@conference {40640,
	title = {Farm management implications of a seasonal price differential for factory supply milk production},
	booktitle = {Proceedings of the New Zealand Society of Animal Production},
	volume = {54},
	year = {1994},
	month = {Jan},
	pages = {383-388},
	publisher = {New Zealand Society of Animal Production},
	organization = {New Zealand Society of Animal Production},
	abstract = {A number of New Zealand dairy companies have proposed a differential  
pricing scheme that would discount the price paid for "peak milk" and provide  
a premium for milk supplied "off peak".  A linear programming model was  
developed to analyse the on-farm impact of a differential milk pricing scheme.   
The differential pricing scheme used in the study was based on a dairy  
company where farmers supplied 30\% of total milk during the  
October/November peak and 70\% during the off-peak period (peak-to-shoulder  
ratio of 30:70).  The impact of three price differentials of $0.82/kg MS,  
$1.63/kg MS and $2.45/kg MS between peak and off-peak milk was analysed.   
The results showed that if the case study farmer made no management changes  
to his system, there would be little change in the farm gross margin per hectare  
under a differential pricing scheme, provided the farm had a peak-to-shoulder  
ratio close to that used by the dairy company to set the price differential.   
However, returns declined by $182/ha, if the farm peak-to-shoulder ratio was  
40:60 and increased by $185/ha if the ratio was 20:80.  A price differential of  
at least $1.71/kg milksolids ($3.00/kg MF) between peak and shoulder milk, was  
required to reduce peak milk production significantly.  As the price differential  
increased, the LP model selected solutions that reduced both total milk  
production and the ratio of peak-to-shoulder milk.  Management changes  
selected to modify the pattern of milk production included; a reduction in  
stocking rate, a shift to an earlier calving date (and then a split calving),  
an increased lactation length, higher cow condition at calving and greater use  
of supplements. 
 },
	issn = {1176-5283},
	author = {Gray DI and Yuretich PA and Lynch GA}
}
