Pricing Milk Components at Retail via Hedonic Analysis

Lenz, John E.; Mittelhammer, Ron C.; Hillers, J.K.

doi:10.3168/jds.s0022-0302(91)78345-8

Cited by 10 publications

(8 citation statements)

References 9 publications

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“…Any differentiated product can be considered a set of several quality attributes that consumers independently assess at the time of purchase. Thus, given a representative consumer’s budget constraints, they consider the attributes of the product during the consumption decision-making process and obtain utility from that [ 41 ]. For instance, dairy producers, when purchasing bovine semen, expect to maximize utility by considering the product characteristics, such as tested semen and sexed semen.…”

Section: Methodsmentioning

confidence: 99%

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Hedonic pricing analysis for semen of dairy bulls in Brazil

et al. 2022

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Dairy farming is an important aspect of the Brazilian agricultural sector. The presence of numerous producers has created a large number of jobs in this field, contributing significantly to the rural economy. Artificial insemination (AI), used as one of the main means of reproduction, is increasingly gaining importance in the genetic improvement of animals. Given this scenario, the semen of bulls has become extremely marketable and an important aspect of the animal industry. This study aims to develop a hedonic model for the price of semen doses of dairy bulls based on the information from the main sellers of the product in the Brazilian market. The main findings reveal that there is an additional premium for proven bulls. Semen doses from Gir bulls proved to be more expensive, and the AI firm ALTA has a discount compared to the other firms. From the characteristics obtained in the tests, there is a premium only for the Predicted Transmitting Ability–Milk (volume). The most valued feature found is the dose being sexed, that is, the dose that guarantees the gestation of a female from its use. Semen doses from dead bulls has proved to be more expensive.

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Section: Methodsmentioning

confidence: 99%

“…[ 41 , 42 ] formalized a model based on consumer theory to evaluate the behavior and milk consumption decisions of a representative agent. The idea presented in these works is identical to that in this study, albeit the present research applies the idea to the bovine semen market.…”

Section: Methodsmentioning

confidence: 99%

Hedonic pricing analysis for semen of dairy bulls in Brazil

et al. 2022

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“…Some of the applications include apples (Carew et al, 2012), fresh tomatoes (Huang and Lin, 2007;Keahiolalo, 2013), fresh eggs (Satimanon and Weatherspoon, 2010), frozen fish (Roheim et al, 2011), and wine (Schamel, 2006). For dairy products, Lenz et al (1991) studied retail pricing of milk components (fat, protein, and calcium). Dimitri and Venezia (2007) investigated various aspects of the US organic milk market based on Nielsen Homescan data.…”

Section: Hedonic Price Modelmentioning

confidence: 99%

Estimating organic, local, and other price premiums in the Hawaii fluid milk market

Loke

Leung

2015

Journal of Dairy Science

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With retail scanner data, we applied hedonic price modeling to explore price premiums for organic, local, and other product attributes of fluid milk in Hawaii. Within the context of revealed preference, this analysis of organic and local attributes, under a single unified framework, is significant, as research in this area is deficient in the existing literature. This paper finds both organic and local attributes delivered price premiums over imported, conventional, whole fluid milk. However, the estimated price premium for organic milk (24.6%) is significantly lower than findings in the existing literature. Likewise, the price premium for the local attribute is estimated at 17.4%, again substantially lower compared with an earlier, stated preference study in Hawaii. Beyond that, we estimated a robust price premium of 19.7% for nutritional benefits claimed. The magnitude of this estimated coefficient reinforces the notion that nutrition information on food is deemed beneficial and valuable. Finally, package size measures the influence of product weight. With each larger package size, the estimate led to a corresponding larger price discount. This result is consistent with the practice of weight discounting that retailers usually offer with fresh packaged food. Additionally, we estimated a fairly high Armington elasticity of substitution, which suggests a relatively high degree of substitution between local and imported fluid milk when their relative price changes. Overall, this study establishes price premiums for organic, local, and nutrition benefits claimed for fluid milk in Hawaii.

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“…Other studies have focused more specifically on the economic returns by breed under multiple component pricing plans (Schmidt and Pritchard, 1988;Elbehri et al, 1994). Other studies have taken a broader look at the social welfare implications of switching to a multiple component pricing system (Perrin, 1980;Lenz et al, 1991;Gillmeister et al, 1996). Despite this large body of literature, no studies have been completed that evaluate the economic returns for actual herds from component performance since the most recent federal order reform.…”

Section: Introductionmentioning

confidence: 99%

Economic Returns to Holstein and Jersey Herds Under Multiple Component Pricing

Bailey

Jones

Heinrichs

2005

Journal of Dairy Science

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This study analyzed component data from herds participating in the Mideast Federal Milk Marketing Order from 2000 through 2002, and its implications for herd profitability. A monthly simulation model was developed to evaluate the economic returns for a representative Holstein and Jersey herd in Pennsylvania under multiple component pricing. Component levels were highly seasonal and variable from farm to farm. A third of the herds during the course of a year realized a 1- to 3-mo temporary reduction in milk fat or protein greater than one standard deviation. Consistently producing milk fat and protein one standard deviation below the mean reduced the Class III value by $0.82/cwt (100 pounds), or 7.09%. The simulation model indicated that a herd of 100 Holstein cows generated $31,221 more income over feed costs (IOFC) a year than a herd of 100 Jersey cows. Although Jersey milk had greater gross value than Holstein milk due to higher component levels, total volume of milk and components produced by Holsteins offset this difference. Simulation results confirm that increasing milk fat and protein percentages by one standard deviation increased IOFC 7.7% for Holsteins and 9.2% for Jerseys relative to the baseline IOFC, with similar losses for component reductions. Increasing milk yield by one standard deviation increased IOFC by 19.6% for Holsteins and 23.9% for Jerseys relative to the baseline IOFC, again with similar losses for reductions in milk production. In all of the scenarios analyzed, the most important factor affecting IOFC was total amount of milk fat and protein produced, not the component percentage levels.

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Pricing Milk Components at Retail via Hedonic Analysis

Cited by 10 publications

References 9 publications

Hedonic pricing analysis for semen of dairy bulls in Brazil

Hedonic pricing analysis for semen of dairy bulls in Brazil

Estimating organic, local, and other price premiums in the Hawaii fluid milk market

Economic Returns to Holstein and Jersey Herds Under Multiple Component Pricing

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