1982 Dairy Legislation
Impact on Six Southern 
States
Some
Program Alternatives
of Ac'-. '. '
t;rlSitv A
A contributing report 
to
the Southern Regional Dairy
Marketing Research Project 
S-166
Department ofAgricultural Ecomonics and Rural 
Sociology
Alabama Agricultural Experiment 
Station
Auburn University, Alabama
Agricultural Economic Series 34 
January 1983

CONTENTS
Page
Prefaceii
Summary and Conclusions iii
Background i i i
Scope iv
Conclusions iv
Introduction 1
Purpose and Procedure 5
Milk Production and Marketing in the Southeast 7
Milk Production 7
Marketings 12
Supply Adequacy 14
Effect on Consumers and Producers of the Assessment
Versus a Support Price Reduction 20
Consumer Considerations 20
Consumer as User 20
Consumer as Taxpayer 24
Producer Considerations 25
Producer Supply Responses 26
Regional Impacts Differ 28
Dairy Price Alternatives for the Southeast 31
Program Impacts 32
Impacts on the Southeast 34
Some Policy Alternatives to the Assessment Plan 43
Cull Cow Incentive Program 48
A Modified Base-Excess Plan 51
Literature Cited 60
Appendix 61
PREFACE
The 1982 dairy legislation provides for deductions from dairy farmers'
marketings of milk to help pay the high and growing costs of the 
price sup-
port program and to bring about reductions in milk supply. Dairy leaders
in several southern states objected to this approach to reduce supply
because no milk surplus problem exists within this region. The impact was
seen to be a price reduction in an area where milk supply is already
short. Most milk marketed in the South is Grade A eligible for fluid use
with most of it used in fluid products. Practically no manufactured pro-
ducts produced in the region are removed from the market through price sup-
port programs.
Discussions between state dairy leaders and several university dairy
marketing economists led to a meeting in Atlanta, Georgia, in October 1982
to discuss the impact of the legislation on the dairy industry in the
South. At that meeting, the authors agreed to make an analysis of the
legislation and alternative programs.
The study area selected was Alabama, Florida, Georgia, Louisiana,
Mississippi and South Carolina. Common milk marketing characteristics
among the six-state area suggest that the 1982 dairy legislation or alter-
native programs would have similar impacts.
Since initiation of this study, the assessment program has been con-
tested by dairy farmers in Federal District Court. However, the impacts on
producers and consumers in the Southeast of the assessments and alterna-
tives presented in this study remain as relevant dairy policy issues.
This report is provided to dairy leaders, policy makers and others
interested in appraising the impact of dairy program alternatives on the
Southeast.
ii
SUMMARY AND CONCLUSIONS
Purposes of this study were to analyze the impact of the 1982 dairy
legislation on the Southeast and to present some program alternatives. The
summary and findings are reported in three sections: background for the
study, scope and conclusions.
Background
In response to growing dairy surpluses and support price program costs
exceeding $2 billion a year, Congress in September 1982 passed legislation
authorizing the Secretary of Agriculture to levy an assessment of $0.50 per
hundredweight on all milk marketed effective October 1, 1982. An
additional assessment of $0.50 was authorized effective April 1, 1983,
subject to refunds for producers who reduced marketings.
Secretary Block announced that the initial assessment was to become
effective December 1i, 1982. Despite the near universal recognition that
changes were needed in the dairy price support program, both the new legis-
lation and the Secretary's decision to implement the assessment drew cri-
ticism from many fronts. Legal action was attempted in a number of
states. A civil suit was brought in December 1982 in Federal Court by
South Carolina dairy interests. Groups representing dairy farmers in
one-third of the country joined South Carolina in the case against the
government as interveners.
In January 1983 after a hearing in Federal Court in South Carolina, a
temporary injunction was ordered barring the collection of the assessment
from milk producers. In the interim, the industry, Congress and the
iii
Administration have been afforded time to develop alternatives to the
assessment plan. This study, which was begun only a few days after
announcement of the assessment program, addresses the assessment issue and
some alternatives relevant to the dairy industry in the Southeast.
Scope
The study focuses on a six-state area in the Southeast--Alabama,
Florida, Georgia, Louisiana, Mississippi and South Carolina. The dairy
industry in these six contiguous states has a number of similar charac-
teristics. National impacts of the assessment program are not projected
nor are those of alternative programs. While this focus limits some of the
conclusions that can be drawn to a relatively narrow area of the country,
it points out the uniqueness of the industry in the region and the unequal
impact of the assessment program on various producing areas.
Only short-run effects of the current legislation and alternatives are
projected. Longer term impacts of the assessment program on the dairy
industry are likely to be greatly magnified.
Conclusions
There are three broad conclusions drawn from this study and a number
of specific findings supporting the conclusions.
I. The dairy industry in the Southeast has unique characteristics with
respect to milk production, consumption and marketing. Because of
these characteristics, the assessment program and some alternative
plans will have much more dramatic consequences on the Southeastern
industry than on other producing regions.
A. Milk production costs tend to be higher in the Southeast.
iv
B. While blend prices are higher in the region, higher costs lead to
net returns from dairying that are lower than returns in most other
regions.
C. Production in the region has increased at a slower rate since 1978
than nationally.
D. Virtually all milk produced in the region is Grade A eligible for
use in the fluid market.
E. Hard manufactured products (Class III) represent only a small
fraction of marketings in the region. Few, if any, sales of these
products are made to the CCC.
F. The Southeast is a milk deficit area with respect to total dairy
products consumption. In two of the six states, production falls
short of fluid use.
II. Based on economic logic, direct support price cuts are a superior
alternative for both producers and consumers than an assessment pro-
gram.
A. Under an assessment program, consumer prices remain constant. If
so, no increase in consumption would occur. However, negotiated
producer Class I prices to handlers may increase, resulting in
higher consumer prices.
B. A decrease in the support price of $1.00 compared to a $1.00
assessment would reduce manufactured product prices by about seven
percent and stimulate an increase in consumption of about three
percent. Fluid consumption would also increase slightly--less than
one percent if the support price was reduced by $1.00.
C. The impact of a $1.00 assessment on producer incomes would be simi-
lar to that of a $1.00 price reduction. Income and prices would be
somewhat higher in the case of a price cut, since quantity demanded
of milk products would increase.
0. CCC purchases and stocks would decline faster with a price
reduction, since it would increase consumption and decrease pro-
duction.
E. The major advantage of the assessment program would be a reduction
in government program costs. Benefits to consumers as taxpayers
would be negligible. Benefits to consumers as users of milk would
be zero, or negative if negotiated Class I prices were increased
following the implementation of the assessment.
III. In addition to a straightforward reduction in the support price, there
are a number of program options preferrable to the assessment pro-
gram. Among the alternatives considered were:
A. Maintain the Class I price, but decrease Class II and III prices
$1.00. This alternative would result in the most production, price
and income stability in the Southeast of all programs studied.
Aggregate production would decrease only 21 million pounds, while
producer income would decrease $14 million. Blend prices would
decline an average of $0.17 per hundredweight. With lower Class II
and III prices, milk product consumption increases. Such a program
would be advantageous to Southeast milk producers since they would
not be penalized for producing needed milk for Class I uses.
vi
B. Decrease Class II and III prices $1.00 (and $1.50) and decrease
Class I price $0.50 per hundredweight. These options result in
larger reductions in production (66 and 73 million pounds), pro-
ducer income ($45 and $51 million) and blend prices ($0.55 and
$0.63 per hundredweight). From the viewpoint of producers in the
Southeast, these options, where Class I price is reduced, along
with Class II and III prices, are less attractive than the first
phase of the assessment plan, but more attentive than the full
application of the assessment program.
C. Assess $0.50, decrease support price $0.50 and pay to cull cows.
This program could effectively decrease production in a short
period and reduce government costs for buying surplus milk
products. Blend prices would be reduced $0.79 and dairy income
reduced $69 million. Problems in administering a cow culling plan
could greatly reduce its effectiveness. There is a danger that the
impact on reducing milk production would be short-term and not pro-
duce the desired longer-term supply adjustments. Also, an increase
in dairy cow culling would have an adverse producer price and
income effect on the beef cattle industry.
