The Demand for Fluid Milk Products in the U.S.: A Demand Systems Approach

The demand for fluid milk products has changed dramatically in recent years not only in terms of lower levels consumed but also in terms of the composition of the products consumed. A time-series based demand system analysis of the market for lowfat and whole milk products is developed incorporating the effects of changes in prices and demographic characteristics. From the estimated model, the impacts of future changes in the demographic profile of the U.S. population on fluid milk demand are analyzed. Key words: fluid milk demand, demand systems, demographic scaling. The per capita consumption of fluid milk products has declined steadily over the last three decades from 291 pounds in 1966 to less than 236 pounds in 1987, a 19 % decline. Coin-cident with this decline in overall fluid milk demand, there has occurred a change in de-mand away from whole milk beverage prod-ucts towards reduced-fat milks such as lowfat and skim milk. Since 1966, lowfat milk con-sumption per capita increased from less than 34 pounds to more than 113 pounds in 1987 while the consumption of whole milk declined from 251 pounds to 110 pounds.' Because of the change in fluid milk demand away from whole milk products, on a whole-milk-equivalent basis, the decline in milk con-sumption has been greater than the declin