This paper investigates the effects of feed input prices on manufactured compound feed costs and prices in the European Community (EC). The analysis is based on a simulation of the cost-minimizing behavior of "typical" feed compounders in the individual EC member countries.

The procedure adopted involves three steps. First, country-specific linear programming (LP) feedmix models for various types of livestock are solved repeatedly for different sets of relative feed input prices. Second, summary functions are fitted to the LP solutions. Third, compound feed cost elasticities with respect to feed input prices are computed. Estimation results are presented at the national and community (EC-9) level.