D. Base-excess plan with assessment for producing excess milk. There
are many versions of base plans. Only one was considered in the
study. Each producer would be assigned a base equal to 96 percent
of the dairy farmer's marketings in the last marketing year. For
production above the base and market needs, the producer would pay
an assessment. The support price would remain at $12.80 (3.5% bf)
vji
but would be adjusted upward as the supply-demand balance
improved. Producers in the high utilization markets such as
Florida would not be penalized. If producers marketed only their
base, which is an unlikely possibility, income loss would be
relatively small.
Any program that reduces producer prices for milk will reduce producer
income and milk supply. However, some programs are more equitable than
others on all producers. An assessment program appears to be inequitable
by endangering supply adequacy in those areas where milk is produced pri-
marily for the fluid milk market, such as the Southeast. An assessment
program would not serve the public interest, as price reductions cannot be
passed on through the marketing channel to consumers. Milk price policy
designed to adjust milk supply should also affect the consumer side of the
market. Therefore, programs that affect consumer prices, as well as pro-
ducer prices, are more in line with sound economic principles of supply and
demand relationships.
Programs that alleviate surpluses through consumption would probably
generate more taxpayers support because they would maximize consumers' wel-
fare. Therefore, programs that provide for support price reductions appear
to be more consistent with decreasing production in surplus regions and
encouraging consumption of surplus milk products through lower consumer
prices. Surplus alleviation through discouragement of milk production in
the surplus regions of milk production and encouragement of consumption
through nationwide product price reduction offer the greatest promise of
distributing the adjustment on the basis of contribution to the problem
while providing for the greatest consumer satisfaction.
viii
THE 1982 DAIRY LEGISLATION
- IMPACT ON SIX SOUTHERN STATES -
- SOME PROGRAM ALTERNATIVES
1 
-
Dale H. Carley, Lowell E. Wilson, Wayne M. Gauthier,
and Harold M. Harris
2
Over the past four years, the United States dairy industry has exper-
ienced record increases in milk production resulting in large holdings of
surplus dairy products by the Commodity Credit Corporation (CCC). Since
the end of 1978, milk production has risen 11.1 percent from 121.5 billion
pounds to an estimated 135.2 billion pounds in 1982. With domestic con-
sumption rising only modestly, price support purchases amounted to more
than 10 percent of production in 1982. On October 1, 1982, about 16
billion pounds of milk equivalent were in CCC holdings of supported
products. The near-term outlook is for the amount of government held dairy
stocks and program costs to continue to increase.
To alleviate the problems of growing price support costs and public
criticism, Congress enacted a new dairy program in September 1982. The
1982 legislation provides for maintenance of the existing support price of
$13.10 per hundredweight of milk. Also, the Secretary of Agriculture was
1 This report contributes to the Southern Regional Dairy Marketing Research
Project S-166, The Impact of Changing Costs, Institutions and Technology
on the Southern Dairy Industry.
2 Professor, Department of Agricultural Economics, University of Georgia;
Professor, Department of Agricultural Economics and Rural Sociology,
Auburn University; Assistant Professor, Department of Agricultural
Economics and Agribusiness, Louisiana State University Agricultural
Center; and Professor, Department of Agricultural Economics, Clemson
Uni versity.
authorized to apply a 50 cents per hundredweight deduction on all milk mar-
keted by farmers. Initiation of the 50 cents deduction was scheduled to
begin on December 1, 1982. In addition, the 1982 legislation authorized
the Secretary to apply a second 50 cents deduction to begin in April 1983.
Revenues from the dairy farmer assessments are to be used to offset some of
the costs of the dairy price support program.
The initial deduction would reduce dairy farmers income about three
to four percent depending on price levels in various regions of the coun-
try. The second 50 cents deduction in April 1983 bringing the total
assessment to $1.00 per hundredweight, will cause dairy farmers to exper-
ience a six to eight percent loss in revenue. However, there are pro-
visions in the April deduction for refunds to farmers who adjust production
downward by the fully prescribed percentage from their two-year average
that began October 1, 1980. Refunds would be paid annually (1).
In December 1982 in South Carolina, the Attorney General, the Consumer
Advocate, the Commissioner of Agriculture, the Farm Bureau and three dairy
farmers brought suit against the U.S. Secretary of Agriculture asking that
the USDA be barred from collecting assessments from producers. After
hearing testimony and arguments on behalf of the plaintiffs (including
interveners representing dairy farmers in about 18 states) and the USDA,
Federal Judge Matthew Perry issued an injunction on January 10, 1983,
forbidding the making of deductions from producers' milk checks until
further notice (2). In the meanwhile, government purchases of supported
milk products continue to grow.
The Agricultural Adjustment Act of 1949 requires the Secretary 
of
Agriculture to support the price of milk at 75 to 90 percent of parity.
Temporary legislation in 1977 and 1979 raised the minimum support level to
80 percent of parity and required semi-annual adjustments to reflect
changes in prices paid by farmers. Milk production increased sub-
stantially. In February 1981, in the first act of the 97th Congress,
legislation was passed to eliminate the support price increase 
scheduled
for April 1981.
Since that time, the support price has remained at $13.10 per hundred-
weight, which was 69.1 percent of parity in the third quarter 
of 1982.
Still, milk production has increased and will likely continue to increase
into 1983 because of the productive capacity inherent in the largest
replacement herd on record, low feed prices and poor alternative oppor-
tunities outside the milk business.
The USDA supports milk prices through purchases of specified manu-
factured milk products by the CCC. Prices paid for butter, cheese and
non-fat dry milk, the supported products, are calculated to return the sup-
port price to producers. However, adjustments in the "make allowance"
result in a pay price that is often different from the support price. The
pay prices become the Minnesota-Wisconsin manufacturing milk prices (M-W
price). Under conditions of shortages the M-W price is greater than the
support price. Conversely, under conditions of surpluses the M-W price is
lower than the support price. The M-W price has been below the support
price for many months. The support price undergirds prices of both manu-
facturing grade (Grade B) and fluid (Grade A) milk.
Purchase of manufactured dairy products by the CCC is not national in
scope. Most government purchases occur in a few 
of the major milking pro-
ducing states where farmers have expanded production in excess of com-
mercial market needs. In some of these areas the 
government, as the resi-
dual buyer, is also the major buyer. In some cases, direct sales 
to the
government are the most profitable 
because such sales eliminate the need
for a commerical sales organization. By contrast, in the South most
marketings of milk are for fluid uses.
Utilization of milk in the six-state area of 
Alabama, Florida,
Georgia, Louisiana, Mississippi and South 
Carolina for the 12-month period
of July 1, 1981 through June 30, 1982, was approximately 
81 percent Class
I, 8 percent Class II and 11 percent Class III. Regardless 
of grade, only
Class III products can be sold to CCC at the announced 
price. The volume
of these manufactured products in the six states sold to 
the CCC is not
reported, but is known to be very small. Within this area, the
supply-demand balance for milk is tight and in many local markets, 
particu-
larly in Florida and Alabama, milk is regularly imported to meet 
fluid mar-
ket needs. Essentially no milk is used for manufacture other 
than for soft
products (Class II) such as ice cream and cottage cheese in 
the several
federal order markets in the region.
Prices received for milk at the farm level 
tend to be higher in the
South, but so are production costs. Studies 
by the USDA indicate that in
the South costs were higher and net returns lower than other regions in
1979, 1980 and 1981 (3).
With the exception of feed, interest and fuel costs, 
all other major
items of milk production costs continued to 
rise for Southern dairy far-
mers in 1982. However, prices received 
by farmers for milk have declined
about 30 cents per hundredweight between 
1981 and May-August 1982. Another
three to four percent reduction in 
milk prices from the impending 50 cents
assessment would further threaten the economic 
well-being of dairy farmers
in the region. To offset as much as possible 
the price loss due to the 50
cents assessment, producer cooperatives 
will be under pressure to announce
price increases to milk processors. Thus, 
it is possible that the impact
of the producer assessment in the South 
would be lower effective prices to
producers, higher raw milk prices to processors 
and higher fluid milk
product prices to consumers.
