CONSUMER AND MARKET DEMAND AGRICULTURAL POLICY RESEARCH NETWORK

The structure of the NSMS is such milk production quotas and the largest element of the component milk price is based on kilograms of butterfat. [...] Graphical analysis is used to illustrate the underlying structure of the NSMS, the credibility of using an underlying assumption of fixed proportions between total dairy milk and butterfat, and examine the effect of monopoly power at the retail level. [...] The importance of the trend in the relationship is demonstrated by the significant time trend in the regression. [...] Then, the change in the real price of butterfat and the change in the dairy price index were deflated, with 1997 as the base year. [...] Marketing dairy on the basis of butterfat has likely contributed to a strong link between the marketing practices of the Canadian dairy industry and the overall health of Canadians.