Negative producer price differentials in Federal Milk Marketing Orders: Explanations, implications, and policy options.

In Federal Milk Marketing Orders (FMMO), which use multiple component pricing schemas, farmers are paid for delivered quantity of butterfat, protein, and other solids, plus a producer price differential (PPD). The PPD captures the difference between the total handler obligations to the pool and the total component value of milk. In 2020, record negative PPD caused widespread frustration among dairy farmers. The primary objective of this research was to provide a comprehensive analysis of factors that affect PPD and to quantify their relative importance. We examined FMMO data from the past 10 yr including prices, utilizations, and tests. By decomposing the PPD, we were able to isolate the drivers of negative values. We found that long-term trends in usage, most importantly declining beverage milk and rising component tests, including both butterfat and protein, have substantially reduced PPD over the past decade. Class I milk pricing reform of 2018 exacerbated negative PPD in 2020, but we found that the PPD would have been negative even without that reform. The greatest contributor to recent negative PPD was the spread between cheese and milk powder prices, caused by shifts in demand due to the COVID-19 pandemic and USDA intervention cheese purchases. A range of policy modifications proposed to address negative PPD was evaluated.

Beverage milk consumption patterns in the United States: Who is substituting from dairy to plant-based beverages?

This research used a survey of 995 US households to explore how dairy milk and plant-based beverage substitutes were consumed. Long-term trends of declining beverage milk consumption have been exacerbated in recent years by increasing consumption of plant-based beverages. Although beverage milk consumption has been declining, total dairy consumption in the United States continues to increase, driven by growth in sales of cheese, butter, and yogurt. Using k-means cluster analysis, 3 consumption clusters for US households were identified. The largest cluster, consisting of 61.6% of households, consumed dairy milk with some regularity and consumed little or no plant-based beverages. A second cluster, flexitarian households, consisting of 15.6% of respondent households, frequently consumed both dairy milk and plant-based beverages. The third cluster, plant-based consumers, consisting of 22.8% of households, consumed almost exclusively plant-based beverages. Examining differences in demographics between clusters, flexitarian households were larger, more likely to include young children, more likely to include a vegetarian or vegan, and more liberal than traditional dairy-consuming households. Plant-based households had many similarities to flexitarian households. The flexitarian and plant-based clusters were willing to substitute plant-based beverages for dairy milk for almost all consumption uses.

US respondents' willingness to pay for Cheddar cheese from dairy cattle with different pasture access, antibiotic use, and dehorning practices.

Cheese is a widely consumed product in American diets and an important economic driver of US dairy markets. Given the widespread interest in credence attributes of fluid dairy products, the lack of knowledge of demand for animal welfare, environmental, and other credence attributes in cheeses is surprising. Increasing attention surrounding dairy cattle welfare has been placed on the disbudding or dehorning of dairy cattle, in addition to the longer term debates surrounding pasture access and antibiotic use. This work estimates willingness to pay for these attributes of dairy cattle management systems for Cheddar cheese in a nationally representative sample of 749 US household members. Ninety percent of respondents indicated they or someone in their household consumed cheese in the last year. Higher proportions of respondents with children in the household purchased cheese of any kind. Respondents had positive willingness to pay for Cheddar cheese that had the following attributes: USDA-, retailer-, and industry-verified antibiotic use not permitted, required pasture access, and dehorning with pain relief as well as polled (when compared with dehorning without pain relief). As dairy producers face tighter margins and shifting consumer preferences, increasing attention on consumer preferences for cheese may aid in increasing profitability if demanded attributes can be profitability provided.

Economic considerations of breeding for polled dairy cows versus dehorning in the United States.

This paper examines the costs and benefits of selecting for polled dairy heifers versus traditional dehorning practices. Stochastic budgets were developed to analyze the expected costs (EC) associated with polled dairy genetics. The economic assessment was expanded beyond on-farm cash costs by incorporating cost and benefit estimates to generate industry-wide discussion, and preliminary economic evaluations, surrounding the public acceptance and attitude toward polled genetics versus dehorning calves. Triangular distributions, commonly used to represent distributions with limited data, were used to represent labor costs for dehorning, the likelihood of treatment of calf, and the cost of veterinary treatment. In total, 10,000 iterations were run using @Risk v 6.0 (Palisade Corp., Newfield, NY). The EC of the 4 traditional dehorning methods evaluated in this study ranged from $6 to $25/head, with a mean EC around $12 to $13/head. The EC of incorporating polled genetics into a breeding program ranged from $0 to $26/head depending on the additional cost, or premium, associated with polled relative to horned genetics. Estimated breakeven premiums associated with polled genetics indicate that, on average, producers could spend up to $5.95/head and $11.90/head more for heterozygous and homozygous polled genetics, respectively, compared with conventional horned genetics (or $2.08 and $4.17/straw of semen at an assumed average conception rate of 35%). Given the parameters outlined, sensitivity to individual farm semen and dehorning costs are likely to swamp these differences. Beyond on-farm costs, industry-wide discussion may be warranted surrounding the public's acceptance and attitude toward polled genetics versus dehorning or disbudding of calves. The value of avoiding dehorning may be larger for the industry, and perhaps some individual farms, than initially suggested if additional value is put on calf comfort and possible worker aversion to dehorning. If public perception of dehorning influences market access, the EC of dehorning may be large but that cost is unknown at present.