PURPOSE AND PROCEDURE
This study was undertaken to develop economic 
information about the
effects of program changes on the 
dairy industry in the six southern states
of Alabama, Florida, Georgia, 
Louisiana, Mississippi and South 
Carolina.
These states were selected for 
analysis since they are contiguous 
and have
many common milk production and marketing 
characteristics. Specifically,
the objectives were:
1. To measure the impact of the 
1982 dairy legislation on
the dairy industry in the six states, including 
effects
on milk supply, prices and dairy farmer 
income, as well
as consumer demand.
6
2. To present program alternatives and to measure 
the impact
of these alternatives on dairy farmers and consumers,
with emphasis on producer prices and income.
National impacts of the assessment program are not projected nor are
those of alternative programs. While this focus limits some of the con-
clusions that can be drawn to a relatively narrow area of the country, it
does point out the uniqueness of the dairy industry in the region and the
unequal impact of the assessment program on various milk producing areas.
The report was developed using information from several sources
including USDA and land-grant universities. In developing the three major
parts of the report, there is some repetition. This serves to clarify and
bridge the sections of the report. The report is presented in the fol-
lowing sections: 1) an overview of milk production and marketing in the
Southeast; 2) an identification of gains and losses to consumers and pro-
ducers of the assessment versus a support price reduction; and 3) analysis
of selected dairy policy alternatives for the Southeast.
MILK PRODUCTION AND MARKETING IN THE SOUTHEAST
Dairy farming is a widespread enterprise and a major contributor to
farm income in each of the six Southeastern States of Alabama, Florida,
Georgia, Louisiana, Mississippi and South Carolina (Southeast). In 1982,
total milk production in these states amounted to 6.49 billion pounds which
was 4.7 percent of national production (Table 1). In the Southeast, gross
receipts from marketings of milk, plus the value of milk used on the farm,
amounted to one billion dollars in 1981 (4).
Mi Ilk Production
During the pastdecade, the number of dairy cows in the Southeast
declined 27 percent to 626 thousand cows in 1982 (Table 2 and Figure 1).
Reduction in cow numbers occurred in each of the six states with the lar-
gest cow losses occurring in Alabama, Louisiana and Mississippi. The num-
ber of dairy cows in Florida was relatively unchanged. Most of the decline
in milk cows resulted from the exit of small dairy herds and farm families
discontinuing the practice of milking a few cows for home consumption (5).
Offsetting the decline in milk cows was an increase in average pro-
duction per cow resulting in relatively stable total milk production in the
Southeast (Figure 2). Since 1970, average annual production per cow rose
40 percent to 10,363 pounds in 1982 with production above 11,000 pounds per
cow in Florida and South Carolina.
Estimated production of 6.49 billion pounds in 1982 was the highest of
the past decade increasing 188 million pounds or three percent since 1978.
While milk production in the Southeast was increasing three percent,
national milk production rose 11 percent from 121.6 billion pounds in 1978
7
Table 1. Milk Production in the United States by Regions with Comparisons, 1978--1982.
Inease in mlk roducion from
1982 as percent 1978 to 1979 to 1980 to 1981 to
Region 1978 1979 1980 1981 1982 of U.S. total 1979 1980 1981 1982
iiion pounds----------- -- percent -- ---- million pounds----
Northeast 24,839 25,238 26,139 26,820 27,370 20.2 399 901 681 550
Lake States 35,134 35,825 36,885 37,869 38,330 28.3 691 1,060 984 461
Corn States 15,562 15,465 15,994 16,446 16,713 12.4 -97 529 452 267
Northern Plains 5,147 5,013 5,253 5,517 5,458 4.0 -134 240 264 59
Appalachian 8,199 8,163 8,415 8,590 8,732 6.4 -36 252 175 142
Southeasta 6,299 6,318 6,375 6,450 6,487 4.7 19 57 75 37
Southern Plains
and Arkansas 5,252 5,172 5,480 5,608 5,750 4.3 -80 308 128 14249
Mountain 5,419 5,589 6,131 6,690 7,120 5.4 170 542 559 430 1,0
Pacific 15,593 16,483 17,688 18,481 19,051 14.1 890 1,205 793 570 3,5
Alaska
and Hawaii 165 163 165 163 158 .1 -2 2 -2 -5
U.S. 121,609 123,429 128,525 132,634 135,169 1,820 5,096 4,109 2,535 1,6
a Includes Alabama, Florida, Georgia, Louisiana, Mississippi
Source: Appendix Table 1.
and South Carolina.
00
Table 2. Milk Production, Marketings,
Selected Years 1970-1982.
and Volume Approved for Fluid Use, Six Southern States,
Milk marketed approved
State and Milk Average production Milk 
All milk sold to for fluid use (Grade A)
yeara cows per cow production 
plants & dealers Volume Percentae
thou Ibmilb mil lb mil Ib percent
Alabama
1970
1975
1976
1977
1978
1979
1980
1981
1982
Florida
1970
1975
1976
1977
1978
1979
1980
1981
1982
Georgia
1970
1975
1976
1977
1978
1979
1980
1981
1982
Louis ana
1970
1975
1976
1977
1978
1979
1980
1981
1982
122
90
85
80
76
73
68
63
60
191
197
201
198
193
188
187
189
190
146
129
129
129
129
130
130
130
130
164
136
137
132
128
121
114
107
102
6,687
7,622
8,024
8,550
8,303
8,301
8,971
9,238
9,330
8,592
9,929
10,065
10,066
10,218
10,617
10,845
11,016
11,110
8,096
9,465
10,101
10,085
10,140
10,292
10,515
10,738
10,820
6,640
7,750
7,942
8,250
8,305
8,446
8,887
9,280
9,410
816
686
682
684
631
606
610
582
563
1,641
1,956
2,023
1,993
1,948
1,996
2,028
2,082
2,109
1, 182
1,199
1,279
1,288
1,305
1,338
1,367
1,396
1,410
1,089
1,054
1, 088
1,089
1,063
1,022
1,012
993
957
735
635
630
635
588
570
575
550
1,525
1,880
1,975
1,945
1,925
1,970
2,009
2,069
1,125
1,170
1,255
1,260
1,280
1,315
1,346
1,376
1,020
1,010
1,045
1,050
1,025
985
975
955
713
622
617
622
576
558
564
539
1,525
1,880
1,975
1,945
1,925
1,970
2,009
2,069
1,125
1,170
1,255
1,260
1,280
1,315
1,346
1,376
1,020
1,010
1,045
1,050
1,025
985
975
955
97
98
98
98
98
98
98
98
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
10
Table 2, (cont'd)
Mi lk marketed approved
State and Milk Average production Milk All milk sold to for fluid use (Grade A)
yeara cows per cow production plants & dealers Volume Percentage
thou lb mll Ib ml Ib ml Ib percent
Mississippi
1970 179 5,860 1,049 960 874 91
1975 122 7,180 876 840 806 96
1976 116 7,431 862 830 797 96
1977 112 7,661 858 830 788 95
1978 106 7,887 836 810 770 95
1979 100 8,140 814 790 750 95
1980 98 8,337 817 795 763 96
1981 97 8,771 845 825 792 96
1982 96 9,100 873
South Carolina
1970 64 8,000 512 476 -- --
1975 58 8,828 512 481 481 100
1976 56 9,375 521 492 494 100
1977 53 9,906 523 496 496 100
1978 52 9,865 516 492 492 100
1979 50 10,480 524 495 495 100
1980 48 11,271 541 515 515 100
1981 48 11,500 552 525 525 100
1982 48 11,970 575
Southeastern
States
1970 866 7,262 6,289 
5,841 -- -
1975 732 8,583 
6,283 6,016 
5,969 99
1976 724 8,916 6,455 6,227 6,183 99
1977 704 9,162 6,450 6,216 6,161 99
1978 684 9,209 6,299 6,120 6,068 99
1979 662 9,517 6,300 6,125 6,073 99
1980 645 9,884 6,375 6,215 6,172 99
1981 634 10,174 6,450 6,300 6,256 99
1982 626 10,363 6,487
a Preliminary for 1982.
Source: Milk Production, Disposition, Income. SRS. USDA. various issues.
