SUPPLY RESPONSE TO PRICE UNDER CERTAINTY,WITH REFERENCE TO THE UNITED KINGDOM EGG MARKET, 1954 TO 1966

Hen egg production in the United Kingdom expanded throughout the 1950's and early 1960's in the face of successive reductions in the guaranteed price thus raising questions about the efficacy of the guaranteed price system as a production control mechanism. The objective of this analysis is to estimate the guaranteed price elasticity of supply of hen eggs over the twelve-year period 1954 to 1966. Two models are used, a conventional linear form and a Nerlove type lagged model. The independent variables considered are the guaranteed price, the price of feed, and egg yield as a proxy for technology. The non-lagged equation is the more satisfactory and gives an elasticity value of 1.66, suggesting that flock owners were highly sensitive to changes in the guaranteed price. This sensitivity tended to be obscured by producer eagerness to profit from technological advance, which was the predominant factor affecting the scale of egg production over the period.     

PROJECTION MODELS FOR U.K. FOOD AND AGRICULTURE*

Successful policy planning depends to a large extent on being able to predict the consequences of alternative measures. In the case of agriculture, it is important to know how the future pattern of supply and demand in this sector will be affected by government action on specific issues such as farm price support, and by expected trends in macro-economic variables such as national incomes and population. This paper illustrates the application of a model of U.K. agriculture to the projection of changes in the production and consumption of food and agriculture products between now and 1975. The demand projections show the effect of important levies, and of joining the E.E.C, on future expenditure on food, while the supply projections show how the output of a number of agricultural commodities will be affected by adjusting farm prices towards E.E.C. levels.