Some Economic Aspects of the Fluid Milk Industry of Nebraska

Most citizens of Nebraska, especially the dairy farmers who produced milk for city consumption, are currently concerned with the problem of marketing fluid milk.In Nebraska and all over the United States, sales of wholesale milk farmers have been increasing for the past 15 years, while cream sales to creameries have been decreasing. Production of milk in Nebraska is greatest in the eastern part of the state.Likewise, consumption is concentrated in Eastern Nebraska. This is most likely due to Eastern Nebraska’s highly concentrated population as well as the most favorable farm conditions for dairy cows. Most of the bottled milk in Nebraska is pasteurized at the present time and much of it is Grade A.Large distributors are shipping bottled, pasteurized milk to surrounding areas.Many small distributors that have sold raw milk in areas of smaller populations are now out of business because they decided against pasteurizing their milk.The majority of consumers prefer pasteurized milk to raw milk; therefore, pasteurized milk is bought more often than raw. The future effects of soil conservation on the dairy industry in Nebraska will probably be noticed most in the eastern part of the state. Under certain assumptions as to an increase in grass acreage in this area, it is estimated that the area could support increased dairy herds which would increase the total milk production by roughly 100,000,000 to 200,000,000 gallons per year. Seasonal changes in the supply of milk produced for fluid purposes causes a problem for milk handlers.This issue of distribution and supply may force the price of retail milk higher than it would otherwise be. Solutions to this problem include importing milk from out-of-state or creating a seasonal milk pricing plan, to encourage more reasonable pricing. Paper bottling is a recent innovation which seems to be having much success in competition with glass bottling.It appears that this process may have grave implications in its effect on small processors of milk and on the area of distribution.All the possible implications are not clear; however, it is clear that paper-bottling saves space and money in terms of transportation. Advisor: C. Clyde Mitchell, Jr