Economic, Resource, and Environmental Consequences of Changes in By-Product use by Dairies

• Agricultural Economics Workshop

Date and Location

Thursday, October 29, 2020, 4:10 PM - 5:30 PM

Abstract

By-product feeds are widely used by dairy farms, especially in places with diverse crop agriculture. For example, more than 70 distinct by-product feeds are used in California dairy rations—ranging from manufacturing waste like brewery spent grains to first stage processing of farm products, such as almond hulls and cotton seed. Some of these by-products are major contributors to dairy feed rations. In this paper we develop and apply stochastic simulation models of by-product supply from crop industries and demand for by-product feeds from dairy farms. We simulate the likely effects of (a) reductions in the demand for the by-product from dairies, say due to a decline in the size of the local dairy industry, and (b) effects of reduction in supply of the by-products that are available to dairies. Results indicate that large changes in demand for, or supply of, almond hulls lead to quite small changes in the prices or quantities of milk and almonds. However, we find that large by-product demand shifts can have substantial resource use and environmental consequences.