Price,
Editor’s Note: In the Jan. 3
issue, Dr. Kirkland presented the
theories concerning milk con
sumption he based his stndy on.
Below are the results of his ex
tensive stndy.
BY JACK KIRKLAND
Penn State Dairy Marketing
Specialist
The price of whole milk and the
prices of the other fluid products
have a significant influence on the
per capita consumption of whole
milk in Pennsylvania. As the price
of whole milk increases one per
cent, the per capita consumption of
whole milk decreases about 0.97
percent. The response was as
expected.
However, the magnitude is
larger than was found in past
studies. One, which reported the
largest negative relationship,
found a 0.73 percent decrease in
whole milk consumption with a 1
percent increase in the price of
whole milk.
The prices of 2 percent, 1 percent
and skim milk had a significant
influence on whole milk con
sumption but they had the opposite
relationship than was expected.
Instead of being substitutes, the
study suggests that they are
complements. In other words, as
the prices of the three fluid
products decrease, more whole
milk will be consumed and con
sumers will not switch whole milk
for one of the lowfat products.
The influence of the price of cola,
income, the proportion of females
in the population, the percentage of
the population under 19 and season
of the year did not have a
significant influence on the per
capita consumption of whole milk.
Consumption of
2 Percent Milk
The price of 2 percent milk had a
significant influence on the con
sumption of 2 percent milk, with
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per capita consumption decreasing
0.99 percent with a one percent
increase in the price of 2 percent
milk. The prices of the other fluid
products had significant! but the
opposite than was expected, in
fluence on the consumption of 2
percent milk.
A complementary relationship
between the four milk products
was indicated, where, as the price
of the other products decreases,
more 2 percent milk will be con
sumed. Consumers will not switch
to one of the other products.
As the proportion of females
increases, the consumption of 2
percent milk decreases. This was
the expected relationship,
although it was thought the impact
of females on the lowfat milks
would be less in magnitude than
for whole milk.
The effects of the price of cola,
income, the percentage of the
population under 19, and season of
the year had no significant in
fluence on the consumption of 2
percent milk.
Consumption of
1 Percent Milk
The price of 1 percent milk had a
significant, but positive, influence
on the consumption of 1 percent
milk. As the price of 1 percent milk
increases 1 percent, the con
sumption of 1 percent milk in-,
creases about 1.4 percent. This is
contrary to economic theory.
It is hard to believe that as the x
price of 1 percent milk increases
consumers are going to buy more
of it. It may be that tastes and
preferences and/or the health
concern for fat in milk causing
consumers to purchase more 1
percent milk, may be overriding
the effect of price. Consumers may
be purchasing more 1 percent milk
irregardless of the changes in its
price and the study make be
picking up this fact.
Again the effects of the price of
Milk Consumption Study
the other milk products show that a
significant and complementary
relationship exists between the
four milk products. The prices of
the other products were significant
and had the opposite relationship
than was expected.
The proportion of females in the
population had a significant and
positive influence on the con
sumption of 1 percent milk. As the
proportion of females increases,
the consumption of 1 percent milk
increases. This seems to indicate
that perhaps 1 percent milk is the
choice of the female population if
they decide to consume a fluid milk
beverage.
The price of cola, income, the
percentage of the population under
19 and the season of the year did
not have a significant influence on
the consumption of 1 percent milk.
Consumption of
Skim Milk
The price of skim milk had a
significant but positive influence
on the consumption of skim milk.
However, the influence was very
weak; a 1 percent increase in the
price of skim milk results in a 0.03
percent increase in the con
sumption of skim milk. Again, as
in die case of 1 percent milk,
factors other than price must have
a dominant influence over price in
consumer’s decisions to buy skim
milk.
The prices of the other fluid milk
products had a significant in
fluence on the consumption of skim
milk. However, as in the case of
the other three products, a com
plementary relationship was in
dicated in which increases in the
prices of those other fluid milks
results in decreases in skim milk
consumption.
The proportion of females had a
significant, but negative, influence
on the consumption of skim milk.
The findings of the study indicate
that as tiie proportion of the
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females in the population in
creases, consumption of skim milk
decreases.
Results also indicate that period
of lowest skim milk consumption is
the period from May through
August.
The price of cola, income, and
the percentage of the population
under 19 did not have a strong
influence on the consumption of
skim milk.
The overall effects of price on
milk consumption are not com
pletely clear from this study.
However, the effects of the prices
of fluid milks on consumption were
significant in all cases. Though,
they did not always have the ex
pected effect on consumption.
The greatest changes in con
sumption occurred in whole and 2
percent milks while consumption
of 1 percent and skim milk had
only a slight change.
Price indeed may be an im
portant consideration in con
sumer’s decisions regarding
purchases of whole and 2 percent
milk. The study does indicate that
consumers respond logically to
changes in price for these two milk
products.
However, for 1 percent and skim
milk, consumers react in the op
posite mannere than economic
theory and logic would lead us to
expect. Perhaps, in the case of 1
percent and skim milk con
sumption, consumers base their
decision to purchase these
products on some factor other than
price (such as tastes and
preferences and health con
siderations).
The findings of the study were
consistent in that it appeared that
there was no substitution among
the four products based solely on
changes in their relative prices. It
did not appear that consumers
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Lancaster Farming, Saturday, January 31,1M7-A33
Interpretation of
The Results
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switched one product for another
when one became relatively
cheaper. Instead of being sub
stitutes, the study suggests that
they are complements.
As the prices of the other three
fluid milks decrease, more of the
other milk will be consumed and
consumers will not switch
products. This effect may be due to
the inability to use actual market
prices for these products in the
study.
By using the minimum prices,
which not only move in the same
direction but proportionately, the
study was not able to capture the
effects of relative price changes
between the fluid products.
However, it is suggested that the
actual market prices also exhibit
this relationship.
Retail market prices are very
close to the established minimum
prices probably due to the intense
competition in the dairy industry
in Pennsylvania. Furthermore,
they move pretty much in the same
fashion as those minimum prices.
So, it may be that consumers
experience actual market prices
that do not change relative to each
other.
If this were the case, Penn
sylvania consumers do not have
the choice to switch products based
solely on relative changes in fluid
milk prices. If product switching
occurs, and the figures seem to
, indicate that it certainly did bet
ween whole and 2 percent milk, it
does so due to factors other than
changes in relative prices.
Other Interpretations
The price of cola and per capita
income did not have a significant
influence on the consumption of
any of the fluid milks. Whatever
the relationship between the prices
of cola and fluid milk, consumers
do not appear to substitute bet
ween them.
(Turn to Page A 37)
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