Abstract
A major problem facing the dairy industry is the continued and consistent conversion of manufacturing grade milk to grade A, and the disproportionate effect of this on Class I utilization and, hence, on farm milk blend prices in the parts of the country where most of the grade B is located. Potential supplies of grade A milk are so concentrated and likely to convert to grade A in such substantial quantities that the problem is serious–far more so than in the past. New broader based pooling and pricing procedures which will stabilize interorder blend price relationships and at the same time preserve orderly marketing and deter uneconomic milk movements are needed. The likely economic results of such programs including standby pool, regional pools, national pools, flat Class I pricing and increased Class II prices are analyzed in this paper.
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