This study provides insight into the seasonality of Class I price differentials in the southeastern dairy industry. This is accomplished by analyzing monthly estimates of Class I price differentials obtained from the imputed price solution or dual solution of a generalized capacitated minimum cost network flow model of the dairy industry. A smooth seasonal pattern emerges through the monthly sequence with the lowest and highest estimated Class I price differentials occurring in April and September respectively. Miami and Jacksonville areas reach $ 5.40 and $ 4.36 per hundredweight in April and $ 6.79 and $ 5.53 per hundredweight in September.

As a result of economies of size, food processors are generally large and few in number. These characteristics put processors at a bargaining advantage over independent farmers. Marketing cooperatives were established to counter the uneven bargaining position of individual farmers. This article investigates the relative bargaining strength of one milk marketing cooperative and several fluid milk processors. The Nash bargaining model can be used to analyze the negotiated price in the Florida fluid milk market which acts like a bilateral monopoly. The milk marketing cooperatives have bargained well with the milk marketing processors; The monthly bargaining strength of the Southeast Dairy Cooperative, Inc. (SDC), exceeds the monthly bargaining strength of the processors in all twelve months, ranging from a low of 0.6664 in January to a high of 0.7831 in September. The monthly average bargaining strength across all months for SDC is 0.7326.

The objective of this analysis was to identify the production practices used by farmers to change seasonal production. Production practices included milk production per cow, proportion of cows milking, number of first lactation animals entering the herd, number of cows leaving the herd, number of days to first breeding, and calves born. Farms that participated in a seasonal pricing plan during 1993, 1994, and 1995 decreased production practice seasonality in response to price premiums, which caused a decrease in production seasonality compared to nonparticipating farms. Participating farms showed a preference for adjusting entering first lactation animals and number of calves born, but did make adjustments in other practices as well.

The trend toward deregulation and the relatively high prices in the Florida milk market have increased competition for milk supplies between the Florida dairy cooperatives (FDCs) and other cooperatives like Dairymen Incorporated and Southern Milk Sales. Because of the increased competition in the Florida markets, the FDCs may need to implement a discriminatory spatial pricing policy. The discriminatory pricing policy allows the FDCs to expand their membership by absorbing some of the transportation cost of producers in distant locations that would otherwise be independent producers or members of competing cooperatives. Spatial pricing policies are analyzed to determine the effects of discriminatory pricing on the blend price, average aggregate revenue of cooperative members, and total costs and quantity of milk imports. The results of this study show that a nondiscriminatory pricing policy maximizes the cooperative members’ blend price and average aggregate revenue. However, if the FDCs were able to increase the price by $0.50 as a result of using spatial price discrimination to gain market power, spatial price discrimination would maximize average revenue and blend price.

Results indicate that, when comparing the unconditional derived-demand elasticities to the unconditional consumer demand elasticities, significant differences emerge due to the differences in the first-stage estimation procedure between the differential production approach and the Rotterdam model. In comparing the consumer demand price/cross-price elasticities to the derived-demand price/cross-price elasticities, it is clear that use of the Rotterdam model when a production approach should be used can lead to overestimation, underestimation, and incorrect signs in deriving unconditional price effects.

The impact of a monopolist or monopsonist on the price and output performance in comparison with perfectly competitive markets is well documented. These markets are coordinated through spot market exchanges.

It is indeed a pleasure to be standing here today addressing you as your president. When Bill Park called me to ask whether I would run for president of the Southern Agricultural Economics Association (SAEA), I said yes. He said, “don't you want a day or two to think about it?” I said, “Bill, I have been in this profession for 27 years; I do not want to wait another 27 years for the opportunity. You can do the math.”

A structural probit model is estimated to determine the change in the probability of selecting a milk handler. Cooperatives are thought to have lower prices and higher deductions than independent milk handlers and these factors reduce the probability that a farmer will select a cooperative by 0.39 and 0.32. Cooperatives are thought to have better services and an assured market and payment than independent milk handlers and these factors increase the probability that a farmer will select a cooperative by 0.20 and 0.26. This indicates that many cooperative members value monetary characteristics over non-monetary characteristics.

The pricing behavior of the Florida celery industry under the current federal marketing order was examined by analyzing the implied market structure of the industry using a model proposed by Appelbaum. Point estimates of the oligopoly power index suggest that some degree of price enhancement above that which would be characterized by a perfectly competitive market may have occurred. However, the bulk of statistical evidence suggests that the departure from marginal cost pricing implied by the industry's pricing behavior is not statistically significant.

This article evaluates the effects of alternative fluid milk procurement strategies on the aggregate net revenue of Florida cooperative members. They are (1) supplemental milk obtained from import sources, (2) supplemental milk obtained from a supply plant, (3) increased supply as a result of an expanded production area, and (4) supplemental milk obtained through pooling arrangements with regional dairy cooperatives. The final ranking of a scenario appears to be dependent primarily on the total cost of exports within the model. The optimum procurement strategy for Florida cooperatives should concentrate on reducing the quantity of surplus milk.

An ordered probit model is used to investigate the factors that determine post-choice satisfaction of southeastern U.S. dairy farmers with their milk handlers. The impact on farmer satisfaction of milk handler attributes, farm/farmer characteristics, and farm location is tested. Results support the hypothesis that mailbox price and the quality of service provided by milk handlers have a positive effect on satisfaction levels. Bargaining-operating cooperatives are negatively associated with farmer satisfaction when contrasted against independently owned milk handlers and bargaining-only cooperatives. Choice and the ability to switch milk handlers are also important determinants of farmer satisfaction.

From 1993–1995, Florida dairy cooperatives implemented a seasonal pricing plan in an attempt to decrease the variability in seasonal production. Farmers that participated in the seasonal pricing plan were able to reduce seasonality in each year when compared to 1992 by as much as 20 percent. For farmers that did not participate, seasonality increased in each year by as much as 32 percent. Overall, the seasonal pricing plan was effective in reducing seasonality for those farmers that chose to participate in the plan and that its limited short-run success was the result of seasonality increases by non-participating farms.

An economically efficient allocation of resources maximizes consumer and producer surpluses. It can be shown that under perfectly competitive conditions, an efficient allocation of resources will evolve. It may be the global welfare optimum, but for a given set of conditions, consumer and producer surpluses can be maximized.

Cost and volume data used in long-run cost studies often are observations from a single cross-section on firms or the average of multiple observations for each firm [1, 3, 5]. Averaging costs and volume over a time series is designed to eliminate the effect of short-run disturbances on the estimated long-run cost function. This practice results in a loss of information on the cost effects of short-run disturbances and significantly reduces the potential degrees of freedom that could result from pooling cross-sectional time-series data. In order to pool data, binary variables for each firm previously have been used to account for short-run fixed firm effects [4].

Seasonal swings in milk production in Florida result in a need to import milk on a seasonal basis. A linear programming analysis is used to analyze alternate freshening-date distributions and project the cost savings to Florida dairy farmers from reduced milk imports.