My name is Marin Bozic. I am an Assistant Professor in Dairy Foods Marketing Economics in the Department of Applied Economics at the University of Minnesota.
My research program encompasses four areas: (i) U.S. dairy policy analysis, (ii) dairy risk analysis, (iii) demand analysis and elicitation of consumers' willigness to pay for new dairy foods products and (iv) feasibility assessments of new dairy technologies, processing investments and new products.
I am affiliated with The Midwest Dairy Foods Research Center, one of six national dairy centers whose mission is to develop and transfer new knowledge in dairy foods research that will increase the value of dairy products in the U.S. and ensure its future competitiveness. The Center was established as a partnership among the University of Minnesota, South Dakota State University, and Iowa State University. Research is done in collaboration with academia and industry, both nationally and internationally.
with Christopher Wolf
The purpose of the proposed Dairy Market Stabilization Program (DMSP) is to shorten the duration of low-margin periods and reduce government outlays on dairy margin insurance. However, DMSP can only achieve those goals if producer participation in the proposed dairy safety net is sufficiently high. In 2012, farms with over 1,000 cows accounted for only 2.9% of operations but produced 50.6% of the milk. Therefore, it is of particular interest to understand views of large herd operators regarding participation in proposed dairy programs. To that end, a survey was conducted of dairy farm manager participants at the Dairy Today magazine’s 2013 Elite Producer Business Conference held on November 11-13 in Las Vegas. Eighty-six surveys were completed. The respondents averaged a herd size of 3,351 cows and 2,449 acres of operating farmland.
To examine the influence of program implementation rules on participation rate, participation likelihood was measured under two scenarios: 1) sign up by January 15 for the calendar year that just began and 2) sign-up by March 15 for the forthcoming fiscal year (Oct 1 – Sep 30). Both implementation rules provide the same inherent risk protection effectiveness, but the former rule allows producers to utilize more information about how much risk they will likely face. A sign-up rule that essentially coincides with the start date allows producers to use easily, and more reliably forecasted margins to strategically adjust margin coverage levels. Thus, they can choose less insurance when risks seem small, and buy high coverage levels when low margins are imminent.
For a January 15 signup date for a calendar year program, the share of survey respondents either neutral or leaning towards participating in the Senate and the House versions of the dairy title was 66% and 78%, respectively. Assuming March 15 as the signup date for a fiscal year program, the share of producers neutral or leaning towards participation was 55% and is equal for both the House and the Senate versions of the bill. One way to interpret this is that up to 20% of large producers did not perceive the new safety net as necessary for viability of their business, but would be willing to engage in opportunistic participation in some programs if there are gains to be made.
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