11
900T 86 6
732L
74i
764
6 84
645 634
1975 1976 1977 19 78 
1979 1980 1981 1982
Rim 1. MILK COWS 
I NSI x SOUTHERN STATES
SELECTED YEARS. 1 97O-1 
e432.
6.29 6.28 6.3n 6.30 6.37
1970 1975 1976 1977 1978 
1979 1980 1981 1982
!rIGUE M. M I K PRODUCTION 
IN SIX SOUTHERN
STATES SLECTED 
YEARS. I S7O- 15 
52.
8004
700
6001
0
,'I)
OI
0
r-
500
400~
300.
200)
100.
626
0
1970
F I out
I
f Lu;
4
t
3.1
-Q
E
0
U
0.
0
v
12
to 135.2 billion pounds in 1982. Thus, national milk production increased
at a rate almost four times greater than in the Southeast. Nationally,
most milk production increases were in the major dairy states with the
largest increases occurring since 1979. Between 1978 and 1982 milk
production declined in only five states in the continental United States;
two of the states were in the Southeast--Alabama and Louisiana (Appendix
Table 1).
Milk production trends vary in individual Southeastern States. Since
1978, production in Florida increased 161 million pounds (8.3 percent);
Georgia, 105 million pounds (8.1 percent); South Carolina, 59 million
pounds (11.1 percent); and Mississippi, 37 million pounds (4.4 percent).
Milk production decreased in Louisiana 106 million pounds (10.0 percent)
and in Alabama 68 million pounds (10.9 percent). Even though milk pro-
duction in Mississippi has increased recently, production since 1970 has
declined over 17 percent.
Within the region, 19,300 farm operations reported a total of 634,000
milk cows in 1981 (Table 3). Almost 93 percent of the milk cows were in
herds larger than 50 cows and 73 percent of cows were in herds larger than
100 cows. The largest herds were in Florida and Alabama. Three-fourths of
the operations reported less than 29 milk cows per herd, but this repre-
sented only 4.7 percent of all milk cows in the region.
Marketi ngs
Practically all milk production in the Southeast is produced on com-
mercial dairy farms and is sold to plants and dealers. In 1981, 97.6 per-
cent of production was marketed. This amounted to 6.1 billion pounds, up
13
Table 3. Number of Operations and Milk Cows by Herd Size in the Southeast, 
1981.
Dairy herd size (head)
State item 1-29 30-49 
50-99 100+
----- n umber ....... .......- .........
Operat ons
OPERATIONS WITH MILK COWS:
Alabama 4,000 3,572 
52 168 208
Florida 2,000 1,600 a 
a 400
Georgia 3,100 2,024 56 
369 641
Louisiana 4,000 2,912 180 488 
420
Mississippi 3,800 2,698 251 521 
330
South Carol inab 2,400 1,819 77 
218 286
Total 19,300 14,625 616 
1,764 2,295
Cows
MILK COWS:
Alabama 63,000 9,700 2,100 13,200 
38,000
Florida 189,000 2,800 
a a 186,200
Georgia 130,000 2,900 2,200 
25,700 99,200
Louisiana 107,000 4,000 
7,500 32,000 63,500
Mississippi 97,000 7,900 9,900 36,600 
42,600
South Carolinab 48,000 
2,200 1,800 8,800 35,200
Total 634,000 29,500 23,500 116,300 
464,700
a Reported in the other groups.
b Distribution of operations and number of cows by herd size were not reported for South
Carolina but were estimated by using the average distribution of the other five states.
This procedure may underestimate the average size of commerical dairy 
herds in South
Carolina.
Source: Cattle. SRS. USDA. LvGn 1. January 1982; Milk Production, Disposition,
Income. SRS. USDA. May 1982.
14
2.9 percent since 1978 and only 7.8 percent since 1970. In the 
individual
states, marketings ranged from 94.5 to 99 percent of production (Table 2).
All milk marketed in Florida, Georgia, Louisiana and South 
Carolina was
eligible for fluid use, or "Grade A," while virtually all marketings in
Alabama and Mississippi were eligible for fluid use. For 
many years, milk
marketings in the South have been primarily for local and nearby fluid
markets. The relatively small manufacturing milk industry 
in the Southeast
has all but disappeared with the exception of production of "soft"
manufactured products (Class II) and seasonal production of "hard"
manufactured products (Class III) from surplus Grade 
A milk.
Cash receipts from marketings of milk sold to plants and dealers 
by
dairy farmers located in the Southeast amounted to $974 million in 1981, up
34 percent since 1978 (Table 4). With the exception of Alabama, cash
receipts from milk marketings in the Southeastern States rose annually
during this period. Nationally, cash receipts to dairy farmers for mar-
ketings of milk rose 43 percent during the same time 
period.
Average prices per hundredweight of milk sold by farmers in the
Southeast was $15.45 in 1981 and 12 percent higher than the national aver-
age. This price relationship between the Southeast and the national aver-
age has been unchanged over the past five years, however, relative prices
within the region compared to the national average prices and other regions
has narrowed since the early 1970's. Nationally, average prices have risen
more rapidly than in the Southeast.
Supply Adequacy
Regional milk supply estimates were made of fluid and manufactured
milk product consumption in the six states and compared with milk mar-
15
Table 4. Total Cash Receipts and Price Per Hundredweight Received by Farmers For Milk Sold 
to
Plants and Dealers, Southeast and United States, Selected Years, 1970-1981.
Alabama Florida Georgia Louisiana Mississippi
South Six-state United
Carolina area States
Total Cash Receipts:
million dollars
1970
1975
1976
1977
1978
1979
1980
1981
50.2
66.0
68.0
69.2
68.2
7 5.8
82.8
80.8
113.0
212.4
235.0
237.3
246.4
285.6
317.4
347.6
78.2
114.7
134.*3
132.3
145.9
169.6
188.4
202.3
71.1
104.0
115.0
112.4
117.9
130.0
137.*5
142.3
60.0
79.8
85.5
84.*7
89.9
99.*5
109.7
118.8
Price Per Hundredweight:
dollars
1970
1975
1976
1977
1978
1979
1980
1981
6.83
10.40
10. 80
10.90
11,*60
13,30
14,40
14,70
7.41
11,30
11.*90
12.20
12.80
14,50
15.80
16.80
6.95
9. 80
10.70
10.50
11.40
12.90
14.00
14.70
6.97
10.30
11.00
10.70
11.*50
13.20
14.10
14.90
6.25
9.50
10.30
10.20
11.10
12.60
13.80
14.40
Source: Milk Production, Disposition, Income. SS SA aiu 
sus
34.5
51.0
55.6
56.5
58.5
65.3
74.*7
81.9
407.0
627.9
693.*4
692.4
726.8
825.8
910.5
973.7
6, 279.2
9,657.1
11,165.4
11,489.6
12, 408.*6
14, 354.4
16,274.0
17,738.8
7.25
10.60
11.30
11.40
11.*90
13.20
14.50
15.60
6.97
10.44
1 1.14
11.14
1 1.88
13.48
14.65
15.45
5.71
8.75
9.66
9.72
10.60
12.00
13.00
13.80
I~~hln a
rrr. sw 4wmmran anrrrrrmw 44w pro Wm #srr.rrr
4 a qw = m m N o an d 4 mwanw N 4 rm
SRS. USDA. various issues.
16
ketings in these states. Comparisons reveal the adequacy (or inadequacy)
of supply in the region. The estimates were made for 1980 using population
reported in the 1980 Census. Per capita demand for fluid and manufactured
milk products was derived from national utilization of milk data reported
by the USDA. National average per capita consumption data may slightly
overstate milk consumption in the Southeast. Per capita use in 1980 of
fluid milk was 227 pounds and milk equivalent of manufactured milk products
was 299 pounds.
Milk consumption, producer marketings of milk and supply deficits for
each Southeastern state are shown in Table 5. On a milk equivalent basis
15.2 billion pounds were consumed in the Southeast in 1980. Of this, 6.6
billion pounds, or 43 percent, were used as fluid products and 8.7 billion
pounds were used as manufactured products. Aggregate fluid product con-
sumption was six percent greater than the 6.2 billion pounds of Grade A
milk marketed by dairy farmers in the six states. Only 43 million pounds
of manufacturing grade milk were sold by dairy farmers located in
Mississippi and Alabama. Essentially all manufactured milk products
required for consumption in the Southeast region must be imported from
outside supply areas. Aggregate milk product consumption was almost two
and one-half times regional milk supply.
