WEEK 3: Dairy Markets Flashcards
Importance of dairy in NYS
what is the total farm gate receipts in NYS across all agricultural sectors? how much of that is dairy?
what is the total farm labor workforce across NYS Ag?
how much of that is dairy
So the total farm gate receipts in NYS is 6billion and of that 3 billion is dairy
in terms of total farm labor workforce: is about 55000 and 26000 is dairy
What is generic advertising
how is it different from brand advertising
what does it entail
generic advertising refers to collective action that promotes generic qualities of (often food and bev) goods; funded by dairy dairy farmers of US and money used to promote flid milk/cheese/ icream
growers vote and decide to contribute to a pool of money for collective purposes
it was voluntary initially and was historically known as a check-off (because u checked that box to say you would contribute)
the term check off is still used but now these programs are mandatory
mandatory marketing programs require all growers to pay into the pool
this is kinda controversial
How is milk categorized
there are two grades of milk A and B
grade A is only one that is allowed to make fluid/liquid
Grade B makes non-fluid milk.
there are 4 classes or uses of milk:
class 1: fluid
class 2: cream and yogurt
class 3: cheese/icd cream
class 4: butter
Grade A can be used to make all classes but Grade b cant make class 1
fluid milk has hgiher prices due to less substitutes and as a resulthacve more inelastic supply
talk more on how dairy is priced
Government sets the price that users (read:
first handler of milk, e.g., the cheese and
butter and ice cream plants) pay for the milk
used to produce milk products
If the end use of the milk is for fluid
purposes, the price is set higher as the
demand or fluid milk is relatively inelastic
How does price discirmination occur
In many countries the government allows milk
producers to charge a higher price for fluid-class
milk
Although Grade A milk is Grade A milk, producers are
allowed to charge different prices to different consumers
of milk (price discrimination)
Policy has encouraged more production of Grade A milk
Who are the first consumers of milk again? – factories
The price for fluid milk is set higher because it has a
more inelastic demand
how is price discrimination legally regulated
Sherman Antitrust Act: proce disc and cartel activitt regulatef
US there are exemptions cia Capper volstead Act which allows farmers to work together to set higher prices
The Capper Volstead Act of 1922 gave
“associations” of persons producing agricultural
products certain exemptions from antitrust laws
* This includes dairy farmers that are allowed to set
different prices to different users/buyers of their milk
Price or Revenue Pooling
In some countries certain producers have
quota to produce milk for the fluid market and
they receive the higher price for their mil
in the US the government sets prices for
different uses of milk, allows producers to
“ship” their milk to whatever plant is closest,
and then individual producers are given an
average price (or a blended or pooled price)
across the different uses for their quantity of
milk delivered
