rbst and the U.S. Dairy Industry: What can we Learn?
rbST and the U.S. Dairy Industry: What can we Learn? Leslie Butler, Henry An and Lovell Jarvis Dept of Agric & Res Econ University of California-Davis...
rbST and the U.S. Dairy Industry: What can we Learn? Leslie Butler, Henry An and Lovell Jarvis Dept of Agric & Res Econ University of California-Davis
What is rbST? • rbST is recombinant bovine Somatotropin • It is the artificial analog of bGH or Bovine Growth Hormone • bGH is a naturally occurring hormone • produced in the pituitary gland of a cow. • When extracted from the pituitary gland of a cow, it increases milk production in the recipient cow
What is rbST? • It takes the pituitaries of 25 cows to get enough bGH to dose 1 cow for 1 day • Obviously impractical and not economically feasible • Dr. Dale Bauman, Cornell University, successfully transferred the gene responsible for bGH production from a cow to a bacterium • Thus, multiply bacteria commercial quantities at feasible costs
Advantages of rbST • Increases milk production 10%-20% • Can result in a 10% – 15% increase in feed efficiency • rbST appears to be safe for cows • The milk from cows treated with rbST also appears to be safe for human consumption.
Some negatives of rbST • At first, it had to be administered by injection every day. – This was a problem for producers – It was fixed when Monsanto deesigned a 14 day injection
• The name bGH was associated with a “hormone” – This was fixed by changing it’s name to rbST
Other properties of rbST • Selection of cows for higher milk production was thought to be associated with higher production of bST in cows. • By the same logic, since high production cows are notoriously difficult to get pregnant, it was also thought that injecting rbST would make them more difficult to get pregnant.
In the beginning…. Adoption and impacts of rbST • Prediction of adoption rates was very high • Characteristics of producers who would adopt rbST in the beginning: – – – –
Younger producers Better educated Operators of larger dairy farms Skilled managers who managed larger dairies with higher than average milk production per cow
• Predicted profitability was relatively high
Milk producers’ likelihood of using rbST when it becomes commercially available. % of Total Respondents 1987
1988
1989
1990 *
1991 *
1992 *
1993 *
42.3
55.0
47.7
33.1
32.2
28.4
30.1
8.5
3.6
2.9
5.9
4.3
6.6
4.1
Would wait
33.8
51.4
44.8
27.2
27.9
21.8
26.0
Would not use
29.2
27.0
44.8
57.4
53.8
56.2
62.3
Uncertain
28.5
18.0
7.6
9.4
14.0
15.4
7.5
Prospective Users Would immediately
use
*Larger sample Note: "Uncertain" category in Table 1 includes those who reported they would use rbST only if conditions in the dairy industry were such that they felt they could only remain competitive by doing so.
Sobering reality…. Present Situation • Actual adoption rates were much lower than predicted……
Table 2. Estimated adoption rates of rbST on U.S. dairy operations, 2005 Group
Farms Adopting (%)
U.S.
16.9
Upper Midwest
15.3
Northeast
18.0
Corn Belt
20.4
Appalachian
11.9
Southeast
25.2
Southwest
15.4
Pacific
16.9
Size of Operation Fewer than 50 cows
2.2
50-99 cows
15.6
100-499 cows
36.7
500-999 cows
42.9
1000 or more cows
44.9
Sobering reality…. Present Situation • Actual adoption rates were much lower than predicted…… • Large percentage of dairy producers were against it from the beginning….
Milk producers’ likelihood of using rbST when it becomes commercially available. % of Total Respondents 1987
1988
1989
1990 *
1991 *
1992 *
1993 *
42.3
55.0
47.7
33.1
32.2
28.4
30.1
8.5
3.6
2.9
5.9
4.3
6.6
4.1
Would wait
33.8
51.4
44.8
27.2
27.9
21.8
26.0
Would not use
29.2
27.0
44.8
Uncertain
28.5
18.0
7.6
57. 4
53. 8
56. 2
62. 3
Prospective Users Would immediately
use
9.4
14.0
15.4
7.5
*Larger sample Note: "Uncertain" category in Table 1 includes those who reported they would use rbST only if conditions in the dairy industry were such that they felt they could only remain competitive by doing so.
