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Impact of Increasing Demand for Dairy Alternative Beverages on Dairy Farmer Welfare in the United States

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  • Copeland, Alicia
  • Dharmasena, Senarath

Abstract

Production and consumption of dairy alternative beverages in the United States has been on the rise as per capita consumption of fluid milk continues to fall. Almond milk and soymilk are the fastest growing categories in the U.S. dairy alternative marketplace. Using household-level purchase data from 2011 Nielsen Homescan panel and tobit econometric procedure, the conditional and unconditional own-price, cross-price and income elasticities for soymilk and almond milk were estimated. Income, age, employment status, education level, race, ethnicity, region and presence of children are significant drivers affecting the demand for dairy alternative beverages, such as almond milk and soy milk. We use the estimates from the tobit econometric procedure to predict how changes in demographic profiles, prices and income will likely affect demand for the aforementioned dairy and dairy alternative products, and how these changes in retail demand will affect the blend price, production and producer surplus of U.S. dairy farmers subject to the federal milk marketing order system. To model the farm-side effects we follow Balagtas and Sumner (2001) and use estimates of elasticities of supply for milk from the literature.

Suggested Citation

  • Copeland, Alicia & Dharmasena, Senarath, 2016. "Impact of Increasing Demand for Dairy Alternative Beverages on Dairy Farmer Welfare in the United States," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230044, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saea16:230044
    DOI: 10.22004/ag.econ.230044
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    References listed on IDEAS

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    1. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    2. Dharmasena, Senarath & Capps, Oral, 2014. "Unraveling Demand for Dairy-Alternative Beverages in the United States: The Case of Soymilk," Agricultural and Resource Economics Review, Cambridge University Press, vol. 43(1), pages 140-157, April.
    3. Joseph V. Balagtas & Daniel A. Sumner, 2003. "The Effect of the Northeast Dairy Compact on Producers and Consumers, with Implications of Compact Contagion," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(1), pages 123-144.
    4. Gould, Brian W., 1996. "Factors Affecting U.S. Demand For Reduced-Fat Fluid Milk," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 21(1), pages 1-14, July.
    5. Brian W. GOULD, 1996. "Abstract Of Factors Affecting U.S. Demand For Reduced-Fat Milk," Staff Papers 386, University of Wisconsin Madison, AAE.
    6. Senarath Dharmasena & Oral Capps, 2012. "Intended and unintended consequences of a proposed national tax on sugar‐sweetened beverages to combat the U.S. obesity problem," Health Economics, John Wiley & Sons, Ltd., vol. 21(6), pages 669-694, June.
    7. repec:reg:rpubli:206 is not listed on IDEAS
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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.
    2. Huang, Wei, 2022. "Demand for plant-based milk and effects of a carbon tax on fresh milk consumption in Sweden," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 518-529.
    3. Hu, Yang & Dharmasena, Senarath & Capps, Oral Jr. & Janakiraman, Ramkumar, . "The Growing Market for Energy and Sports Drinks in the United States: Can Chocolate Milk Remain a Contender?," Journal of Food Distribution Research, Food Distribution Research Society, vol. 51(2).
    4. Peter Slade & Mila Markevych, 2024. "Killing the sacred dairy cow? Consumer preferences for plant‐based milk alternatives," Agribusiness, John Wiley & Sons, Ltd., vol. 40(1), pages 70-92, January.

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