(Continued from Page A 1)
Under this system, more money is
going toward the non-solids in
milk. This compensates high
volume herds, but fails-to recog
nize high-solids herds such as
Jerseys and Guernseys.
These farmers, recognizing that
the solids in their herd’s milk is
marketable, are pushing for a
change to component pricing basc
d on the amount of protein in a
herd’s milk.
Jersey and Guernsey breeders
argue that most of the milk pro
duced today goes into manufac
tured dairy products such as
cheese, yogurt, and ice cream and
that fluid whole milk consumption
is down. Milk that has a high
protein, high-fat content yields
more cheese. Therefore, since it is
more efficient for cheese produc
ers to have the high-solids milk,
Jersey and Guernsey breeders feel
they should be rewarded for pro
ducing it.
Component pricing not new
Component pricing isn’t a new
idea. Paying for milk on fat and
solids-not-fat has been going on
since the 19405. Currently Europe
pays for milk on this basis as docs
California and certain areas in the
Midwest.
It has not been popular in the
northeast for several reasons. First,
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most of the dairy herds in the reg
ion consist of Holsteins, which are
long on volume but rather low on
solids. “The current bulterfat pric
ing system benefits Holstein
breeders,” commented Glenn
Shirk, Penn State extension dairy
specialist. “For decades the pricing
structure for milk has been more
attractive for non-solids, which is
what Holsteins have been bred for.
Holstein breeders resist the com
ponent pricing system, which they
don’t see as profitable for them.”
Component pricing hasn’t
caught on yet with most cheese
manufacturers who for some rea
son haven’t recognized the value
of high-solids milk. “Cheese man
ufacturers just aren’t aware that
more protein yields more cheese.
This is partly because they aren’t
set up to segregate the milk and run
comparisons,” said John I. Collins
Jr., district manager for Dairymen
Inc., Middle Atlantic Division, a
milk cooperative in Sykcsvillc,
Md. “We have to increase their
awareness and convince them that
high-solids milk is more efficient
for their uses.”
Because Jersey and Guernsey
breeders arc scattered, it is costly
to gather a load. This cost factor
has kept many co-ops from being
willing to work with high-solids
milk producers in gathering a load
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of high-solids milk.
The roadblocks for component
pricing arc falling away as more
and more farmers arc negotiating
special bonus plans with coopera
tives. Some of the current prog
rams, according to Dr. Jack Kirk
land, extension dairy specialist for
Adams County, include:
•Dairymen Inc. is paying a
group of southern Lancaster Coun
ty farmers 12 cents for every point
of protein above the standard 3.2
percent, a bonus that is lied to the
somatic cell count (SCC).
•Dairylca Inc. has a protein pay
ment program where producers are
paid 13 cents per point for milk"
with a protein percentage over 3.3
percent and with a SCC of less than
350,000 and no antibiotic
contamination.
•Lcprino-Eastern is giving all
producers a premium plus giving
10 cents per point of protein grea
ter than 3.3 percent. The base pro
tein percentage moves higher as
the SCC increases and no protein
premium will be paid for milk with
a SCC higher than 750,000.
•Empire Cheese Inc. has a pro
tein payment plan that is deter
mined on a quarterly basis. The
protein percentage is established
each quarter and currently is 7
cents per point for milk over the
base if the milk meets their quality
standards.
•Sunnydale Farms of Brooklyn,
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N.Y., is paying a 30-ccnt per hun
dredweight premium as well as
paying a protein premium. Their
plan pays 10 cents per point of pro
tein over 3.2 percent.
•Wmhcld Cheese Cooperative
and Farmers Cheese Inc. use end
product pricing to pay producers
for their milk. The formula takes
into account the SCC, casein con
tent (protein), and bu tterfal content
and pays farmers on that basis. The
prices paid also depend on the
wholesale price of cheese and
cream. With the end-product pric
ing, the higher the solids level in
the milk, the higher the price to
producers. The proportion of
cheese products is directly related
to the level of solids in the milk, the
higher the solids, the greater the
output of cheese.
Many dairymen believe compo
nent pricing is an idea whose lime
has almost arrived for the north
east. “I believe that component
pricing eventually will become the
pricing system,” said Shirk.
“There tends to be a movement in
the marketplace in trying to price
most commodities on their true
value in relationship to the desires
of the public.”
Shirk feels that component pric
ing will be adopted slowly because
currently more producers stand to
loose. “But in the long run,” he
added. “The ones that gain will
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have a higher gain than the loss
experienced by the majority of
those that loose.” This monetary
gain will influence fanners to shift
emphasis from volume to solids.
Or, as Dr. Truman F. Graf, agri
cultural economics specialist from
the University of Wisconsin-
Madison said, “Consumers arc
pulling more emphasis on the non
fat solids portion of milk. If the
dairy industry hopes to maximize
per capita sales of dairy products,
it must recognize and react to the
increased consumer demand for
nonfat solids. With the nonfat val
ues included in pricing, individual
farmers would benefit by getting
paid for extra nonfat solids, and
thus encouraged to produce more
nonfat relative to fat and thereby
improve their marketing
situation.”
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