With the 2009 milk prices still fresh on everyone’s mind, there has been increased interest in ways to limit milk price volatility. Using SERF, this paper determined some dairies are willing to pay for limited milk price volatility and found a value they are willing to pay using risk premiums.

A quarterly econometric model of the U.S. dairy sector has been developed for use in short-to medium-term outlook and policy analyses. Simulations of the model indicate that it performs quite well both during the estimation period and during an eight-quarter interval beyond the estimation...