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CONTENTS
Dairy Check-off Investments for New Uses for Whey
Tables
Next NEC63 Meeting
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Tables and Figures
Table 1 - Simulation Results: The Annual Effects
of a Three Percent R&D-induced Increase in Whey Demand
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| |
Percent Change |
| Prices |
|
| Whey |
2.86 |
| Cheese |
-0.28 |
| Other Dairy |
0.03 |
| Raw Milk |
0.04 |
| Quantities |
|
| Whey |
0.14 |
| Cheese |
0.14 |
| Other Dairy |
-0.01 |
| Raw Milk |
0.04 |
| Revenue |
|
| Whey |
3.40 |
| Cheese |
-0.18 |
| Cheese and whey plant2 |
0.21 |
| Other Dairy |
0.02 |
| Raw Milk |
0.8 |
| $ million (year 2002 dollars) |
| Gross Annual benefits, US Milk Producers3 |
9.96 |
| Gross Annual benefits, CA Milk Producers3 |
1.85 |
| Gross Annual benefits, Total4 |
42.30 |
1These calculations are based on the parameters discussed in
the text.
2Based on an average of 11 percent of cheese plant revenue
from whey.
3Calculated as the change in producer surplus resulting
from demand for whey, but excluding producers' cost of the research
program
4Gross annual benefits to producers, processing and marketing
firms, and consumers, excluding cost of the research program.
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Table 2 - Present Value Benefits and Costs of R&D
for New Uses of Whey Protein
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| |
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Total |
U.S.
Producers |
California
Producers |
| Present Value, Gross Benefits |
2002$ million |
528.73 |
127.39 |
23.73 |
Attributing 100 percent of research costs to three marketed applications |
| Present Value, Research Costs2 |
2002$ million
|
3.80 |
0.92 |
0.60 |
| Present Value, Net Benefits3 |
2002$ million
|
524.93 |
126.47 |
23.13 |
| Benefit-Cost Ratio |
|
139 |
139 |
40 |
| Internal Rate of Return (IRR)4 |
percent per annum
|
36 |
34 |
25 |
Attributing 50 percent of research costs to three marketed applications3 |
| Present Value, Research Costs2 |
2002$ million
|
1.90 |
0.46 |
0.30 |
| Present Value, Net Benefits3 |
2002$ million
|
526.82 |
126.93 |
23.43 |
| Benefit-Cost Ratio3 |
|
278 |
277 |
79 |
| Internal Rate of Return (IRR) |
percent per annum
|
42 |
39 |
29 |
Note: All present values in millions of 2002 dollars, and based on
a real discount rate of four percent per annum.
2 We estimate that the producers' cost of the research
program is 41 percent of the total check-off investment. Our estimate
of the producer incidence of the check-off, 41 percent, is based on
an elasticity of milk supply of 1.0, an elasticity of milk demand
of -.05, and an elasticity of demand for raw milk of -.35. We estimate
California producers' costs based on the share of the total check-off
investment that comes from California milk sales.
3Because of rounding, net benefits may not exactly equal
gross benefits less costs. Also because of rounding, the benefit-cost
ratio with 50 percent cost attribution may not be two times the benefit-cost
ratio with 100 percent cost attribution.
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