Alabama and Florida fluid milk markets are dependent on substantial
volumes of imported raw milk produced in other states including locations
outside the Southeast. Information from the Alabama Dairy Commission and
the Florida Department of Agriculture shows that raw milk imports into the
two states amount to about 500 million pounds annually (Table 6). About 35
Table 5. Population, Milk Consumption, Producer Marketings and Supply Deficit by State, Southeast,
1980.
Estimated milk consumption
a  
Producer marketings
1980 popu- Fluid Manufactured Approved for Manufacturing Supply
State lation products products Total fluid use grade Total deficitb
no -----------------
mil Ib ----- ----
Alabama 3,890.061 883 1,163 2,046 564 11 575 1,459
Florida 9,739,992 2,211 2,912 5,123 2,009 0 2,009 3,103
Georgia 5,464,265 1,240 1,634 2,874 1,346 0 1,346 1,518
Louisiana 4,203,972 954 1,257 2,211 975 0 975 1,216
Mississippi 2,520,638 572 754 1,326 763 32 795 518
South Carolina 3,119,208 708 933 1,641 515 0 515 1,119
Total 28,938,136 6,568 8,653 15,221 6,172 43 6,215 8,933
a Per capita consumption of fluid products (whole milk, cream items, lowfat and skim items) was assumed
to be 227 pounds; per capita consumption of all other milk products was assumed to be 
299 pounds of
milk equivalent. These estimates were based on domestic disappearance from commercial sources.
The national estimates likely overstate per capita consumption in the region by five 
to ten
percent.
b Adjusted for milk consumed on farms.
Sources: Census of Population, Bureau of Census; Dairy Outlook and Situation, USDA; Milk 
Production,
Disposition, Income. USDA. DS-388. March 1982.
18
percent of the milk supply received by Alabama processors is produced in
other states, largely by dairy farmers located in Tennessee. Florida raw
milk imports are nine to ten percent of the volume of milk marketings by
Florida dairy farmers. A large proportion of the Florida raw milk imports
is produced in Georgia and Alabama.
Table 6. Imports of Raw Milk for Fluid Use into Alabama and Florida,
1976-1982.
Year Alabama Florida
--------- million pounds-----------
1976 304.5 60.7
1977 313.6 81.4
1978 323.8 113.2
1979 316.7 171.0
1980 300.0 213.3
1981 301.1 212.0
1982 N.A. 248.0
b
a Partially estimated
b Florida imports through November 1982
N.A. Not available
Sources: Alabama Dairy Commission and Florida Department of Agriculture.
Population is the major determinant of milk consumption. The 24.3
percent population growth in the Southeast during the past decade increased
the aggregate demand substantially. The comparison of population numbers
indicates that the national population growth was less than one-half the
rate of growth in the Southeast during the decade of the 1970's, shown as
fol 1 ows:
19
Population Percentage
1970 1980 change
no no pct
Southeast (6 states) 23,276,046 28,938,136 24.3
United States 203,302,031 226,504,825 11.4
The outlook for continued population growth in the Southeast at a rate
faster than the national growth rate targets the region as one of the most
favorable markets in the United States. The combination of a tight milk
supply and anticipated demand expansion suggest strong upward pressure on
producer prices to encourage more production, particularly regional pro-
duction of milk for the fluid market. However, prices paid Southeastern
dairy farmers have barely been high enough to bring forth supply increases
at the same rate as demand expansion. The region has become more dependent
on other regions for raw milk and milk products. Unless the prices paid
Southeastern dairy farmers increase, the trend toward greater dependency on
imported milk will continue. With higher transportation costs for
long-distance shipment of milk, the results to consumers will likely be
higher priced milk products.
EFFECT ON CONSUMERS AND PRODUCERS OF THE ASSESSMENT VERSUS
A SUPPORT PRICE REDUCTION
The 1982 Omnibus Budget Reconciliation Act provided for an assessment
on all milk sold. The administration's choice of the assessment versus a
reduction in the support price has some economic implications for producers
and consumers. Processor decisions are not expected to be as directly
affected as those of producers and consumers.
One purpose of the assessment is to reduce production through lower
producer prices. The economic implications for producer groups can be
linked to the responses of consumers in the commercial market place.
Because of the derived demand characteristic of milk production, the res-
ponses of consumers to the producer assessment versus a reduction in the
support price of milk will be developed first. The consumer is impacted
individually as a user of fluid milk and milk products and collectively as
a taxpayer who through the CCC purchases and stores surplus milk supplies
in the form of butter, nonfat dry milk powder (NDM) and cheese.
Consumer Considerations
Consumer As User. Consumers of fluid and manufactured milk products
realize no change in the cost of their dairy product purchases as a direct
result of the assessment because the raw milk costs remain the same to pro-
cessors under conditions of surplus milk supplies. A reduction in the
price support level, however, places downward pressures on the
Minnesota-Wisconsin (M-W) price, the market-clearing price for milk used
in manufactured milk products. As a result, all raw milk prices are
lowered because the support price undergirds the raw milk price which is
20
21
the basic formula price for all fluid (Grade A) milk in federal order mar-
kets.
A lower support price means lower costs for the raw milk as an ingre-
dient and hence, lower consumer prices, ceteris paribus. As a consumer,
the citizen pays only for that portion of the milk supply that is desired
and within his budget. As a taxpayer, the citizen pays through the CCC for
the remaining portion of the milk supply that is either not desired or that
is commercially priced out of his budget. The provision of the Agricultur-
al Adjustment Act of 1949 that established the price support program pro-
vided for the CCC to release surplus stocks whenever commercial prices
exceeded 105 percent of CCC purchase prices. It also affects the citizen's
economic well-being as both consumer and taxpayer. CCC calculations of
product prices, given the assessment versus a reduction in the level of the
support price, proxies the economic effects upon the consumer under the two
choices for reducing production.
Column A in Table 7 identifies the factors that enter into the calcu-
lations of product purchase prices for nonfat dry milk (NDM), butter and
cheese at given support price levels. Interest is on comparing differences
in purchase prices across varying support price levels. With the producer
assessment, the support price remains at $13.10 per hundredweight (Column
B). Under the 1982 Act, the $13.10 per hundredweight ($12.80 at 3.5 per-
cent butterfat) support price level established in 1980 is maintained and a
direct assessment of $0.50 per hundredweight is paid by the first 
purchaser
of the producer's milk to the CCC beginning on December 1, 1982. There are
provisions to collect an additional $0.50 beginning April 1, 1983. Effects
on purchase prices of reductions in the level of support prices by $0.50
22
Table 7, Calculation of CCC Purchase Prices of Dairy Products Under Conditions of a Producer
Assessment on Production Versus a Lowering of Support Prices.
