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The Component Pricing of Milk Revisited
Author(s) -
StPierre Normand R.,
Scobie Grant M.
Publication year - 1987
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1241704
Subject(s) - butterfat , component (thermodynamics) , milk fat , food science , econometrics , economics , business , chemistry , thermodynamics , physics , linseed oil
Various studies have addressed the impact of component pricing on milk marketing. All required an estimate of the implicit prices of components under an existing scheme. In this paper, we show why results differed between studies, and we present evidence that they drew inappropriate conclusions. A reformulation based on the relationship between fat and solids‐not‐fat percentages in milk leads to the conclusion that butterfat pricing schemes for milk may have underpriced fat relative to solids‐not‐fat rather than overpriced butterfat in U.S. produced milk.