![]() ![]() This limits the number of producers in the market and reduces consumer choice, causing a very inelastic demand curve like we saw with the textbook industry. Due to a supply management system that is operated by farmer-run provincial marketing boards, the Canadian dairy market remains very inelastic as high tariffs and quota requirements restrict market entry. Compare this to the Canadian market and you will see a very different story. This means that the quantity demanded in the dairy market is becoming more responsive to changes in price in the U.S. ![]() Today, that is not the case as the government is no longer one of our best customers.” As a result, milk and dairy product prices played within a rather tight range, a factor that contributed to our belief that demand was rather inelastic. “Therefore, once every few years, butter or cheese would have a run-up and fall back down. ![]() government, which kept prices stable, especially for skim products,” says Dorland, who holds an MBA in business and finance. “Historically a good amount of our product went to the U.S. Higher prices can have a direct effect on the consumption of dairy products. (Credit: David Masters/ Flickr/ CC BY 2.0) Buttery Elasticityįor many years the U.S dairy market was inelastic, but times have changed, and dairy demand is not as inelastic as it once was, says Sara Dorland, managing partner with Seattle-based Ceres Dairy Risk Management. ![]()
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