Document Detail

Milk marketing policy options for the dairy industry in New England.
MedLine Citation:
PMID:  18292281     Owner:  NLM     Status:  MEDLINE    
New England dairy farmers are under intense price pressure resulting from important growth in milk production from lower cost of production Southwest states as well as by retailers' market power. Agricultural officials and legislative bodies in New England and in other Northeast US states are aware of these pressures and have been reacting with emergency dairy farm aid, following a very low 2006 milk price, and with state legislations in an attempt to address perceived excess retailing margins for fluid milk. In this paper, we suggest that a sigmoid demand relationship exists for fluid milk. This demand relationship would explain fluid milk asymmetric price transmission, high-low pricing, and the creation of a large retailing margin (chain surplus) often observed for fluid milk. It is also argued that a sigmoid demand relationship offers an opportunity for state legislators to help Northeast dairy farmers capturing a larger share of the dollar of the consumers through various policy options. Therefore, 5 milk market channel regulatory mechanisms (status quo, price gouging, supply control, fair share policy, and chain surplus return) are discussed and compared. The supply control mechanism was found the most effective at redistributing the chain surplus, associated with the sigmoid demand relationship for fluid milk, to dairy farmers. However, this option is unlikely to be politically acceptable in the United States. Second-best options for increasing dairy farmers' share of the consumers' dollar are the fair price policy and the chain surplus return. The former mechanism would distribute the chain surplus between retailers, processors, and farmers, whereas the latter would distribute it between consumers, retailers, and farmers. Remaining mechanisms would either transfer the chain surplus to retailers (status quo) or to consumers (price gouging).
M Doyon; G Criner; L A Bragg
Publication Detail:
Type:  Journal Article; Research Support, Non-U.S. Gov't    
Journal Detail:
Title:  Journal of dairy science     Volume:  91     ISSN:  1525-3198     ISO Abbreviation:  J. Dairy Sci.     Publication Date:  2008 Mar 
Date Detail:
Created Date:  2008-02-22     Completed Date:  2008-03-13     Revised Date:  -    
Medline Journal Info:
Nlm Unique ID:  2985126R     Medline TA:  J Dairy Sci     Country:  United States    
Other Details:
Languages:  eng     Pagination:  1229-35     Citation Subset:  IM    
Department of Agricultural Economics and Consumer Science, Laval University, Quebec City, Canada G1K 7P4.
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MeSH Terms
Costs and Cost Analysis
Dairying / economics*
Marketing / methods*
Milk / economics*
New England
New York
Public Policy

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