Donald P. Blayney

Retail Dairy Prices Fluctuate with the Farm Value of Milk

Farm milk prices tend to be volatile. Dairy farmers, industry pundits, and policymakers further tend to react to price volatility with alarm. One point of concern is the response of retail prices. This study investigates farm-to-retail price transmission in the 2000s for whole milk and Cheddar cheese. Results show that price shocks at the farm gate are transmitted with delay and asymmetry to retail. Differences in the nature of price transmission for whole milk and Cheddar cheese prices are also identified.

Will Changing Demographics Affect U.S. Cheese Demand

U.S. cheese consumption has grown considerably over the last three decades. Using a censored demand model and Nielsen Homescan retail data, this study identifies price and non-price factors affecting the demand for differentiated cheese products. Own-price and expenditure elasticities for all of the cheese products are statistically significant and elastic. Results also reveal that a strong substitution relationship exists among all cheese products. Although demographic influences are generally smaller than those related to prices and expenditures, empirical findings show that household size, college educated female heads of household who are age 40 and older, residing in the South, Central, and Western regions of the United States, as well as Black heads of household, have positive statistically significant effects on consumers’ cheese purchases.

Livestock Gross Margin-Dairy: An Assessment of Its Effectiveness as a Risk Management Tool and Its Potential to Induce Supply Expansion

An evaluation of the risk-reducing effectiveness of the Livestock Gross Margin–Dairy (LGM-Dairy) insurance program, using historical futures price data, predicts economically significant reductions in downside margin risk (24–41%) across multiple regions. Supply analysis based on the estimated risk reduction shows a small supply response, assuming minimal subsidization. A decomposition of the simulated indemnities into milk price and feed price components shows comovements in futures prices moderating the frequency and levels of indemnities.