Analyses of Generic Dairy Advertising, 1984-97

by Noel Blisard, Donald Blayney, Ram Chandran, and Jane E. Allshouse

Generic advertising raised fluid milk sales about 6.0 percent, or 18.1 billion pounds, between September 1984 and September 1997. Sales of cheese rose by about 6.8 million pounds (milk equivalent) in the same period because of increased generic advertising. An assessment of 15 cents per hundredweight of milk sold commercially, mandated by the Dairy and Tobacco Adjustment Act of 1983, funded the advertising. Activities of the National Fluid Milk Processor Promotion Board also contributed to increased milk sales over the past year. Gross returns to dairy farmers between September 1984 and September 1997 were estimated to increase by $3.44 for each dollar spent on generic advertising. This report presents the results of econometric demand models that examined the effect of advertising and other facts on milk and cheese sales.

Keywords: Cheese, fluid milk, advertising, demand, entry, exit, distributed lag, econometrics, simulation, elasticities, Milk Processor Education Program

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