Prices received by farmers

prices received
Iby farmers

Manufacturing Grade Milk in Minnesota
and Wisconsin, 1972-74











Pr 1-4 (7-75) July 1975 CROP REPORTING BOARD
STATISTICAL REPORTING SERVICE.U.S. DEPARTMENT OF AGRICULTURE WASHINGTON, D.C.






PRICES RECEIVED BY FARMERS FOR MANUFACTURING GRADE MILK
IN MINNESOTA AND WISCONSIN, 1972-73

The Statistical Reporting Service of the U.S. Department of Agriculture publishes each month
estimates of the average price received by farmers and the average milkfat test for milk of manu-
facturing grade for the preceding month for the two-State (Minnesota-Wisconsin) area. For example,
the price for August 1975 will be reported on September 5, 1975.

These two-States produce over half (53 percent in 1974) of the manufacturing grade milk
marketed in the United States. The estimates relate only to manufacturing grade milk purchased
from farmers and do not include Grade A milk diverted to manufacturing uses. The price concept
used is that represented by dividing total dollars paid to producers, before hauling costs are
deducted, by the number of hundredweight of manufacturing grade milk purchased from farmers. This
is an estimate of the average price for all milk of manufacturing grade delivered in bulk tanks
and in cans, f.o.b. plant or receiving station, before hauling costs are deducted. It includes
bulk tank, quantity, or other premiums paid to producers, but excludes hauling subsidies.

Most of the basic and preliminary data needed for the preparation of the two-State average
price and fat test of manufacturing grade milk are collected by the offices of the Federal-State
Agricultural Statisticians in Minnesota and Wisconsin. These data come from regularly scheduled
monthly reports submitted by plants receiving manufacturing grade milk.

After these data are summarized and analyzed by the Federal-State Statisticians, they are
forwarded to Washington, D.C. for final review by the Crop Reporting Board and consolidation into
the two-State average price and test.

The price and test estimates for a given month are derived from two factors: (1) the
estimated average price and test for the base month, which is the month preceding that to which
the estimate relates, and (2) an estimate of change from the base month to the month to which the
estimate relates.

Estimated Price and Test for Base Month

The level for the base month, which is used as the benchmark is based on reports from about
220 plants in Wisconsin and about 120 plants in Minnesota that purchase approximately 50 percent
of all manufacturing grade milk sold by Wisconsin and Minnesota farmers. These reports give the
total pounds of manufacturing grade milk received from producers, total pounds of milkfat in such
milk and total dollars paid to producers.

The estimated monthly price and fat test for Minnesota and Wisconsin are weighted together by
the total quantity of manufacturing grade milk purchased from farmers in each State. During the
first half of any year these weights are based on data for the same month two years earlier.
During the latter half of the year, weights are based on purchases for the corresponding month in
the preceding year, since later data are available than during the first six months. The quantity
weights, for weighting data for each State in computing the two-State average price, change each
month and vary seasonally. In 1974, the annual average of the monthly volume weights for
Wisconsin was 57 percent of the two-State total, and for Minnesota, 43 percent.

The 340 plants in the sample for the base month are well distributed geographically over
both States, and represent all the major types of processing plants using manufacturing grade
milk. At the end of the year, reports from all manufacturing grade milk plants in each State
indicate close agreement with the monthly prices derived from the 340 plants.

Estimate of Change from Base Month

The estimate of change from the base month to the month to which the estimate relates is
based primarily on reports from a sample of 110 plants distributed in the two-States. These
plant reports are also evaluated in terms of changes from the base month in wholesale prices of
manufactured dairy products and historic price and fat test relationships. Estimated changes in
price and fat test are applied to the State average for the base month to estimate price and fat
test for each State for the month to which the estimates relate.


MFG. GRADE MILK PRICES, JULY 1975


CROP REPORTING BOARD, SRS, USDA






The sample for estimating change from the previous month includes 40 plants in Minnesota and
70 in Wisconsin. Plants in each area were classified according to type of products manufactured,
and sample plants were drawn from each product class in each State. Plants that consolidate or
go out of business are replaced by the same type plant of approximately the same size in the same
general area.

