Pricing Milk Components at Retail via Hedonic Analysis

¹ Department of Agricultural Economics, Cornell University, Ithaca, NY 14353
² Department of Animal Science, Washington State University, Pullman 99164

Household food consumption survey data was used in an analysis of the significance and level of milk component values perceived by consumers at the retail level. The research was based on the new approach based on hedonic assessment of product characteristics for demand analysis. Dairy products analyzed included beverage milk products and three types of cheeses. The estimated nonlinear regression function explaining dairy product retail prices indicated that the protein, fat, and calcium components of raw milk were perceived by consumers as having significant value in the marketplace. Regarding relative value, on average, the protein component was perceived to be 28% more valuable than the fat component per point. Decomposing the $9.45 per hundredweight price of raw milk given average milk component levels existing during the time the survey data was collected, $3.76 was attributable to the protein component, $3.29 represented fat value, and $2.40 was assigned as calcium value.

Key Words: milk component values • retail level • consumer hedonic analysis

Submitted on March 29, 1990
Accepted on November 5, 1990

This article has been cited by other articles:

				K. W. Bailey, C. M. Jones, and A. J. Heinrichs Economic Returns to Holstein and Jersey Herds Under Multiple Component Pricing J Dairy Sci, June 1, 2005; 88(6): 2269 - 2280. [Abstract] [Full Text] [PDF]