in Milk Quota Values: The Role of Economic Efficiency

This article explores the relationship between milk quota values and economic efficiency in order to analyze government interventions in quota allocations among producers. For this purpose, we estimate quota values using a panel of Spanish dairy farms. Quota values are then decomposed into economic efficiency, price, and scale effects in order to assess the relative influence of these factors. We find that efficiency is important in explaining quota values but is uncorrelated with observable farm characteristics. This casts doubts on the government's ability to allocate quotas to efficient farms.     

采伐限额下用材林合理收益率确定研究——以南平顺昌为例

以福建省南平市顺昌县岚下国有林业采育场为例,根据加和法和采伐限额下的收益法对林木价值进行评估,分别计算了不同收益率下的林木价值,并通过评估值比较来确定用材林的合理收益率。此方法对于林业经济活动有一定的实际意义。     

Impacts of Norwegian Milk Quotas on Output Growth: A Modified Distance Function Approach

Quota regulations that prevent output expansion of farms and reallocation of output between farms can cause lower growth in output and productivity. The aim of this study was to explain the output growth rate of Norwegian dairy farms since 1976, and to decompose it into output, input, socioeconomic and technical change components. Instead of using the standard distance function approach for multi‐output technologies, we use a growth rate formulation, which automatically removes the farm‐specific effects. This formulation also helps to impose non‐negativity constraints on marginal products of inputs (input elasticities), which are often violated for many observations, especially when flexible functional forms are used. The farm‐level panel data cover three periods: before the quota scheme was introduced (1976–1982); the period with the most output‐restricting quota scheme (1983–1996); and the period with a more flexible quota scheme (from 1997 onwards). Results show that the milk quota regulations had a significant constraining effect on output growth, in particular on milk output in the period 1983–1996. Furthermore, the output mix has shifted towards meat production for the average farm. What emerges from this study is that output growth and technical change are negatively influenced by policy aims where productive performance has not been the primary objective, and that there is scope for increased farm growth if the quota regime is liberalised.     

The Social Welfare Loss from Egg and Poultry Marketing Boards, Revisited

Continuing conflict over supply management warrants another look at its costs. The authors' model combines the traditional welfare triangle with the social welfare loss created when farmers bear the investment risk associated with possible termination of quota protection. The annual net social welfare loss from egg and poultry marketing boards likely exceeds $100 million, with consumers losing more than $500 million. Half the net social welfare loss is the cost of risk bearing. Quota prices imply that farmers expect quota lives to be relatively short. Therefore, changing to short fixed terms might halve the social welfare loss without imposing capital losses on farmers and might facilitate a return to a free market or auctioning new fixed term quotas.     

Structural Change and Policy Reform in the UK Dairy Sector

Estimation of a cost function for a representative sample of UK dairy producers allows future re‐structuring of the industry to be simulated using a model which incorporates producers' differential costs and milk prices. Consideration is also given to reductions in producer prices and to the introduction of an A/B quota system. The results indicate that, despite the history of quota trading in the UK, there is considerable scope for further restructuring in the industry to take advantage of differential incentives between producers. It is also projected that UK milk supply would increase if quota restrictions were removed.     

Quota prices as indicators of comparative advantage in supply‐managed industries

The Canadian dairy, egg, broiler, and turkey industries operate under supply management, a policy regime that sets product prices and allocates production among provinces and ultimately among farms through quotas. The Canadian Farm Products Agencies Act requires that comparative advantage be used to guide the allocation of new quota when increases in consumer demand necessitate increased production. This requirement, however, has not been met in practice. We develop a proposal by Meilke to use quota prices as measures of comparative advantage. We evaluate the quota price approach and other proposed methods, from a Hayekian and Coasean market process perspective. We conclude that quota prices offer an economically justifiable indicator of provincial comparative advantage. We develop an individual‐level general equilibrium model of quota exchange to illustrate the informational content of quota prices as indicators of comparative advantage. We also discuss potential practical challenges of using quota prices as indicators of comparative advantage.     