In Minnesota, plants were classified originally into those making (1) butter and by-products
and (2) other dairy products. Because of changing conditions, a new classification of Minnesota
plants was made in 1963. Plants were reclassified into (1) butter and by-products; (2) cheese;
and (3) varied products. Based on this method of classification, in 1974 the butter and by-
products group accounted for 22 percent of all manufacturing grade milk in the State; cheese, 31
percent; and the varied-products group, 47 percent.

In Wisconsin, the plants were divided originally into four major product groups: (1) cheese;
(2) butter and by-products; (3) condenseries; and (4) varied products. In 1973, plants were re-
classified into three major product groups. The proportion of manufacturing grade milk purchased
in 1974 by each product group was: (1) cheese, 85 percent; (2) butter and by-products, 5 percent;
and (3) condenseries and varied products, 10 percent.

In both Minnesota and Wisconsin, the varied products group consists mostly of plants which
make butter, cheese, or other products in such proportions that they cannot be clearly classified
in any one specific group such as primarily butter-making plants, primarily cheese-making plants,
or condenseries.

These percentages are used as weights for combining reported price and milkfat test data by
groups for the monthly manufacturing grade average price and milkfat estimates in each State.
The percentages are based on final plant enumerations for the previous year and are changed once
each year, approximately 5 months after the close of the calendar year, when enumerated data be-
come available.

Data are collected from the 110-plant sample using a questionnaire mailed near the close
of each month. This inquiry is designed to obtain information for the base month and for the
first half of the month relating to: (1) quantity of manufacturing grade milk purchased, (2)
quantity of fat included, (3) dollars paid, if available, (4) average price at average test, and
(5) related information such as quantities purchased in bulk and in cans, and the base price for
3.5 percent milk and point differentials for fat. Space also is provided on the inquiry for the
plant manager's best estimate of the average fat test and milk price for the last half of the
month to which the estimate relates.

Comparison of Current and Final Estimates

The table on page 4 gives a comparison of the current Minnesota-Wisconsin manufacturing
grade milk price at average test with the final estimate combined for the two-States from 1972
through 1974, together with the corresponding comparison for milkfat percentage. The entries
in the column headed "Final Two-State Estimate" are weighted averages of the final monthly prices
for Minnesota and Wisconsin combined, using complete monthly marketing for each State as weights.

For the 3 years 1972 through 1974, the latest years for which complete data are available,
the difference between the current Minnesota-Wisconsin estimates of price per hundredweight and
the final data average 1 cent; the difference in milkfat test average is negligible.

Since the Minnesota-Wisconsin price for use in Federal milk orders is reported on a 3.5 per-
cent milkfat basis, a table is included showing the same comparisons converted to a 3.5 percent
basis. The price at average milkfat test is converted to a 3.5 percent basis using a milkfat
differential pe'r point (1/10 of one percent) that is calculated by multiplying the average price
of Grade A (92-score) butter at Chicago by 0.120. This is the method specified in Federal milk
orders.

Publication

The report for' each month on price per hundredweight at the average milkfat test and on a 3.5
percent basis is issued about the 5th of the following month from the Wisconsin office of the
Statistical Reporting Service, P. 0. Box 5160, Madison, Wisconsin, 53705. This report is avail-
able on request. The price series is also published in the Dairy Market News reports issued by
several offices of the Dairy Market News Service.


