Agricultural supply reactions in response to output price changes remain far from being well understood. German milk supply response is studied using a global vector autoregressive (GVAR) model of milk output in the seven largest German states. Based on this model, the effect of a positive shock of one standard deviation on the farm gate milk price has been simulated. Results indicate that farms on average reacted with increased output. However, this effect was substantially more pronounced in the years 1961-1983 prior to introduction of the dairy quota than during the quota years (1984-2015). Both Northern and Southern German states showed similar short-term output reactions, while northern states exhibited more pronounced long-term output expansion effects than southern regions.