Utility-derived supply function of sheep milk: the case of Etoloakarnania

Abstract

Dairy sheep farming is an important agricultural activity in Greece, since it contributes significantly to the country’s gross agricultural production value. In this study, we suggest the use of multi-criteria analysis to estimate the supply response of sheep milk to price. The study focuses on the Prefecture of Etoloakarnania, located in Western Greece, where sheep farming is a common and traditional activity. A non-interactive technique is used to derive farmers’ individual utility functions which are then optimised parametrically, subject to technico-economic constraints, to estimate the supply function of sheep milk. Detailed data from selected farms representing different farm types and management strategies have been used in the analysis. The results indicate that the multi-criteria model reflects the actual operation of the farms more accurately than the gross margin maximisation model and therefore leads to a more robust estimation of the milk supply.