Christopher A. Wolf

Studies analyzing the impact of climate change on agriculture mostly emphasize effects on production quantity, overlooking potential impacts on quality and nutritional content. We explore this question in the context of U.S. milk production, which represents about 20% of national animal-products. We link individual lactation records for over 6.5 million cows over 2007-2016 with high-resolution weather data to estimate the nonlinear effects of heat on both milk yield and composition (fat and protein content). While milk yield declines sharply only when the Temperature-Humidity Index (THI) exceeds 70 (primarily in the summer), milk composition deteriorates steadily with rising THI (throughout the year). Combining these findings indicates that estimates of heat damages that ignore composition effects –common in the literature– underestimate total economic losses by at least a factor of two. We also find that the sensitivity of both milk yield and composition to heat varies little with cow age, farm size, region of the country, or period in the sample, indicating no detectable change in the aggregate heat sensitivity of U.S. dairy systems over the study period.

Given the revenue and cost volatility with resulting tight profit margins in dairy farming, it is increasingly important to measure, monitor, and understand farm financial risk. Solvency, liquidity, debt repayment capacity, and financial efficiency measures can reveal potential problem areas and assist in financial risk management. Financial risk is defined as uncertainty about interest rates, willingness of lender to keep or put money into the business, ability to meet cash flow needs, and the market value of collateral. Financial resilience is defined as the ability to withstand events that impact firm net income. Solvency was measured by equity to asset ratio. Liquidity was measured by current ratio. Repayment capacity was measured by debt coverage ratio. Financial efficiency was measured by operational expense ratio and net farm income ratio. Critical thresholds for these farm financial measures include those determined by US agricultural lenders since maintaining access to outside capital is important for farm financial management. To demonstrate these concepts and measure financial risk and resilience, this research uses farm data from a balanced panel of 105 New York dairy farms from 2010 through 2019. Results reveal that there were 4 average, 2 good, and 4 poor financial years for these operations on average as measured by farm profitability. Solvency positions were relatively stable being based on long-term asset and liability values. During the poor years, the percent of farms below danger thresholds for liquidity and debt repayment capacity spiked.

There is debate about whether meat labeling regulations might prevent consumer confusion or simply reduce the substitution between competing products. Using a between‐subjects experiment with a sample of 1504 U.S. households, we tested whether U.S. consumers could accurately identify the nutrition content and ingredients in traditional and nontraditional meat. We then conducted a discrete choice experiment to test for likely changes in choices between traditional and nontraditional meat products. Results suggest that more than 30% of consumers cannot accurately distinguish between the two. We find that labeling restrictions do not decrease consumer confusion and are unlikely to substantially affect how consumers substitute between traditional and nontraditional meat.

In Federal Milk Marketing Orders (FMMO), which use multiple component pricing schemas, farmers are paid for delivered quantity of butterfat, protein, and other solids, plus a producer price differential (PPD). The PPD captures the difference between the total handler obligations to the pool and the total component value of milk. In 2020, record negative PPD caused widespread frustration among dairy farmers. The primary objective of this research was to provide a comprehensive analysis of factors that affect PPD and to quantify their relative importance. We examined FMMO data from the past 10 yr including prices, utilizations, and tests. By decomposing the PPD, we were able to isolate the drivers of negative values. We found that long-term trends in usage, most importantly declining beverage milk and rising component tests, including both butterfat and protein, have substantially reduced PPD over the past decade. Class I milk pricing reform of 2018 exacerbated negative PPD in 2020, but we found that the PPD would have been negative even without that reform. The greatest contributor to recent negative PPD was the spread between cheese and milk powder prices, caused by shifts in demand due to the COVID-19 pandemic and USDA intervention cheese purchases. A range of policy modifications proposed to address negative PPD was evaluated.

Product labels communicate the presence of valuable traits to consumers but, when a single label represents multiple traits, communication can be hindered by consumer misinformation. Redundant labels can address this problem by explicitly indicating included qualities within a comprehensive label. We use data from a field experiment on willingness to pay for redundant labels in the US organic fluid milk market when consumers are either uninformed or informed of the redundancy. Market share simulations demonstrate the market impacts and effectiveness of introducing a redundant label as a response strategy to recapture market share lost to increasingly prevalent individual labels.

This research used a survey of 995 US households to explore how dairy milk and plant-based beverage substitutes were consumed. Long-term trends of declining beverage milk consumption have been exacerbated in recent years by increasing consumption of plant-based beverages. Although beverage milk consumption has been declining, total dairy consumption in the United States continues to increase, driven by growth in sales of cheese, butter, and yogurt. Using k-means cluster analysis, 3 consumption clusters for US households were identified. The largest cluster, consisting of 61.6% of households, consumed dairy milk with some regularity and consumed little or no plant-based beverages. A second cluster, flexitarian households, consisting of 15.6% of respondent households, frequently consumed both dairy milk and plant-based beverages. The third cluster, plant-based consumers, consisting of 22.8% of households, consumed almost exclusively plant-based beverages. Examining differences in demographics between clusters, flexitarian households were larger, more likely to include young children, more likely to include a vegetarian or vegan, and more liberal than traditional dairy-consuming households. Plant-based households had many similarities to flexitarian households. The flexitarian and plant-based clusters were willing to substitute plant-based beverages for dairy milk for almost all consumption uses.