Economic and Marketing INFORMATION
FOR
INDIANA
FARMERS
Prepared by Members of the Agricultural Staff of Purdue University, Lafayette, Indiana. January 21, 1955.
How Much Milk Can We Sell In 19657
By
PAUL L.  FARRIS, Agricultural Economics
An attempt is made in this
article to forecast the probable
increase in the market outlet for
milk in the next 10 years. This
is estimated to average about 1
percent per year. Total production may have a tendency to increase faster than expected demand. The implications which
this may have for Indiana dairymen are pointed out and will be
developed further, in the light of
an analysis of long run milk supply, in a later article.
IF YOU THINK your long-range
Marm plans may include dairying,
one of the most important questions
you must ask yourself is, "What kind
of market will I face in the years
ahead?" The other big question deals
with the cost side of dairying. "How
good am I in competition with
other dairymen?" Your answer to
this question might be that you could
compete very well if you wanted to,
hut with your farm and your management ability you could make more
money raising hogs, or feeding beef
cattle—and you might be right.
But if dairying is an enterprise
which holds some attraction for you,
let s take a look at the long-range market potential for milk. In a later article
we plan to discuss some of the big
changes which appear likely to affect your costs, or that might give
y°u a competitive advantage over
your neighbor.
On the demand side, two shining
rays of hope appear on the future
horizon. One of these is our rapidly
growing population and the other is
the upward trend in per-person real
income. These rays are clouded a
little by changing consumer preferences, caused by competition from
butterfat substitutes, but the net effect is favorable.
Population  in  1965
Let us take the year 1965 as a
reference point. The U. S. Congress
Joint Committee on the Economic Report foresees a U. S. population of
approximately 190 million persons in
1965, compared with about 163 million now. What's more, a larger proportion of the population in 1965 will
be in age brackets where they will be
subject to induced consumption programs by virtue of being in school or
in the army (Table 1). To the extent
that institutional feeding programs
cause these youngsters to drink more
milk than they otherwise would, a
larger proportion of the population
being in the 10-24 year age group
would result in greater per capita
milk consumption in 1965.
Table  1.  Estimated  Distribution of
the U. S. Population by Age Groups,
1953 and  1965
Age Group
1953
1965
yeart
percent
percent
0- 9
20.7
19.8
10-24
21.7
26.0
25-44
29.2
24.4
45-64
20.3
20.6
65+
8.3
9.1
In addition, we might see some increase in consumer preference for
milk as a result of school lunch and
other subsidized milk feeding programs. If these are continued, our
young  people  might  want  to  drink
more milk than the rest of us when
they grow up.
Real Income in  1965
Income per person after taxes, in
1965, has been estimated at about
$2,000 (in 1953 dollars) compared
with $1,567 in 1953. It is important
that we consider income, for one of
the largest market potentials for fluid
milk is in the low-income groups. If
More than one-fourth of the
U. S. population will be in the
10-24 age group in 1965 compared with a little over one-fifth
now. These young people are expected to be good customers for
milk.
these low-income groups share in the
rise in real income which is in prospect during the next decade, they will
have more money to spend for milk.
Information as to how much more
milk people will drink when their
income goes up is sketchy at best,
but we are fairly sure people whose
incomes are low will buy more milk
as their incomes rise. People with
higher incomes may not consume any