A B C D
Producer Suport price reduction
Item/unit assessment 0.50 $1
I, Basic Information
1. Support price for manufacturing milk,
$/cwt at 3.5 pct mllkfat 12.80 12.30 11.80
2. Support price for manufacturing milk,
$/cwt at 3.67 pct milkfat 13.10 12.60 12.10
3. Average milkfat test, percent 3.67 3.67 3.67
4. Butterfat differential, centsa 17.9 17.3 16.6
5. Yields per 100 pounds of milk at average
test (pounds)
(a) Butter 4.48 4.48 4.48
(b) Nonfat dry milk 8.13 8.13 8.13
(c) Cheese 10.1 10.1 10.1
I I. Butter-Nonfat Dry MIlk Calculation
6. Return to butter-powder plants, $/cwt 13.10 12.60 12.10
7. CCC margin between price of manuf. milk and
the value of butter and NDM made from 100
pounds of milk, $/cwt 1.22 1.22 1.22
8. Value of butter (Chicago) and NDM (U.S. aver-
age) made from 100 pounds of milk, $/cwt 14.32 13.82 13.32
9. Nonfat dry milk purchase price, $/lb 0.94 0.91 0.88
Value of NDM per 100 pounds of milk, $/cwtb 7.64 7.39 7.14
10. Value of butter:
11. Dollars per 100 pounds of milk 6.68 6.43 6.18
12, Dollars per pound at Chicago (calculated)c 1.4911 1,435 1.3795
13. Butter purchase price at New York, $/l 1.5200 1.470 1.41
14. Butter purchase price at Chicago, $/Ib 1.4900 1.440 1.38
III. Cheese Price Calculation
15. Return to cheese, $/cwt 13.10 12.60 12.10
16. Margin between price of manuf. milk and
value of cheese and whey per 100 pounds
of milk, $/cwt 1.37 1.37 1.37
17. Value of cheese and whey per 100 pounds of
milk, $/cwt 14.47 13.97 13.47
18. Value of whey: 0.25 pound of fat, $e .37 .35 .32
19. Other solids, $f .00 .00 .00
20. Total .37 .35 .32
21. Value of cheese:
22. Dollars per 100 pounds of milk 14.10 13.61 13.125
23. Dollars per pound (calculated)g 1.3960 1.3475 1.2995
24, Cheese purchase price (rounded) $/Ib 1.3950 1.3500 1.3000
a CCC purchase price for butter at Chicago times 12.
b NDM price per pound times 8.13. The decrease in support is split about equally between the
joint products of butter and nonfat dry milk.
c Value of butter per hundred pounds of milk divided by 4.48. (Chicago butter price is
d representative 
of U.S. average 
price.)
Price based on actual freight rate effective at the beginning of the marketing year, but limited
to the maximum 3 cents reduction from the New York City price.
SButter purchase price at Chicago times .25.
fEstmated that whole mllk cheese whey solids other than fat is processed at 0 cents net return
(13.5 cents dried whey average price minus 13.5 cents processing costs per pound).
g Value of cheese per hundred pounds of milk divided by 10.1.
Source: Dairy Market Newt, Week of October 13-15, 1981 provided the format for calculations.
23
and $1.00 to $12.60 and $12.10 per hundredweight versus the assessment are
indicated in columns C and D, respectively.
Product prices from lines 9, 11 and 23 of columns B, C and D in Table
7 provide data for Table 8. Comparative analyses of CCC purchase 
prices
for hard manufactured milk products for alternative price support levels
can now be readily made.
Table 8. CCC Product Purchase Prices Under Alternative Price Support
Levels.
Manufactured Support price level per hundredweight
product 1$3.10 $
12
.
60
D $12.10f
-------- dollars per pound--
Butter 1.49 1.44 1.38
Nonfat dry milk 0.94 0.91 0.88
Cheese 1.395 1.35 1.30
a Proxies the producer assessment alternative.
b Proxies a $0.50 per hundredweight price support reduction alternative.
c Proxies a $1.00 per hundredweight price support reduction alternative.
24
The set of prices in Table 8 provides for analysis and inference of
the impact of the assessment compared to reductions in the support prices
by amounts equal to the assessment. Since the assessment does not alter
the support price level of $13.10 per hundredweight, it has no direct
effect on consumer prices of either fluid milk or manufactured milk. A
$0.50 reduction in the support price level from $13.10 per hundredweight to
$12.60 lowers butter prices from $1.49 to $1.44 per pound, a price decrease
of 3.36 percent. The assumed price elasticity of demand of-0.49 suggests
that butter consumption will increase by 1.65 percent and NDM will increase
by 1.56 percent as a result of a $0.50 reduction in the support price (5).
Cheese utilization is calculated to increase 1.58 percent as a result of
the 3.23 percent decrease in its price due to the $0.50 reduction. As
shown in Table 9, a price support deduction of $1.00 per hundredweight will
essentially double the reduction in the products' costs and increase in
consumption percentage.
Table 9. Estimated Effects of Support Price Reductions on Product Prices
and Quantities Consumed Per Capita.
Product price reduction Product quantity increase
Milk associated with support associated with support
product price reduction price reduction
$0.50 $1.00 $0.50 $1.00
$/Ib pct $1/lb pct lb pct lb pct
Butter 0.05 3.36 0.11 7.38 0.07 1.65 0.16 3.62
NDM 0.03 3.19 0.06 6.38 0.05 1.56 0.09 3.13
Cheese 0.045 3.23 0.095 6.81 0.29 1.58 0.57 3.17
Source: Basic consumption data for calculating percentage changes were
taken from Dairy Outlook and Situation, USDA, DS-390, September
1982, Table 12.
CosmrA ap~r Table 8 indicates that current CCC purchase prices
remain unhanged under the assessment but decline proportionately with
25
reductions in support price levels. Therefore, excess product purchase
costs are less to the taxpayer under reductions in the support price level
than they are under the producer assessment. Additional savings accrue to
the taxpayer under support price reduction programs since the reduced pro-
duct purchase prices place downward pressures on commercial product pri-
ces. Lower prices act to increase consumption by amounts suggested in
Table 9. For any given quantity of milk, greater consumption means smaller
CCC purchases and associated storage costs.
Producer Considerations
Farm level prices for raw milk will be lower regardless of the choice
of an assessment or reductions in support price levels. Lower farm prices
mean lower blend prices. Since the assessment has no effect on final pro-
duct prices and consumption, its full effect is placed on the producer.
Lower product prices associated with reductions in support price
levels act to increase utilizations of both Class I (fluid) and Class III
(manufactured) milk products. Increased utilization of Class III products
places upward pressure on the M-W price and hence, on all class prices. At
the same time, the increased Class I utilization acts to lower the relative
level of Class III utilization. The combination of increased class prices,
increased Class I utilization and decreased Class III utilization acts to
raise the producer's blend price.
The outlook is for continual price depression due to the inventory of
surplus stocks and the production potential inherent in the largest heifer
replacement ratio (43.1 per 100 milking cows) to date, a relatively high
milk-feed price ratio, relatively low cull cow prices and fewer alternative
26
opportunities for dairy farmers either in or out of agriculture. Absolute
declines in farm prices, regardless of whether they 
result from an
assessment or a reduction in support price levels, will impact upon 
the
milk supply. The direction, magnitude and timing of the supply 
response
will depend upon the behavior of milk producers.
Producer Supply Responses. The Law of Supply maintains that there is 
a
direct relationship between the price of milk and the quantity produced.
Following a change in the price of milk, the 
timing of adjustments and the
degree of response vary among individual producers and regions of 
the
country. The only clear-cut issue for farmers is 
economic survival and
whether that survival lies in milk production or some other endeavor.
Increasing production under conditions of falling 
blend prices is
contrary to dictates of supply theory. Inconsistencies in assumptions
underlying supply theory and the absence of attractive 
alternatives produce
conditions under which individual farmers' output may increase in 
order to
maintain income and cash flow under conditions of falling blend prices (6).
In the short-run, the individual producers who try to maintain 
income
by offsetting the per unit profit margin decline with increased output
will first experience losses in returns to fixed assets. Further economic
losses will be experienced as reduced returns to their own labor. 
Finally,
the inability to service all variable costs from the revenue generated in
milk production will mark the terminal stage of the dairy farm's existence.
Reduced blend prices will result in less aggregate total milk pro-
duction. Over time, the lower blend prices leave smaller reserves from
which to replace worn-out resources essential to milk production. The
27
lower returns to assets in dairying make it easier for those assets to be
bid out of dairying. These developments and the net culmination of lower
blend prices will be manifest differently throughout regions of the United
States.
Table 10. Milk Production Costs and Returns Per Cow and Per Hundredweight, by Costs and Returns
Items, All Regions, 1979-1981.
