Marin Bozic

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.

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.

This is a newly created faculty position created to foster research in areas such as (i) evaluation of the economic value of new product development, (ii) elicitation of consumer preference and willingness to pay for new dairy food products, (iii) evaluation of demand and price analysis of existing and new dairy food products, (iv) assessment of the market penetration and market potential for new products, and (v) feasibility of processing investments for new product development.

with John Newton (lead author), Cameron S. Thraen, Mark Stephenson, Christopher Wolf and Brian W. Gould

This paper reports our analysis, to-date, of expected short-term impacts of two major dairy safety net policy proposals popularly referred to as the Dairy Security Act (DSA) and the Goodlatte-Scott Amendment (G-S). Our results suggest that both DSA and G-S are very effective in providing catastrophic risk insurance and revenue enhancement for farms with stable and moderately growing milk marketings. For sufficiently high DSA participation rate, and sufficiently low price-elasticity of demand for milk in aggregate, the Dairy Market Stabilization Program (DMSP) has the potential to reduce government outlays and accelerate margin recovery in low-margin states of the world, relative to outcomes expected under DSA with low participation rates and high price-elasticity. Furthermore, the DMSP is not likely to provide long-term obstacles to growth for participating farms with an aggressive growth plan unless generous margin insurance induces a long-term oversupply of milk. Our analysis suggests that under the provisions of G-S effective catastrophic margin insurance for aggressively growing farms is limited due to the fixed production history. However, more complete margin risk protection may still be possible using private risk markets to complement government provided insurance. Both programs share contract design features that may result in strategic annual supplemental margin protection sign-up and reduce demand for private risk insurance products - inadvertently increasing policy cost. Under DSA, this problem is somewhat reduced as DMSP provides disincentives for forfeiting supplemental margin insurance in years when anticipated margins are moderately above long run average. The analysis is parsimonious in structural model assumptions and relies on expected market conditions as reflected in Chicago Mercantile Exchange futures and options prices. As such our primary focus is on expected short-run effects flowing from these alternative programs. The long-term impacts of these programs on the growth of milk supply, dairy exports, and liquidity of private dairy risk markets are among important open questions we do not attempt to address.

April, 2013