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Impacts of Fuel price, Supply/Demand, and Seasonality on Class I Milk Price Differentials

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  • Seo, HongSeok
  • McCarl, Bruce A.

Abstract

The Class I price differentials for milk were established in 2000 and continue in use today. These differentials are to reflect transport and other factors that vary across space. Since 2000 some key factors have changed like fuel price and supply/demand locations. We examine how the differentials match up with the distribution of shadow prices in a spatial transport model. We find consideration of fuel costs and supply demand location shifts raises the magnitude of the differentials by about 75%. We also find that consideration of seasonality also affects the differentials. Collectively the results indicate that it may be desirable to revisit the policy determined price differentials.

Suggested Citation

  • Seo, HongSeok & McCarl, Bruce A., 2014. "Impacts of Fuel price, Supply/Demand, and Seasonality on Class I Milk Price Differentials," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162420, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saea14:162420
    DOI: 10.22004/ag.econ.162420
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    1. Testuri, Carlos E. & Kilmer, Richard L. & Spreen, Thomas H., 2001. "Seasonality Of Class I Price Differential Estimates For The Southeastern United States," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 33(3), pages 1-14, December.
    2. Cox, Thomas L. & Jesse, Edward V., 1995. "Regional Effects of Selected Dairy Policy Options: Dairy IRCM Simulations," Marketing and Policy Briefing Papers 12723, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
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    Cited by:

    1. Townsend, Owen & Mark, Tyler & Burdine, Kenneth, 2017. "Diversions and the Role they play in Determining Order 7 Milk Price," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252761, Southern Agricultural Economics Association.

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    Industrial Organization; Marketing;

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