Saturday, May 29, 2010

Classification of milk

There is quite a bit of discussion about how many classes of milk should be out there. This raises at least two questions. First, should farm milk price be based on the value of the product or as some say they don't care what happens to the milk after it leaves their farm as long as they get a "fair" price.

However, the farmer has a real interest in all the milk being used at the highest value.

Secondly, in the early days of milk pricing fluid milk was the product with the most value. So, one could say there has always been a relationship between the farm price and the consumer price. Well, at least until recent years.

In the most recent Dairy Market News, condensed skim solid for the Northeast are listed as, $1.20-1.30 per pound of solids. there are 8.6 pounds of skim solids per hundredweight. The April Class II skim price was $8.52.

If the condensed skim is converted to yogurt the retail value is just under $50 per hundredweight. On top of that there is still about $9 of cream wholesale.

If you put the same milk in a gallon jug, you have $36 retail value - $23 less than the same milk going to yogurt.

In the old days, the value of farm milk was based on the highest retail product and the declining shelf life of the the rest.

Perhaps, we need more not fewer classes of farm milk.

1 comment:

  1. I would agree with that as long as we are stuck using end-product pricing, which has caused use keep up with all the different milk products. I believe it would be better to price milk based on what it cost to produce and then let the processor (or consumer) decide which product is worth more. Of course there is little chance of that happening now that the processing industry is cutting a fat hog.