M1G. GRADE MILK PRICES, JULY 1975


CROP REPORTING BOARD, SRS, USDA






COMPARISON OF MINNESOTA WISCONSIN MANUFACTURING GRADE MILK PRICE AND MILKFAT TEST WITH
THE TWO-STATE AVERAGE OF FINAL ESTIMATES, BY MONTHS, 1972-74

MINNESOTA : FINAL : DIFFERENCE BETWEEN
YEAR WISCONSIN : TWO-STATES : FINAL TWO-STATE AND
AND : SERIES : ESTIMATES : MINN-WIS SERIES
MONTH PRICE PER : MILKFAT : PRICE PER : MILKFAT : PRICE PER : MILKFAT
: CWT 1/ : TEST : CWT. 1/ : TEST : CWT. 1/ : TEST
1972 DOLLARS PERCENT DOLLARS PERCENT DOLLARS PERCENT
JAN : 5.12 3.69 5.13 3.70 +.01 +.01
FEB 5: .10 3.66 5.13 3.66 +.03 0
MAR : 5.15 3.64 5.14 3.65 -.01 +.01
APR : 5.07 3.63 5.07 3.62 0 -.01
MAY : 5.03 3.61 5.04 3.60 +.01 -.01
JUN : 5.01 3.58 4.99 3.56 -.02 -.02
JUL : 5.04 3.54 5.05 3.55 +.01 +.01
AUG : 5.14 3.58 5.14 3.59 0 +.01
SEP : 5.23 3.66 5.26 3.68 +.03 +.02
OCT : 5.41 3.78 5.45 3.80 +.04 +.02
NOV : 5.59 3.82 5.58 3.81 -.01 -.01
DEC : 5.63 3.76 5.65 3.78 +.02 +.02

SIMPLE AVERAGE
1972 : 5.2100 3.6625 5.2192 3.6667 +.0092 +.0042
1973
JAN : 5.61 3.72 5.63 3.70 +.02 -.02
FEB : 5.57 3.65 5.63 3.65 +.06 0
MAR : 5.65 3.63 5.69 3.62 +.04 -.01
APR : 5.73 3.63 5.73 3.63 0 0
MAY : 5.75 3.62 5.77 3.61 +.02 -.01
JUN : 5.80 3.60 5.77 3.56 -.03 -.04
JUL : 5.83 3.56 5.89 3.53 +.06 -.03
AUG : 6.44 3.56 6.54 3.56 +.10 0
SEP : 7.07 3.66 7.23 3.66 +.16 0
OCT : 7.75 3.77 7.72 3.76 -.03 -.01
NOV : 7.90 3.79 7.99 3.79 +.09 0
DEC : 8.15 3.75 8.17 3.76 +.02 +.01

SIMPLE AVERAGE
1973 : 6.4375 3.6617 6.4800 3.6525 +.0425 -.0092
1974
JAN : 8.28 3.72 8.26 3.72 -.02 0
FEB : 8.27 3.67 8.25 3.66 -.02 -.01
MAR : 8.26 3.64 8.25 3.65 -.01 +.01
APR : 7.84 3.64 7.80 3.65 -.04 +.01
MAY : 7.02 3.62 6.87 3.63 -.15 +.01
JUN : 6.38 3.59 6.41 3.60 +.03 +.01
JUL : 6.34 3.57 6.29 3.53 -.05 -.04
AUG : 6.45 3.57 6.47 3.57 +.02 0
SEP : 6.83 3.67 6.85 3.69 +.02 +.02
OCT : 7.07 3.80 7.10 3.79 +.03 -.01
NOV : 7.03 3.83 7.03 3.82 0 -.01
DEC : 6.64 3.79 6.68 3.78 +.04 -.01

SIMPLE AVERAGE
1974 : 7.2008 3.6758 7.1883 3.6742 -.0125 -.0016

36 MONTHS 6.2828 3.6667 6.2958 3.6645 +.0130 -.0022

1/ AVERAGE PRICE FOR MILK OF AVERAGE MILKFAT TEST.


