The main objective of this investigation was to analyze the factors that are negatively affecting the Milk Industry in Puerto Rico. The total production of milk is decreasing each year and the fresh milk demand is declining. On the other hand the consumption of UHT milk and low fat milk are increasing. Another problem is that the dairy farmer receives less income by each liter of surplus milk. The data obtained for this study was analyzed and found that the main factors affecting the consumption of fresh milk are the flavor, to be healthy, and the retail price of milk. The main factors that affect the consumption for UHT milk are the packing and convenience, retail price, and the flavor. The fresh milk obtained a price elasticity of 0.76, which indicates, that is inelastic and UHT milk obtained a price elasticity of 1.20, which indicates that is elastic. In other words, the consumers of UHT milk are more sensitive price changes in contrast with the consumers of fresh milk. It was found that the positioning of the UHT milk compared with fresh milk is the following: the UHT milk is cheaper, has a better package, is equal of healthy, has an equal freshness, has the same quality but has worse flavor than fresh milk. In our sample, the exclusive consumer of fresh milk is of both genders (female and male) with an average age of 40 years. Their education level is a Bachelor degree. They are employees in the labor force of the country and are married. Their family is composed of three persons with a person of less than 18 years living in the home. The average income of their family is $19,395. They live in a rural zone. The exclusive consumer of UHT milk is feminine, with an average age of 38 years. Her level of education is under High School. Is an employee in the labor force of the country and is married. Her family is composed of four persons with a least one person of less than 18 years living in the home. The average income of her family is $19,632. She lives in a…
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