Area and Regional Aggregate Milk Supply 



Resource Bases for Area and Regional Milk Supply, 1960 and 1965 



Stepped supply functions were developed for each group of farms 

 following the procedure just descrihed for the Group 5 farm in Area 3. 

 Milk outputs at the several planned milk prices were multiplied hy 

 appropriate farm group weights to obtain each of the 20 area step 

 supply functions. The number of farms in each of the six homogeneous 

 restriction classes formed the basis for the expansion factors of the 

 sample in each area.i^ Thus, the total number of dairy and potential 

 dairy farms in 1960 represents the 1960 resource base. Tlie regional milk 

 supply function for 1960 was obtained by adding the 20 area milk 

 supply functions at the several milk price levels. Only one type of supply 

 function is needed because virtually all milk produced in the North- 

 east is eligible for fluid Class I use. 



The procedures for estimating the area and regional aggregate milk 

 supplies using the 1965 resource base was the same as that using the 

 1960 resource base. The considerable decline in dairy farm resources 

 that occurred in the period 1960-65 was taken into account, i" Tbis net 

 exit of farm resources was incorporated in the 1965 resource base 

 through a decrease in the total number of dairy and potential dairy 

 farms based on census and other secondary sources of data. This pro- 

 cedure would be consistent with the classification methods used in de- 

 veloping the representative farms only if changes in numbers of each 

 homogeneous grouping of farms were proportional to total farm number 

 change. Through resurveying and reclassifying, it was found that pro- 

 portional changes in numbers of farms did occur in each grouping of 

 sample farms over the 1960-65 period. Thus, it was possible to update to 

 the 1965 resource base of farm numbers without reweighting the homo- 

 geneous catagories of the sample farms. ^^. 



Area Supply Functions with 1960 and 1965 Resource Base 



Supply functions for each of the 20 Northeast areas were computed 

 using the procedures just outlined. These supply functions are based on 

 superior technology and profit maximizing principles and, therefore. 



^*"' See Table 3 for sampling and total farm numbers in 1960. 



1" It is recognized that farm numbers declined more than farm resources in this 

 196fl-6S period. The rei-narch methodology of the micro to macro approach makes it 

 difficult to deal with aggregates of resources in an area such as total cropland or hay 

 supply for purchase or for sale. This is discussed in the section of the manuscript 

 describing the linear programming model. The individual representative farm groups 

 were optimally planned based on resource availability at the time of the 1960 survey. 

 The milk supplies from this programmed sample were expanded to the universe of 

 farm numbers for the years 1960 and 1963. 



18 One of the limitations of the homogeneous restriction method of grouping 

 is it? incompatibility with conventional farm descriptive materials such as the census. 

 Secondary' data sources do not permit development of farms that can be sorted on 

 resource restrictions. 



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