新增建设用地指令性配额管理的市场取向改进

研究目的：通过案例分析,揭示改进农地非农化开发指令性配额管理体制的方向。研究方法：文献资料法和案例分析法。研究结果：在中国农地非农化开发中,地方政府是第一顺序的土地开发者,中央以新增建设用地配额的形式统筹分配土地开发权,这一指令性配额管理体制与土地公有制以及当前所处的转型发展阶段总体上是适应的,但这一体制的“刚性”也引发了很多矛盾。改进指令性配额管理的可能路径是实行新增建设用地配额与其耕地保有量挂钩,构建新增建设用地指标市场对配额进行调剂。研究结论：沿着可转让配额方向推动农地非农化开发的指令性配额管理体制改革,是实现最严格的土地管理制度与市场机制有效衔接和协调的一个可选路径。     

国有自然资源资产管理的主要问题与应对思路

我国国有自然资源资产管理存在资产所有权代理机制不健全、资产收益制度不完善以及自然资源所有者和监管者身份混同等问题。解决问题的思路:应充分考虑客观存在的诸多因素对国有自然资源资产管理的实际影响,包括自然资源立法传统的影响、原有自然资源管理体制中职能分工的惯性影响,以及国有自然资源资产属性的差异性等方面。解决问题的路径:通过对再代理的设定完善国有自然资源资产所有权代理制度;合理选择对价机制,优化国有自然资源资产收益制度;通过推动“权证分开”对国有自然资源所有者权能与自然资源监管者职能进行区分。     

Household‐level Impacts of Dairy Cow Ownership in Coastal Kenya

This study uses heteroskedastic Tobit and Censored Least Absolute Deviations models to examine the impacts of dairy cow ownership on selected outcomes for a sample of 184 households in coastal Kenya. The outcomes examined include gross household cash income, gross non‐agricultural income, consumption of dairy products, time allocated to cattle‐related tasks, number of labourers hired and total wage payments to hired labourers. The number of dairy cows owned has a large and statistically significant impact on household cash income; each cow owned increased income by at least 53% of the mean total income of households without dairy cows. Dairy cow ownership also increases consumption of dairy products by 1.0 litre per week, even though most of the increase in milk production is sold. The number of dairy cows has no significant effect on total labour for cattle‐related tasks. However, in contrast to previous studies, labour allocation to cattle by household members decreases and labour requirements for dairy cows are met primarily by an increase in hired labour. Dairy cow ownership results in relatively modest increases in payments to hired labourers and the number of hired labourers employed. The large positive impacts on income and the substitution of hired for household labour in cattle care suggest that intensification of smallholder dairying can be beneficial as a development strategy in the region if disease and feed constraints are addressed.     

Decision-making Criteria for Purchasing Milk Quota at the Individual Farm Level

Dairy farmers wishing to contemplate purchases of additional quota should first consider what the appropriate time horizon on their investment should be. If the chosen time horizon is one year or less, the problem of estimating how much they can afford to bid for quota can be solved with simple budgeting techniques. On the other hand, if the time horizon is taken as several years, and this would seem rational, then capital budgeting techniques are required. However, in either case, investment in additional quota should be compared with alternative investment opportunities before a final decision is made. Where capital budgeting techniques are used, a modification of the net present value approach permits the farmer to take account of his time preference for money, and allows calculation of the break-even price, or the maximum affordable price to pay for additional quota. This approach necessitates the provision of estimates of the expected net returns from investing in quota for each year of the selected time horizon, as well as provision of estimates of the salvage value of the quota and an appropriate discount rate. The calculation of the expected net returns figures represents the most difficult task for the farmer. If expansion of milk shipments rests upon increasing output of milk per cow, then the short-run production function and marginal cost curve provide the appropriate reference points. The expected net return on investment in quota is then given by the area under the marginal revenue line and above the relevant portion of the marginal cost curve. If, however, all short-run variable input decisions have already been implemented at the optimum level, and expansion of milk shipments depends upon expanding the number of cows, or the “fixed” plant and equipment, or both, then the average total cost curve is the appropriate reference point. The expected net return on investment in quota is then represented by the difference between total net revenue at the new planned level of output and total net revenue at the existing level of output.     