1979 1980 1981a
Item Per cow Per cwtb Per cow Per cwtb Per cow Per cwtb
---------------------- dollars-_ _. -_ _ __
Gross Revenue
Milk 1540.01 11.93 1724.19 12.95 1867.95 13.72
Cull cows, calves,
replacement sales 192.01 1.49 183.58 1.38 169.80 1.25
Total revenue 1732,02 13.42 1907.77 14.33 2037.75 14.97
Direct Costs
Feed costs 695.84 5.39 815.04 6.13 866.84 6.36
Other direct costs 311.58 2.40 357.70 2.70 398.09 2.92
Tofal direct costs 1007.42 7.79 1172.74 8.83 1264.92 9.28
Revenue above Direct
Costs 724.60 5.63 735.03 5.50 772.83 5.69
Ownership Costs
RI 364.23 2.82 449.23 3.37 506.16 3.72
Total direct and
ownership costs 1371.65 10.61 1621.97 12.20 1771.08 13.00
Returns to Producer
Operator & family
labor 157.41 1.22 168.43 1.27 186.35 1.37
Management d 202.96 1.59 117.38 .86 80.32 .60
Total returns to
operator, family
labor, and
management e 360.37 2.81 2.81 2.13 266.67 1.97
a Preliminary.
b Hundredweight of milk represents all milk sold and consumed on the farm.
c Replacement reserve, interest on borrowed and equity capital, taxes, and insurance.
d Residual returns.
e Returns to equity capital are included in ownership costs.
Source: Costs and Returns of Producing Milk in the United States--1979, 1980, and Preliminary
1981, prepared by ERS, USDA, for the Committee on Agriculture, Nutrition, and
Forestry, United States Senate, July 1982.
28
Regional Impacts Differ. Producer cost data for the last three years in
different regions of the nation support earlier observations and illustrate
the disproportionate effect of the assessment on a regional basis. Data in
Table 10 indicate that the all-region total returns per hundredweight to
operator labor, family labor and management have been decreasing over the
past three years. Although total revenue has increased, so have costs of
production. Among cost categories, those associated with replacement
reserve, interest on borrowed and equity capital, taxes and insurance have
increased significantly. As a result, the net profit 
margin decreased over
time.
Table 11. Total Milk Production Costs and Returns by Selected Cost and Returns Items, by Regions
and the United States, 1981a.
Upper Corn Southern A I
Item Northeast : Midwest : Belt : Appalachian : Plains : Pacific: reqions
f
-- ----- - - - - - dollars per hundredweightb- 
.-..-.-.-.-.-....-
Gross revenue 15.28 14.88 14.69 15.19 15.87 14.40 14.97
Direct costs 9.27 8.28 9.57 11.02 11.16 9.88 9.28
Revenue above
direct costs 6.01 6.60 5.12 4.17 4.71 4.52 5.69
Ownership costs
(RITI)c 3.70 4.17 4.36 3.47 2.98 2.46 3.72
Total direct and
ownership costs 12.97 12.45 13.93 14.49 14.14 12.34 13.00
Returns to pro-
ducer d e 2.31 2.43 .76 .70 1.73 2.06 1.97
a Preliminary.
b Hundredweight of milk represents all milk sold and consumed on the farm.
c Replacement reserve, interest on borrowed and equity capital, taxes, and insurance.
d Residual returns.
e Returns to equity capital are included in ownership costs.
f Weighted average.
Source: Costs and Returns of Producing Milk in the United States--1979, 1980, and Preliminary
1981, prepared by ERS, USDA, for the Committee on Agriculture, Nutrition, and Forestry,
United States Senate, July 1982.
29
Costs and return data in Table 11 for individual regions of the coun-
try support the proposition that the producer assessment will produce
unequal hardships among producers by regions. Of the six regions for which
data are available, the Appalachian region is most typical of the
Southeast. It is also the region in which returns to producers are the
lowest. In the Appalachian region, despite the fact that gross revenue is
relatively high and its ownership costs are below the all-region average,
the returns are low because direct costs are relatively high.
The direct effect of the producer assessment is to reduce net returns
to producers by that amount. Table 12 indicates the relative impact of the
assessment as a percent of returns to producers in all six regions. The
greatest impact is on dairy farmers in the Appalachian region. The $0.50
assessment represents 25.4 percent of the all-region or average return per
hundredweight to operator labor, family labor and management. It, however,
represents 71.4 percent of the Appalachian producer's return, but only 20.6
percent of the Upper Midwest producer's return. The degree of inequity of
the burden increases with increases in the assessment rate. Economic
relationships suggest that there is likely to be a greater proportion of
the milk production lost in those areas where the effect of the assessment
if relatively greater.
This section outlined consumer and producer considerations associated
with the implementation of a producer assessment versus a reduction in sup-
port price equal to the amount of the assessments. These considerations
were outlined in terms of CCC purchase prices for the hard manufactured
products of the dairy industry and in terms of relative rates of taxation
to producers based on returns per hundredweight. Comparative effects are
summarized in Table 13.
30
Table 12. Effects on Milk Production Returns Among Regions as a Result of
Alternative Assessments.
Return $0.50 cents assessment $1.00 assessment
Region per hundredweighta Absolute Relative Absolute Relative
dol dol pct dol pct
Northeast 2.31 .50 21.6 1.00 43.2
Upper Midwest 2.43 .50 20.6 1.00 41.2
Corn Belt .76 .50 65.8 1.00 131.6
Appalachian .70 .50 71.4 1.00 142.9
South Plains 1.73 .50 28.9 1.00 57.8
Pacific 2.06 .50 24.3 1.00 48.5
All regions 1.97 .50 25.4 1.00 50.8
a Based on 1981 returns.
Table 13. Comparative Effects of a Producer Assessment Versus a Reduction in the
Support Price Upon Producers and Consumers.
Effect on: Producer assessment Support price reduction
Short run Lon run Short run Lon run
Producer
Blend price decrease decrease decrease decrease
Production don't know decrease don't know decrease
Income decrease decrease decrease decrease
Consumer
Retail prices no change no change decrease decrease
Consumption no change no change increase increase
DAIRY PRICE ALTERNATIVES FOR THE SOUTHEAST
The major focus of the assessment program is directed toward reducing
government costs in the purchases of cheese, butter and nonfat dry milk by
the CCC. Costs are to be reduced through a levy to be collected from all
milk sold in the United States.
The price support level is maintained at $13.10 per hundredweight
($12.80 at 3.5 percent fat) for the marketing years beginning October 1,
1982 and 1983. In 1984, the support price level will be based on the per-
cent of parity that $13.10 is on October 1, 1983. The estimated parity is
about 61 percent, which equates to a support level of $14.60 per hundred-
weight on October 1, 1984.
The Secretary of Agriculture is given the authority to assess 50 cents
per hundredweight on all milk marketed. The assessment was to begin on
December 1, 1982, but the USDA is now under an injunction prohibiting
collections. Responsibility for collecting the assessment and sending the
funds to the CCC is imposed on every plant or handler of fluid and
rnanufacturi ng milk. Producer-handlers are requi red also to pay the
assessment. The assessment is to remain in effect at the discretion of the
Secretary through the 1985 marketing year if surplus removals by the CCC
exceed 5 billion pounds of milk equivalent on an annual basis.
Furthermore, the Secretary has the authority to assess an additional
50 cents per hundredweight on April 1, 1983. However, this assessment has
the following provisions:
1. The assessment will be made if the estimate of annual (marketing
year) CCC purchases exceed 7.5 billion pounds milk equivalent.
31
32
2. A production adjustment incentive program must be 
established by
the Secretary to refund part or all of the second 50 cents
assessment to farmers who reduce their production.
Dairymen who reduce their production from a base period after April 1,
1983, will be eligible to have a part or all of the 50 cents 
assessment
refunded depending on the amount of the reduction. 
The Secretary must
estimate the year's surplus production and then set a percent 
by which he
chooses to reduce production. Dairy producers will not be 
required to
reduce production more than the percent of the national surplus to be eli-
gible for the refund. If the surplus is estimated at 
10 percent and the
Secretary specifies an 8 percent reduction for a full refund, then a pro-
ducer reducing marketings by that amount would be eligible 
for a refund of
50 cents per hundredweight.
The base period established by the Secretary 
to determine the
production history will be October 1, 1980, through September 
30, 1982.
The marketing history of each milk producer in the 
nation will be necessary
information to establish a producer base for the selected base 
period.
Each producer will need to furnish evidence to substantiate 
their
production reduction after April, 1983. The refund is payable 
only on an
annual basis with the first refund payable after March 31, 1984 
(1).
