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PATS Research Report No.9

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Seven years have passed since the U.S. government approved the commercial use of recombinant bovine somatotropin (rBST), a synthetic relative of a naturally-occurring growth hormone that stimulates milk production in cows. Prior to approval, national controversy over rBST, more popularly known as BGH (bovine growth hormone), raged for almost a decade (Barham, 1996). Opponents and proponents alike envisioned rBST as a juggernaut technology, one that would change the dairy industry in dramatic ways, first and foremost by substantially raising herd productivity and overall milk production and then perhaps by driving away consumers from dairy products. With these concerns in mind, opponents also believed that rBST’s effects would drive tens of thousands of (smaller-scale) dairy farmers out of business by both depressing milk prices and rendering small-scale producers less competitive. Meanwhile, proponents hailed the technology as a valuable management tool for improving herd performance and the efficiency of dairy farms of any scale. At the peak of the controversy, the U.S. Congress debated whether to overturn the Food and Drug Administration’s approval, and the Senate demanded a special, full-length report by the Office of Management and Budget (1994) assessing the potential impacts of rBST on the U.S. dairy industry and society. Given the intensity of the debate in the early 1990s, it is noteworthy that rBST’s seventh anniversary as a commercial product passed with hardly a mention from any of the erstwhile protagonists, even in Wisconsin which had been at the center of the national tempest. These “after-the-storm” conditions reflect the fact that markets and regulations shaping rBST use have been relatively stable for several years now, with most demand-side uncertainties surrounding U.S. consumer reaction largely dissipated, at least for the time being. Instead of chaos and disruption, what emerged quickly in Wisconsin, and in some other major dairy producing states (including California and Minnesota), were segmented markets for fluid milk as well as for some processed products (cheeses, soft products, etc.). These market niches have held steady or perhaps receded in certain instances. Generally, retailers and processors, respectively, use signs above the dairy case and product labels to signal to consumers the availability of dairy products from cows not treated with rBST. For dairy farmers, this marketplace stability means that rBST adoption decisions are now probably based on their own adoption preferences, production strategies, other farm-level factors, and the local presence (or lack of) segmented markets for dairy products rather than uncertainties about consumer reaction.