Analyzing The Effect Of Multiple Component Pricing On Producers
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The price of milk depends on many factors. For example, if corn prices rise then feed costs will go up and milk prices will increase. Besides corn prices, inflation, import and export market situations, somatic cell count, natural disasters and management costs such as feed, marketing, breeding, hired labor, capital, machinery and utilities can affect milk price. Before multiple component pricing was introduced, profit increased in direct proportion to increased production. However, after multiple component pricing is used, producing more milk did not mean more profit anymore. The reason is that milk prices are decided by content of component in milk such as fat and protein. Thus, higher the percentage of fat, protein and nonfat solid, the more profit can be made. For this reason, dairymen are making an effort to produce milk with higher fat and protein content in many ways. Breed changes, genetic selections and feed rations are examples of those efforts. The objective of this research is to analyze the differences between before and after adopting new FMMO in 2000 and differences of several factors that affect milk pricing between orders. At first, trends of several factors would be analyzed and the reason for those trends would be explained. Specifically, price and milk composition part will be of interest. Then, differences between the two orders, six orders using multiple component pricing and four orders using skim-fat pricing, and causes of differences will be investigated. By determining differences between the two marketing orders, the effects of using multiple component pricing on milk price, composition, utilization and so on could be inferred. These will enable us to identify producers’ strategies and changes made to production process when multiple component pricing as adopted.
Moon, Youngji (2015). Analyzing The Effect Of Multiple Component Pricing On Producers. Master's thesis, Texas A & M University. Available electronically from