The restructuring of the institutional real estate portfolio in the UK

Real estate investment portfolios of financial institutions have seen dramatic changes over the last three decades or more. Historically such property investment decisions have been seen within a portfolio diversification paradigm that has sought to balance risk and return. This paper considers the role of the supply of assets in the determining and constraining the UK institutional portfolio. The supply of real estate assets not only expands during property booms but has also been transformed by a long term urban development cycle as cities adapt to cars and the ICT revolution that has brought new property forms. The research examines long term trends in investment change by disaggregating into ten property forms rather than the usual three land use sectors. It then assesses to what extent investment patterns can be explained in terms of portfolio theory, short term net returns of individual sectors or driven by the supply of real estate assets. It concludes that the supply of real assets is an overlooked explanation.     

Decision-making Criteria for Purchasing Milk Quota at the Individual Farm Level: A Comment

In a recent article in this journal, Stonehouse and MacGregor outlined several elements of the farm level decision to purchase milk quota. They provide a useful reminder that, because quota is an asset, decisions regarding its purchase or sale should be undertaken and analyzed with capital budgeting techniques. More specifically, they describe procedures for calculating the net flow return from additional quota under different cost circumstances and the subsequent bid price which that farm could pay for the quota asset. It is the purpose of this comment to show that errors of both commission and omission have found their way into the paper. In addition, there is a problem of inconsistency because the text and the actual calculation formulae are sometimes contradictory.     

The Future of European Union Dairy Policy

Even if the quota regime has been extended until 2007–08 as part of the Agenda 2000 reform adopted in March 1999, the European Union (EU) dairy sector is currently experiencing large uncertainty over future policy. This paper examines EU dairy policy issues and assesses their likely implications. It mainly addresses the central question of dismantling the quota and intervention support mechanisms. Simulation results illustrate how three factors (marginal costs of production, import tariffs on dairy products and compensatory payments granted to dairy producers) may affect the outcomes of a quota elimination scenario.
Même si le régime des quotas a été prolongé jusqu'en 2007–2008 à l'occasion de la réforme Agenda 2000 de mars 1999, le débat sur la nécessité d'une réforme plus importante de la politique laitiére européenne n'est pas clos. Dans ce papier, nous analysons les différentes contraintes auxquelles l'Union européenne doit faire face et ses implications pour le secteur laitier communautaire. L'attention est centrée sur les conséquences d'une suppression du régime des quotas et du mécanisme de l'intervention. Les résultats de simulation montrent comment les conséquences d'un tel scénario dépendent de trois facteurs, i.e., les coûts marginaux de production du lait, la protection tarifaire sur les importations européennes de produits laitiers et les mesures de compensation accordées aux producteurs de lait.     

Should farmers invest in financial assets as a risk management strategy? Some evidence from New Zealand*

This study explores the potential for risk reduction by New Zealand farmers through the diversification of their farm asset portfolios to include financial investments such as ordinary industrial shares, government bonds and bank bills. Low correlations between rates of return on farm and these financial assets suggest that significant reduction of income variability might follow their inclusion in farmers’ portfolios. Stochastic efficiency analysis is used to analyse alternative portfolios of ordinary shares, government bonds and bank bills and New Zealand farmland, using coefficients of absolute risk aversion derived from a negative exponential utility function. The results suggest that those farmers showing high degrees of risk aversion would gain utility by including financial assets in their portfolios. Deregulation of the New Zealand economy in the 1980s appeared to reduce the potential gains from diversification. Bonds rather than ordinary shares are the main contributors to portfolios which maximise utility for individuals classified as ‘somewhat’ risk averse.