The Component Pricing of Milk Revisited

Normand R. St-Pierre and Grant Scobie

American Journal of Agricultural Economics, 1987, vol. 69, issue 3, 693-696

Abstract: Various studies have addressed the impact of component pricing on milk marketing. All required an estimate of the implicit prices of components under an existing scheme. In this paper, we show why results differed between studies, and we present evidence that they drew inappropriate conclusions. A reformulation based on the relationship between fat and solids-not-fat percentages in milk leads to the conclusion that butterfat pricing schemes for milk may have underpriced fat relative to solids-not-fat rather than overpriced butterfat in U.S. produced milk.

Date: 1987
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:69:y:1987:i:3:p:693-696.

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