SIMULATING BST INTRODUCTION IN CALIFORNIA FOR DAIRY POLICY ANALYSIS

An econometric model is estimated to simulate the impact of introducing bovine somatotropin (BST) on the California dairy industry. Forecasts of 1991-94 milk production and prices without BST are compared to those with BST under the 1990 Farm Bill. The effects are evaluated under a range in assumptions, given the uncertainty about BST's commercial benefits and costs. Results indicate the aggregate returns of BST introduction for California are positive, but small, assuming no adverse consumer reaction.