bST and the Dairy Industry: A Summary Analysis

Excerpts from the report: Cows produce more milk at less cost when injected with bovine Somatotropin (bST), a protein occurring naturally in cattle. Advances in biotechnology now make it possible to produce synthetic bST at commercially attractive prices. Dairy farmers are likely to use synthetic bST since early adopters will realize significantly higher returns and other operators will eventually have to adopt to compete. This report evaluates the performance of the dairy industry from 1990 to 1996 with and without the use of bST to enhance milk production. We assume that FDA will approve commercial use of bST, that bST will be introduced commercially in early 1990, and that the effect of adopting bST will work its way through the sector by 1996. The study focuses on the effects of bST on milk supplies, commercial use, milk prices, dairy industry structure, the dairy price support program, and the international competitive position of the U.S. dairy industry. We give particular attention to analyzing the effects of bST on dairy industry structure—the survivability of farms of different sizes in different regions with varying debt loads and management skills.