Milk Check Money
What determines the price farmers receive for Grade A milk?
By Geoffrey A. Benson, Ph.D.
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Table 1. U.S. milk supplies and utilization, 1999
Item
Supply
Amount
Percent
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The U.S. market for dairy products
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Table 2. Commercial disappearance of selected dairy products, United States,
1980–99
Item
1980
1999
PLOOLRQVRISRXQGV
Average
annual change
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Table 3. Economic factors affecting U.S. dairy product demand, 1980–99
Item
1980
1999
Average
annual change
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Milk production in the United States
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Table 4. U.S. milk production, 1980–99
Item
1980
1999
Average
annual change
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Table 5. U.S. milk production, by region, 1980–99
Region
1980
1999
—Percent of U.S. total—
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Table 6. Farm costs and returns of producing milk, United States, 1980 and
1998
Item
1980
1998
OE
Gross returns
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Cash expenses
Total economic costsD7RWDOFDVK
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6RXUFHMilk Costs and Returns(FRQRPLF5HVHDUFK6HUYLFH86'$6HSWHPEHU
Table 7. Farm costs and returns of producing milk, by region, 1998
Region
Gross
returns
Cash
expense
Net
cash
Total
economic
costs
Returns to
management
and risk
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Figure 1. Federal Dairy Support Price & MinnesotaWisconsin or Basic Formula Price, Monthly,
1975-1999
18
M-W or BFP
Price
16
$/100lb.
14
12
10
8
Support Price
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
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93
94
95
96
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Figure 2. Average Daily Milk Production, by
Month, 1997-99
460.0
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450.0
440.0
430.0
420.0
410.0
400.0
J
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Figure 3. Federal Order Milk Markets, effective January 1, 2000
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Figure 4. Carolina Order Mailbox Prices and the
BFP Lagged 2 Months, 1996-99
20.00
BFP
Mailbox Price
18.00
$/100 lb.
16.00
14.00
12.00
10.00
8.00
1996
1997
1998
1999
State regulation
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Figure 5. The sequence of events that determines the price individual dairy
farmers receive for milk
Market Conditions
Government Programs
Wholesale Dairy
Product Prices
Milk Component
Values
Class I & II
Differentials
Class III & IV
Component Values
FMMO Minimum
Pool Prices
Co-op Over- Order
Premiums
Other Premiums & Deductions
Mailbox Price
Published by
North Carolina Cooperative Extension Service
Distributed in furtherance of the Acts of Congress of May 8 and June 30, 1914. Employment and program opportunities are
offered to all people regardless of race, color, national origin, sex, age, or disability. North Carolina State University, North
Carolina A&T State University, U.S. Department of Agriculture, and local governments cooperating.
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