Response of Irish creamery milk supply to price changes

This article investigates the responsiveness of creamery milk supply to changes in the price of milk relative to agricultural materials. A basic model, which includes milk and livestock price variables and a Gini coefficient of cow concentration (a proxy for technological change) is modified to test pre- and post-EC response differences. The effects of the milk price variables are isolated using the method of principal components. Price responsiveness was higherin thepost- thanpre-EC period, largest responses being shown after a two to three year lag. The technology effect although positive was not significant. 1