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Impact of Bovine Somatotropin on U.S. Dairy Markets under Alternative Policy Options

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  • Harry M. Kaiser
  • Loren W. Tauer

Abstract

The annual market impacts of bovine Somatotropin on the U.S. dairy sector are simulated under four dairy policy scenarios for 1988–2000. The scenarios include freezing the support price at its predicted 1990 level ($10.60) for 1990–2000, adjusting the support price annually to keep annual government purchases of dairy products between 2.5 and 5 billion pounds, using annual cow removals to maintain support program purchases under 5 billion pounds, and using a combination of support price changes and annual cow removals. Annual equilibrium values for supply, demand and prices are generated for the farm sector and fluid and manufactured dairy product retail markets. Estimates of government purchases of dairy products and government costs for each year are reported. The results suggest that a combination of support price changes and cow removals is the most attractive policy in terms of government costs and producer profits.

Suggested Citation

  • Harry M. Kaiser & Loren W. Tauer, 1989. "Impact of Bovine Somatotropin on U.S. Dairy Markets under Alternative Policy Options," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 11(1), pages 59-73.
    • Handle: RePEc:oup:revage:v:11:y:1989:i:1:p:59-73.
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    File URL: http://hdl.handle.net/10.1093/aepp/11.1.59
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    Cited by:

    1. Kalaitzandonakes, Nicholas G. & Bjornson, Bruce, 1997. "Vertical And Horizontal Coordination In The Agro-Biotechnology Industry: Evidence And Implications," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 29(1), pages 1-11, July.
    2. Jarvis, Lovell S., 2000. "THE POTENTIAL EFFECT OF RECOMBINANT BOVINE SOMATOTROPIN (rbST) ON WORLD DAIRYING," Transitions in Agbiotech: Economics of Strategy and Policy, June 24-25, 1999, Washington, D.C. 26003, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    3. Govindasamy, Ramu & Liu, Donald & Kliebenstein, James, 1993. "Economic Impacts of Porcine Somatotropin on a Farrow-to-Finish Hog Farm Operation," ISU General Staff Papers 199302010800001247, Iowa State University, Department of Economics.
    4. Helming, John F.M. & Hammond, Jerome W., 1991. "Potential Impacts Of Bst On The Minnesota Milk Supply," Staff Papers 14119, University of Minnesota, Department of Applied Economics.
    5. Kuchler, Fred & McCelland, john & Offutt, Susan E., 1989. "Regulating Food Safety: The Case of Animal Growth Hormones," Food Review/ National Food Review, United States Department of Agriculture, Economic Research Service, vol. 12(3), September.
    6. Kaiser, Harry M., 1992. "Market Impacts Of Bovine Somatropin: A Supply And Demand Analysis," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 24(1), pages 271-282, July.
    7. Govindasamy, Ramu & Liu, Donald J. & Kliebenstein, James B., 1993. "Impacts Of Pst On Optimal Production And Marketing Decisions Of A Grow-Finish Hog Farm Operation," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 22(2), pages 1-9, October.
    8. Kaiser, Harry M., 1990. "Bovine Somatotropin and Milk Production: Potential Impacts for the U.S," Staff Papers 121538, Cornell University, Department of Applied Economics and Management.
    9. Tauer, Loren W., 1990. "Ex-ante Economic Assessment of Agriculture Biotechnology," Staff Papers 121528, Cornell University, Department of Applied Economics and Management.
    10. McGuirk, Anya M. & Preston, Warren P. & Jones, Gerald M., 1992. "Introducing Foods Produced Using Biotechnology: The Case Of Bovine Somatotropin," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 24(1), pages 1-15, July.
    11. Zepeda, Lydia & Butler, Leslie J. & Carter, Harold O., 1991. "Simulating Bst Introduction In California For Dairy Policy Analysis," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(2), pages 1-10, December.
    12. An, Henry, 2008. "The Adoption and Disadoption of Recombinant Bovine Somatotropin in the U.S. Dairy Industry," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6278, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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