Sobering reality…. Present Situation • Actual adoption rates were much lower than predicted…… • There were problems associated with using rbST • Many producers started to disadopt rbST
Table 3. Estimated disadoption rate of rbST on U.S. dairy operations, 2005
Group U.S. Upper Midwest Northeast Corn Belt Appalachian Southeast Southwest Pacific Size of Operation Fewer than 50 cows 50-99 cows 100-499 cows 500-999 cows 1000 or more cows
Table 4. Characteristics and production practices of rbST adopters and disadopters, 2005 Item Adopters Disadopters Farm operator Age (years) 48 50 Experience (years operating)** 19 24 Completing college (percent) 27.8 20.8 Out of business by 2010 (percent) 49 60.2 Farm business Milk cows (head)** Milk production (hundredweight per cow)**
328
228
220
174
Dairy production practices (percent unless specified) Computerized milking system 13.7 Milking more than two times per day** 31.3 Genetic and breeding program** 95.6 Computerized feeding system** 21.2 Consulting nutritionist 95 Time spent milking (hours per day)** 9.36 Consult veterinarian 92.9 Individual cow production records** 89.5 On-farm computer use 61.5
8.1 7.9 87.7 7.1 89.1 6.87 89.2 66.8 46.7
Why would producers disadopt? • rbST not profitable? – Feed costs and milk prices not conducive to rbST use – Response rates highly variable, inconsistent – Not cost effective – producers cannot monitor feed intake – Monopoly pricing of product leaves no rent for producer
• Concerns about rbST
Concerns about rbST expressed by respondents, by rbST use status (Percentage of respondents), 2002 Percentage of respondents Regular Irregular
Might
Never
Total
Count
% with concerns*
94
100
98
98
97
522
Adverse prices**
28
33
17
39
33
510
rbST not safe***
4
11
4
25
15
510
Burnout***
44
75
52
71
63
510
Not cost effective*
34
46
46
33
37
509
Insufficient research**
5
12
13
17
13
510
Injection of cows***
25
29
28
24
26
510
Reproductive problems
39
50
54
60
52
510
Public Opinion
45
45
57
54
50
510
Other
16
17
9
21
18
508
* indicates the significance of a chi-square test for the difference between the variable and rbST use status *** = significant at the 99% level; ** = significant at the 95% level; * = significant at the 90% level
Why would producers disadopt? • rbST not profitable? – Feed costs and milk prices not conducive to rbST use – Response rates highly variable, inconsistent – Not cost effective – producers cannot monitor feed intake – Monopoly pricing leaves no rent for producer
• Concerns about rbST • Better ways to increase milk production and increase profits
Management We are becoming increasingly convinced that the main factor that was overlooked were the changes in management required to successfully adopt and use rbST – – – – – –
Injections required More feed required rbST makes cows “high” stress Reproductive problems, hard to get pregnant Unreliable response rates Inability to monitor feed costs, thus cost effectiveness
and the future?……looks bleak • National adoption rates have reached a plateau • Strong market differentiation occurring – organic milk, rbST-free milk, vs. conventional milk • Studies show consumers willing to pay more for differentiated products • Processors have reacted by increasing the demand for rbST-free milk • Labeling issues exacerbate differentiation
So…what lessons have we learned 1. Don’t underestimate the importance of management and changes needed to adopt. 2. Product pricing should not be “monopoly” pricing – but leave sufficient rents for adopters. 3. Technology should not allow product differentiation to occur based on production process
Lessons continued 4. Resources should be devoted to producer (user, adopter) and product consumers education and understanding. 5. Focus should be on quality-enhancing technologies rather than cost-saving technologies favoring producers only
