An Investigation of the Marketing of Butterfat by the Canadian Dairy Industry

J. Stephen Clark, Bettina Brown, Diane Dunlop, Jinbin Yang and Petr Prochazka

No 45501, Consumer and Market Demand Network Papers from University of Alberta, Department of Resource Economics and Environmental Sociology

Abstract: This study examines the Canadian Dairy Commission’s marketing of butterfat. Previous studies have concentrated on the evaluation of butterfat by using total kilograms of milk. Measuring milk as kilograms is based the assumption of fixed proportions between kilograms of milk and kilograms of butterfat. However, measuring dairy using kilograms may not be a good proxy for the underlying butterfat. In this study we argue that dairy fat maybe an inferior factor of production, whereas kilograms is a normal factor of production. This means that following kilograms within the marketing system may not track butterfat. In fact, butterfat may respond in an opposite direction to kilograms when prices and incomes change. Assuming that butterfat is an inferior factor may explain some of the marketing practices of the provincial marketing boards that on the surface seems to be neither in the interest of consumers or dairy farmers. If the objective of the supply management is to make dairy producers better off, then basing dairy quota on kilograms of butterfat seems logical since the demand for butterfat has been rising over time. In addition, controlling supply at the retail level using minimum milk price supports also benefits producers, although it may not be in the best interest of consumers due to higher dairy prices and increased butterfat consumption.

Keywords: Agribusiness; Agricultural and Food Policy; Consumer/Household Economics; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety (search for similar items in EconPapers)
Pages: 22
Date: 2008-07
New Economics Papers: this item is included in nep-agr and nep-mkt
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/45501/files/CMD%2008-07.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:ualbnp:45501

DOI: 10.22004/ag.econ.45501

Access Statistics for this paper

More papers in Consumer and Market Demand Network Papers from University of Alberta, Department of Resource Economics and Environmental Sociology Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().