Economic implications of bovine somatotropin use for the Arizona dairy industry

This study examined the impacts of bST on income of dairy producers in Arizona. The nature of milk production in Arizona, the institutional aspects of the Milk Order, and the supply management program of the United Dairymen of Arizona (the only milk cooperative in Arizona) were considered in the model. Prices declined with increased milk yields from bST. Three dairy enterprise budgets demonstrated that gross revenue minus variable costs initially increased for adopters of bST but declined for nonadopters. If government milk purchase increases cause support price reductions, gross revenues less variable costs would decrease for both adopters and nonadopters but more for nonadopters. Adjustments in size of dairy farms would be required if increased milk production due to bST is large enough to result in decreases in milk price support levels.