A Nonlinear Programming Analysis of Production Response to Multiple Component Milk Pricing

Jack J. Kirkland and Ron Mittelhammer ()

American Journal of Agricultural Economics, 1986, vol. 68, issue 1, 44-54

Abstract: The problem of feeding Holstein cows so as to maximize revenue over feed costs was analyzed under various scenarios concerning milk component prices. Results suggested that production response of milk components to component price incentives was inflexible. When compared to baseline solutions generated under a standard federal order pricing system, fat production was within 3.5%, and solids nonfat and fluid carrier within 1.0% of baseline levels for a 100-cow herd. Component pricing scenarios having blend prices equal to the blend price in the baseline scenario were associated with reductions in revenue over feed costs of less than 4%.

Date: 1986
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