This report examines the responsiveness of fluid milk sales to
milk advertising in the New York City, Albany, Syracuse, Rochester,
and Buffalo markets. Fluid milk demand equations for New York
City, Albany, Syracuse, Rochester, and Buffalo were estimated
with monthly data from 1986-2000, which included generic milk
advertising expenditures Generic milk advertising had a positive
impact on milk sales in all markets, and was statistically significant
in three out of the five markets. The model was then simulated
to determine the impact of the New York state portion of advertising
expenditures on producer milk prices and returns. A benefit-cost
ratio was also computed for each market, and the weighted average
for New York state was equal to 2.12 indicating that every dollar
invested into New York state generic milk advertising returned
$2.12 back in extra Class I revenue to farmers.
* The authors are professor and research associate, respectively,
in the Department of Agrciultural, Resource and Managerial Economics
at Cornell University. Funding for this project came from the New York
State Dairy Promotion Order. The authors thank members of the New York
Dairy Promotion Advisory Board for useful suggestions on earlier versions
of this report.
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