MFG. GRADE MILK PRICES, JULY 1975


CROP REPORTING BOARD, SRS, USDA






COMPARISON OF MINNESOTA WISCONSIN MANUFACTURING GRADE MILK PRICE WITH
FINAL TWO-STATE ESTIMATED PRICE, FOR MILK OF 3.5 PERCENT MILKFAT CONTENT, BY MONTHS, 1972-74 1/

YEAR MINNESOTA : FINAL : DIFFERENCE BETWEEN
AND WISCONSIN : TWO-STATE : FINAL TWO-STATE
MONTH : SERIES : ESTIMATE : AND MINN-WIS SERIES
DOLLARS PER CWT.
1972
JAN 4.97 4.97 0
FEB 4.97 5.00 +.03
MAR 5.04 5.02 -.02
APR 4.96 4.97 +.01
MAY 4.94 4.96 +.02
JUN 4.95 4.94 -.01
JUL 5.01 5.01 0
AUG 5.07 5.07 0
SEP 5.10 5.11 +.01
OCT 5.18 5.20 +.02
NOV 5.32 5.32 0
DEC 5.41 5.41 0

SIMPLE AVERAGE
1972 : 5.077 5.082 +.005
1973
JAN 5.43 5.47 +.04
FEB 5.45 5.51 +.06
MAR 5.55 5.60 +.05
APR 5.63 5.63 0
MAY 5.66 5.69 +.03
JUN 5.73 5.73 0
JUL 5.78 5.87 +.09
AUG 6.38 6.48 +.10
SEP 6.91 7.07 +.16
OCT 7.49 7.47 -.02
NOV 7.64 7.73 +.09
DEC 7.94 7.95 +.01

SIMPLE AVERAGE
1973 : 6.299 6.350 +.051
1974
JAN 8.10 8.08 -.02
FEB 8.14 8.13 -.01
MAR 8.15 8.13 -.02
APR 7.73 7.68 -.05
MAY 6.93 6.78 -.15
JUN 6.31 6.34 +.03
JUL 6.29 6.27 -.02
AUG 6.39 6.41 +.02
SEP 6.69 6.70 +.01
OCT 6.82 6.86 +.04
NOV 6.76 6.76 0
DEC 6.41 6.46 +.05

SIMPLE AVERAGE
1974 : 7.060 7.050 -.010

36 MONTHS : 6.145 6.161 +.016

1/ PRICES HAVE BEEN CONVERTED FROM THE AVERAGE MILKFAT TEST TO 3.5 PERCENT USING THE MILKFAT
DIFFERENTIAL SPECIFIED IN FEDERAL ORDERS (CHICAGO GRADE A BUTTER X 0.120).


MFG. GRADE MILK PRICES, JULY 1975


CROP REPORTING BOARD,iSRS, USDA





MANUFACTURING


GRADE MILK: WEIGHTS USED TO CALCULATE THE MINNESOTA-WISCONSIN MILK
PRICE SERIES, BY MONTHS, 1970-76 !/


: 1970 : 1971 : 1972 : 1973
MONTHMINN WIS MINN WIS MINN WIS MINN : WIS

MILLION POUNDS


JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC


: 705 768 653 673 601 636 564 644
: 712 758 625 648 575 603 539 603
: 788 863 708 759 667 718 626 716
: 774 891 688 767 647 742 614 740
: 803 986 729 878 679 832 644 829
: 743 986 694 921 640 840 607 837
: 590 801 549 750 514 732 497 779
: 472 716 451 685 427 676 408 705
: 403 622 386 603 372 603 361 631
: 417 588 412 603 396 579 367 598
: 438 546 425 546 415 523 373 533
: 528 606 503 595 477 S63 438 581







1974 : 1975 : 1976
MINN : WIS : MINN : WIS : MINN : WIS
MILLION POUNDS


1/ WEIGHTS SHOWN FOR JANUARY THROUGH JUNE
GRADE MILK TWO YEARS EARLIER WHILE WEIGHTS
RECEIPTS FROM A YEAR EARLIER.


ARE BASED UPON RECEIPTS OF MANUFACTURING
FOR JULY THROUGH DECEMBER ARE BASED UPON


MFG. GRADE MILK PRICES, JULY 1975


CROP REPORTING BOARD, SRS, USDA



































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