Managing dynamic epidemiological risks through trade.

There is growing concern that trade, by connecting geographically isolated regions, unintentionally facilitates the spread of invasive pathogens and pests - forms of biological pollution that pose significant risks to ecosystem and human health. We use a bioeconomic framework to examine whether trade always increases private risks, focusing specifically on pathogen risks from live animal trade. When the pathogens have already established and traders bear some private risk, we find two results that run counter to the conventional wisdom on trade. First, uncertainty about the disease status of individual animals held in inventory may increase the incentives to trade relative to the disease-free case. Second, trade may facilitate reduced long-run disease prevalence among buyers. These results arise because disease risks are endogenous due to dynamic feedback processes involving valuable inventories, and markets facilitate the management of private risks that producers face with or without trade.

Perceptions of Prominent Animal Welfare and Veterinary Care Organizations in the United States.

U.S. residents' perceptions of the impact of prominent animal welfare and veterinary care organizations on pet animal well-being and health care may not be linked to the organization's stated mission and effectiveness in advancing it, but to the level of recognition people have for the groups. An online survey of 1000 U.S. residents was used to understand the perceived impact of organizations with self-stated dedication to pet animal well-being. Using a Likert-scale, respondents ranked 13 prominent organizations as having a low to high impact on pet animal well-being and health care. The American Society for the Prevention of Cruelty to Animals (ASPCA) had the highest perceived average impact, while People for the Ethical Treatment of Animals (PETA) had the lowest. A best-worst scaling (BWS) choice experiment was conducted with 7 of the initial 13 organizations to elicit relative rankings by forcing tradeoffs by respondents. Consistent with the Likert-scale results, the ASPCA was ranked as the most impactful organization. The ASPCA's perceived impact on pet animal well-being and health care may be linked to their high level of recognition among respondents, as this was the organization that respondents most frequently reported having seen/heard stories related to animal well-being and health care.

Familiarity and Use of Veterinary Services by US Resident Dog and Cat Owners.

Pet ownership, veterinary use, and beliefs regarding veterinary care were elicited through the use of a nationally representative survey of 997 U.S. residents. Fifty-one percent of respondents have or had a dog in the past five years and 37% have or had a cat in the past five years. Over ninety percent of cat and dog owners had visited a veterinarian at any time, but only about 40% visited a veterinarian annually. With the rise of options in veterinary medicine, including low-cost options for vaccines and spay/neuter, further study and analysis of pet-owners use of veterinary care is warranted. Fifty-four percent of dog owners and 40% of cat owners who went to a low-cost spay/neuter clinic also went to a veterinarian/clinic/practice. This finding suggests that pet-owners who use low-cost options do so in a manner that supplements rather than replaces traditional veterinary care. Logit models were employed to evaluate the relationship between dog and cat owner demographics and visiting a veterinarian. The probability of visiting a veterinarian increased with age and income for dog owners.

US Farm Animal Welfare: An Economic Perspective.

The topic of farm animal welfare (FAW) is both complex and controversial, and inherently involves expertise and views from multiple disciplines. This article provides a summary of economic perspectives on FAW issues in the United States. Practices related to FAW can occur through legal, market or voluntary programs. FAW is not a primary driver of US food demand but negative press has industry-wide effects. Aligning FAW supply and demand can be facilitated through labeling, education, and voluntary programs, but all have pros and cons.

Farm-level economic analysis of the US National Johne's Disease Demonstration Herd Project.

OBJECTIVE: To evaluate farm-level economic costs and benefits related to control of paratuberculosis (Johne's disease) in dairy herds in the National Johne's Disease Demonstration Herd Project (NJDDHP). DESIGN: Economic analysis. SAMPLE POPULATION: 40 dairy herds enrolled in the NJDDHP. PROCEDURES: A farm-level economic analysis of the US NJDDHP was performed. Costs and benefits of management-related practices to control Johne's disease were estimated on the basis of results for 40 dairy operations enrolled in the project. From these costs and benefits, the net present value (NPV) for control of Johne's disease was estimated. Results-Analysis revealed a mean NPV of $34/animal (equivalent to approx $3/animal/y) when there were no testing costs for producers and a mean NPV of -$14/animal when testing costs were borne by the producers. CONCLUSIONS AND CLINICAL RELEVANCE: Management-related practices to control Johne's disease were typically found to be of marginal economic benefit when the costs of testing were not borne by producers. The continuation of the NJDDHP for another 2 to 4 years would allow more precise estimation of the economic benefits of a control program for Johne's disease.

An examination of US consumer pet-related and veterinary service expenditures, 1980--2005.

