Supply elasticities in Slovene agriculture

Abstract

Supply response and structural breaks in the Slovene agriculture over the period of 30 years (1966-1995) were evaluated in this paper. Kalman filter procedure was applied in deriving supply elasticities for 6 staple agricultural products. Two structural breaks in Slovene agriculture may be (hypothetical) expected in the observed period, but both cannot clearly be estimated. The extent of agricultural reforms has been gradually defined and started much before the process of political transition in 1990/91. High supply elasticities were obtained for beef and maize, which is explained by a relatively free market environment that was encountered by the farmers involved in beef and maize production. Low supply elasticities calculated for pork and potato, and very low supply elasticities computed for wheat and milk point at a high degree of state regulation on these markets in the past and the importance of the quasi fixed assets in the production. From the values of cross-price elasticities certain complement and substitute relationships between various farm produce, which are however subject to change over time, could be observed. Possible Slovene admission to EU would thus have quite different effects for domestic farmers engaged in one of the 6 production activities scrutinised here.