Pricing of raw milk based on main dairy products in the Iran market

Document Type : Research Paper

Authors

1 Former M.Sc. Student, Department of Animal Science, Collge of Agriculture, Isfahan University of ‎Technology, Isfahan, Iran

2 Associate Professor, Department of Animal Science, Collge of Agriculture, Isfahan University of ‎Technology, Isfahan, Iran

3 Ph.D. in Industrial Engineering, Sourcing and Purchasing Director, Solico Kalleh Company, Tehran, Iran

4 Department of Animal Science, Faculty of Agriculture, Isfahan University of Technology, Isfahan-Iran

Abstract

A multiple-component pricing (MCP) method for the purchase of milk by dairy processors in Iran was developed and compared with the current procedure, reference on percentage differential pricing (PDP) method. Data on the quantity and quality of raw milk and dairy products, and economic data relating to the sale prices of dairy products and processing costs for the Iran dairy market in 2017 were used. Cheese, cream, skim milk powder and liquid milk were the reference dairy products. After calculation of net return for each reference product, and consideration of composition and total production share, economic importance for milk fat and protein were estimated using weighted least square method. Economic values for each percent of milk fat and protein were estimated as IRR 2,741 and 1,311 respectively, with a total value of 12,704 IRR for 1 kg of basal milk (3.2% fat, 3.0% protein); this was slightly higher than the current PDP of 12,500 IRR. The effect of including milk composition (quality factors) in the MCP created a differential between milk of the highest and lowest quality that was more than twice that of using the PDP. This illustrates the importance of encouraging the adoption of MCP for dairy processors and farmers in Iran to take into account the pricing structure of the end-products. A more realistic pricing structure for milk based on the protein and fat content would encourage comparison of the value of different products (e.g. milk products vs. meat) for Iranian consumers. 

Keywords

References

  1. Breen, J., Wallace, M., Crosse, S. & O'Callaghan, D. (2007). A new direction for the ‎payment of milk: Technological and seasonality considerations in multiple component milk ‎pricing of milk (Liquid and Manufacturing) for a diversifying dairy industry. Retrieved May, 5, ‎‎2018, from https://t-stor.teagasc.ie.‎ ‎
  2. Cropp, R. & Wasserman, W. (1993). Issues and options for using multiple component ‎pricing to set pricing in Federal milk marketing orders. Retrieved Jaunary, 11, 2000, from ‎https://pdfs.semanticscholar.org.‎
  3. ‎De Vries, A. & Feleke, S. (2008). Prediction of future uniform milk prices in Florida ‎federal Milk Marketing Order 6 from milk futures markets. Journal of Dairy Science, 91, 4871- ‎‎4880.‎
  4. ‎Garrick, D.‎‏ ‏J‏.‏‎ & Lopez-Villalobos, N. (2000). Potential for economic benefits to the ‎producer from altering the composition of milk. BSAP Occasional Publication, 25, 93-108.‎
  5. ‎Geary, U., Lopez-Villalobos, N., Garrick, D. J. & Shalloo, L. (2012). An analysis of the ‎implications of a change to the seasonal milk supply profile in the Irish dairy industry utilizing a ‎seasonal processing sector model. Journal of Agricultural Science, 150, 389-407.‎
  6. ‎Geary, U., Lopez-Villalobos, N., Garrick D. J. & Shalloo. L. (2010). Development and ‎application of a processing model for the Irish dairy industry. Journal of Dairy Science, 93, ‎‎5091-5100.‎
  7. ‎Hillers, J. K., Nielsen, V. H., Freeman, A. E., Dommerholt, J. & Deiter, R. E. (1980) Value ‎of fat and protein in producer milk. Journal of Dairy Science, 63, 322-327.‎
  8. ‎IFCN Dairy. (2016). International Farm Comparison Dairy Network [Online]. Available at ‎https://www.ifcndairy.org. (accessed  10 June 2016).‎
  9. ‎Jesse, E. & Cropp, R. (1994). USDA’s Recommended Decision‏ ‏on Multiple Component   ‎Pricing‏ ‏for Midwestern Federal Milk Marketing Orders. Retrieved February 15, 2018, from ‎http://ageconsearch.umn.edu/record/12702. ‎
  10. ‎Jesse, E. & Cropp, R. (2008). Basic milk pricing concepts for dairy farmers. Retrived June ‎‎10, 2017, from https://cdn.shopify.com/s/files/1/0145/8808/4272/files/A3379.pdf. ‎
  11. ‎Manchester, A. C. & Blayney, D. P. (2001). Milk pricing in the united states. ‎Agricultural Information Bulletin, No, 761, 24 pp.‎
  12. ‎Murphy, S. C., Martin, N. H., Barbano, D. M. & Wiedmann, M. (2016) Influence of raw ‎milk quality on processed dairy products: How do raw milk quality test results relate to product ‎quality and yield? Journal of Dairy Science, 99, 10128-10149. ‎
  13. ‎Prathap, P., Archana, P, R., Aleena, J., Sejian, V,. Krishnan, G., Bagath, M.,  Manimaran, ‎A., Beena, V., Kurien, E, K., Varma, G & Bhatta, R. 2017. Review heat stress and dairy cow: ‎impact on both milk yield and composition. International‏ ‏Journal of Dairy Science, 12, 1-12.‎
  14. ‎Sadeghi-Sefidmazgi, A., Zare Bidaki, M., Shirvani Brojeni, N. & Darzei Larejanei, Sh. ‎‎(2016). Milk pricing in Iran: Challenges and Solutions. Iranian Journal of Animal Sciences, 19, ‎‎57-66. (in Farsi)‎
  15. ‎Sneddon, N., Lopez, V. N., Hickson, R.  & Shalloo, L. (2013). Review of milk payment ‎systems to identify the component value of lactose. In: Proceedings of the Conference: 73rd ‎Annual Meeting of the New Zealand Society of Animal Production, At Hamilton, New Zealand, ‎‎73, 33-36.‎
  16. Tavakolnia, M. (2018)Pricing of Raw Milk Based on High Consumption Dairy Products in the Market. M.Sc. Thesis. College of Agriculture, Isfahan University of Technology, Iran. (in Farsi)
Iranian Journal of animal Science
Volume 51, Issue 1
May 2020
Pages 9-16

Files

History

  • Receive Date: 15 August 2019
  • Revise Date: 02 February 2020
  • Accept Date: 08 February 2020

Share

How to cite

Statistics