OBJECTIVE: To evaluate US consumer expenditures for veterinary services, pets-pet supplies, and pet-related services. DESIGN: Retrospective economic analysis. SAMPLE POPULATION: US consumers from 1980 through 2005. PROCEDURES: Descriptive statistics and probit regressions were calculated. RESULTS: From 1980 to 2005, total inflation-adjusted expenditures on pet-related and veterinary services increased, as did the percentage of households with a pet-related expenditure. The percentage of households with veterinary service expenditures was fairly constant. Among households with a pet-related expenditure, the percentage purchasing veterinary services decreased. The probability for pet-related and veterinary service expenditures increased with income, education, and family size and was higher for household heads who were white, were married, owned their residence, and lived in a rural area. CONCLUSIONS AND CLINICAL RELEVANCE: Overall spending on veterinary services increased substantially, providing no indication that successful practices should change strategy. Households that spent money on veterinary services increased their spending sufficiently to exceed the loss of income for veterinarians associated with the increasing proportion of pet-owning households that did not spend anything on veterinary services. Because the probability of veterinary service expenditures was strongly related to household income, caution is suggested in planning provision of veterinary services when incomes are constrained. Among households with pet-related expenditures, the decreasing percentage of households with veterinary service expenditures suggests a growing proportion of pet owners who are not having their veterinary service needs met. Because non-white households were less likely to purchase veterinary services, the veterinary profession cannot afford to delay efforts to enhance diversity and cultural competence.

Consumer perceptions of egg-laying hen housing systems.

The egg industry has transitioned, or is in the process of transitioning, from conventional cages to alternative hen housing systems in response to legal changes in many states across the United States (US). However, consumers find it is increasingly difficult to understand the details behind those labels and specific attributes conveyed. There are multiple hen housing options with a wide range of costs and impacts on hens, workers, and the environment. This research furthers the understanding of US public perceptions and attitudes related to hen housing systems and corresponding animal welfare, worker, economic, and environmental effects. Results reveal that the US public perceives cage-free aviaries as achieving essentially the same positive impact on hen health and stress, hen behavior, and environmental impact as free-range systems when compared to conventional cage systems. The information provided can assist industry, marketing, and policy decisions with respect to hen housing.

Social desirability bias in reporting of holiday season healthfulness.

Respondents participating in survey or interview based research often tend to give answers that put themselves in a favorable light, displaying social desirability bias (SDB). Understanding the susceptibility of individuals to underreport their perceived unhealthy holiday behaviors or over report holiday behaviors they perceive as healthy has important implications for health promotion and health policy surrounding the holiday season. This study examines SDB specific to the reporting of holiday food consumption and health-related behaviors. An online survey of 620 U.S. consumers was utilized to collect data in which SDB was accounted for via indirect questioning. The online survey was conducted by Purdue University from November 17-19, 2014. Up to 64% of respondents displayed SDB for the eight holiday health statements studied. Respondents over the age of 45 and without children more frequently displayed social desirability bias. Respondents who displayed SDB with respect to acceptable health related holiday food consumption behaviors may be more susceptible to social pressures surrounding other consumption decision making. Understanding SDB in health and behavior reporting, in particular for the traditionally challenging, in terms of health outcomes, holiday season is critical for health practitioners as they seek to promote healthy behaviors.

The economics of dairy production.

The structure of the dairy farm industry has been changing rapidly in recent years. Milk production has increased, with dramatic increases in milk produced per cow and with a steep decline in number of milk cows and fewer farms with larger herds. The change in dairy farm size has not been uniform across regions. The growth in farm size has occurred much more rapidly in the Pacific and South regions than in the traditional dairy-producing regions (Upper Midwest, Northeast, and Corn Belt). Using USDA data to examine costs and returns over time reveals that the incentives to produce milk have been much greater in the Pacific and South regions in recent years. Although the cash costs are similar across regions, accounting for all costs including unpaid factors such as labor and capital replacement yields a clear advantage for the Pacific region. Dairy farm size and cost of production are jointly determined. The incentive to increase farm size is derived from the economies of size that may be achieved by spreading the capital, labor, and managerial costs across more units of milk production. Empiric evidence from previous studies indicates a declining cost of production over a large range of herd sizes. Even in the presence of a flat average cost curve, the incentive to maximize farm income provides incentive to increase production. Adjustment costs may fix dairy production facilities in their current use. Those firms facing higher adjustment costs because of individual or regional characteristics or because of different timing of growth will be smaller or grow more slowly than if they faced smaller adjustment costs. This situation may explain the continued lag of farm size and technology adoption in the traditional dairy producing regions relative to the Pacific and South regions where the more recent population growth coincided with the presence of modern, large-scale production technologies. Finally, dairy marketing policies almost certainly have affected the structure and regional pattern of dairy farm size and production. For the most part, however, the policy effects have been of indirect nature. The Pacific region has grown (despite having the lowest average price) by taking advantage of economies of size by specializing in milking cows. The United States dairy industry is a technologically advanced, well-managed, and economically important sector of United States agriculture. Future challenges include the ability to remain viable economically while dealing with environmental and social sustainability issues in the form of new constraints from formal policies and from consumer perceptions.