U.S. Household Demand System Analysis for Dairy Milk Products and Plant-based Milk Alternatives
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Various demographic factors, specifically household income, household size, region, age and presence of children as well as age, education, ethnicity, and race of the household head significantly affect the budget shares for these products. Participation in the WIC program, the pandemic, seasonality, and year-to-year effects also are important determinants of demand for these products. We offer insights to stakeholders in developing demographic-specific targeted marketing strategies designed to increase household purchases of milk products. Ultimately, our findings aid in developing a holistic approach to food policy, integrating economic, health, and environmental objectives to support balanced and sustainable dairy and PBMA markets.
In the recently published article “U.S. Household Demand System Analysis for Dairy Milk Products and Plant-Based Milk Alternatives,” Oral Capps, Jr., and Lingxiao Wang, from Texas A&M University discover the demand interralationships among traditional white milk, traditional flavored milk, lactose-free milk, organic milk, and plant-based milk alternatives.
The authors say “Based on a rigorous analysis involving the Quadratic Almost Ideal Demand System (QUAIDS) pertaining to household purchases of milk and milk alternatives over calendar years 2018 to 2020, the demand for dairy milk products is elastic (sensitive to price changes), but the demand for PBMA is inelastic (not sensitive to price changes). The various milk categories are substitutes with two notable exceptions. Traditional flavored milk and PBMA as well as lactose-free milk and organic milk are complements. Lactose-free milk is the best substitute for traditional white milk and vice versa. Lactose-free milk and traditional white milk are the best substitutes for traditional flavored milk. Traditional white milk is the best substitute for organic milk and for PBMA.”
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ABOUT AAEA: Established in 1910, the Agricultural & Applied Economics Association (AAEA) is the leading professional association for agricultural and applied economists, with 2,500 members in more than 60 countries. Members of the AAEA work in academic or government institutions as well as in industry and not-for-profit organizations, and engage in a variety of research, teaching, and outreach activities in the areas of agriculture, the environment, food, health, and international development. The AAEA publishes three journals, the Journal of the Agricultural and Applied Economics Association (an open access journal), the American Journal of Agricultural Economics and Applied Economic Perspectives & Policy, as well as the online magazine Choices and the online open access publication series Applied Economics Teaching Resources. To learn more, visit www.aaea.org.
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