Program Impacts
Milk production in the 1981-82 marketing year is projected to be 
134.3
billion pounds with marketings of 132 billion pounds. Net removals by the
CCC are expected to be 13.8 billion pounds milk equivalent with the price
33
support at the minimum of $13.10 per hundredweight. With no deductions
implemented for 1982-83, production is projected to be 137.5 billion pounds
of milk resulting in marketings of 135.3 billion pounds. Projected CCC
removals are 13.9 billion pounds of milk equivalent. Commercial use is
expected to increase about the same amount as the increased marketings
because of stable prices and increases in population (7,8).
Implementation of the 50 cents assessment on December 1, 1982, was
expected to slow down the rate of increase in milk production. The
implementation of the second 50 cents assessment on April 1, 1983, is
expected to reduce production somewhat to slightly above the 1981-82
level. With an expected increase in commercial utilization and a slight
increase in production, CCC removals under the assessment plan may be down
about 1 to 1.5 billion pounds.
With the 50 cents assessment, projected outlays by the CCC are $2,037
million for 1982-83, and with both assessments the outlay projection is
$1,992 million. The assessment will amount to about $600 million for 50
cents and over $900 million for both assessments. Therefore, CCC costs
would be reduced to $1.1 to $1.5 billion or by almost one-half of current
expected costs.
Milk costs to consumers will not be directly affected by the 1982-83
price support program. Costs will not increase due to price support
increases since the support is frozen at its current level. Neither will
milk product costs to consumers decrease because the assessment goes to CCC
to reduce costs of removing milk from the market. Taxpayers' costs for the
CCC milk product purchases will be reduced by the amount of the
assessments.
34
Impacts on the Southeast
Although the incidence of surplus milk production is a regional
problem, the dairy surplus problem is a national one in that it impacts on
the economic well-being of dairy farmers, processors and consumers
throughout the United States. In those regions where farmers have expanded
production in excess of commercial market needs, the CCC has become the
major purchaser. However, the assessment is scheduled to be applied to all
producers regardless of the market or region.
Most marketings of milk in the Southeast are Grade A eligible for
fluid milk markets. Furthermore, most of the milk is used for either Class
I products or Class II products. For the 12-month period July 1, 1981-June
30, 1982, milk producers in the six Southeastern States of Alabama,
Florida, Georgia, Louisiana, Mississippi and South Carolina marketed 6.4
billion pounds of milk. In these six states it is estimated that 81
percent of the milk marketed was used for fluid milk products (Class I) and
8 percent was used for soft products (Class II). Only 11 percent was
utilized in manufactured milk products of cheese, butter and nonfat dry
milk. Thus, a relatively small quantity of milk in the Southeast is
manufactured into products eligible for purchase by the CCC.
Milk production and marketings for each of the Southeastern States and
for the United States are shown in Table 14 for the period July 1,
1981-June 30, 1982. Marketings ranged from 550 million pounds to 2.1
billion pounds. Data were obtained for the eight Federal milk orders and
two state milk orders in which most of the milk produced in the six states
is sold (Table 15). Utilization ranged from 68 to 88 percent Class I.
Table 14. Production per cow, Average Number of Cows, Total Milk Production, and Total Milk Marketed, Southeastern
States and United States, July 1981-June 1982.
Southeastern States Total
Item/unit Alabama Florida Geor Ia Louisiana Mssissipp South Carolina Total U.S.
Milk per cow (Ib) 9,130 11,160 10,720 9,335 8,910 11,766 10,748 12,174
Milk cows (thou) 62.8 189.6 130.7 102.8 96.1 48.0 630 10,973
Total production (mll Ib) 573 2,116 1,401 960 856 565 6,471 133,585
Total marketed (mil Ib) 556 2,103 1,381 936 844 553 6,373 130,419
Source: Milk Production, SRS. USDA. various issues, and Milk Production, Disposition, Income. SRS. USDA.
W--
36
Table 15. Producer Deliveries of Milk Used in Class I, II, and
areas, Selected Southeastern Markets, July 1981-June
III by Market
1982.
Producer deliveries Percentage Price per
Market/class use of milk utilization hundredweight
thou lb pct dol
Georgia Fed. Order
Class I
Class II
Class III
Total
Upper Florida and
Tampa Bay Fed. Orders
Class I
Class II
Total
Southeast Florida Fed. Order
Class I
Class II
Total
New Orleans - Miss.-
Memphis Fed. Orders
Class I
Class II
Class III
Total
Greater Lousiana Fed. Order
Class I
Class II
Class III
Total
South Carolina
Class I
Classes II & III
Total
Alabama
Class I
Classes
Total
II & III
1,419,658
140,485
328,736
1,888,879
1,313,525
182,320
1,495,845
686,736
83,537
770,273
1,011,004
181,011
287,139
1,479,154
469,677
26,169
49,106
554,952
486,640
66,360
553,000
775,602
102,847
888,449
75.16
7.44
17.40
100.00
87.81
12.19
100.00
89.15
10.85
100.00
68.35
12.24
19.41
100.00
84.63
4.72
10.65
100.00
88.0
12.0
100.0
88.29
11.71
100.00
15.18
12.61
12.48
14.52
17.02
12.63
16.48
17.32
12.63
16.81
15.34
12.62
12.48
14.45
15.23
12.63
12.48
14.81
15.95
12.48
15.53
14.96
12.57
14.69
and State
Sources: Federal Order Market Statistics, Agricultural Prices,
Order Statistics.
~IU33 LIL LUI rlJ;I
37
The utilization percentages were applied to the 
estimated milk mar-
ketings by producers in each state to obtain 
estimates of the amount of
milk utilized in the various classes (Table 16). 
All the Florida markets
were combined to obtain a weighted utilization 
percentage. Since federal
orders overlap state boundaries in Louisiana and Mississippi and milk moves
across state boundaries, the data for three 
Federal orders were combined to
obtain a combined utilization.
Estimates of class and blend 
prices were obtained for each
Southeastern State from milk order and USDA sources. 
Class prices for
Florida and Louisiana-Mississippi are 
weighted average prices of all milk
and value of milk in the combined markets. The blend 
price in each state
is the simple average of the monthly 
all milk price published by USDA for
each state. The Class II and Class III 
prices are the simple averages of
the monthly prices from the Federal and state 
order markets. The Class I
price in most markets was a price above 
the federal order minimum price.
Although the price was announced each month, 
various deductions and market
adjustments made it difficult to obtain the actual 
Class I price. However,
class utilizations and Class II and Class III 
prices were available.
Therefore, the Class I price in each 
state was estimated by the following
procedure: Class I price = Blend price - [(Class 
II price x Class II %
util.) + (Class III price x Class III % util.)] 
/ (Class I % util.)
Table 17 shows the estimated milk marketed by producers 
for 1982.
Production data for the first nine months of 1982 were obtained from USDA
published sources. The last three months 
were estimated by multiplying
the percentage change in the first nine months 
of 1982 relative to 1981 to
38
Table 16. Estimated Utilization of Milk Marketed and Prices Received, South-
eastern. States, July 1, 1981-June. 30, 1982.
Estimated Percentage, Price per
State/class use marketed utilization hundredweight
Georgi a
Class I
Cl ass I I
Class ILL
Total.
Florida
Class I
Class II
Total
Louisiana and
Class I
ClassII
Cl ass- III
Total
Mi s si s si, ppi
South Carolina
Class I
Classes II & II
Total
Al abama
Class I
Classes II & III
Total
All markets
Class I
Class II
Class ILL
Total
Sources: Tables 14 and 15.
1,038
103
240
1,381
1,856
247
2,103
1,296
181
303
1,780
487
66,
553
491
65
556
5,168
531
674
6,373
75.16
7.44
17.40
100000
88.27
11.73
100.00
72.79
10.19
17.02
100.00
88.00
12.00
100.00
88.29
11.71
100.00
81.10
8.33
10.57
100.00
15.18
12.61
12.48
14.52
17.12
12.63
16.59
15.31
12.62
12.48
14.55
15.95
12.48
15.53
14.96
12.57
14.69
15.96
12.62
12.49
15.32
39
Table 17. Estimated Milk Marketed, Percentage Utilization, and Prices Paid to
Producers, Southeastern States, 1982.
Estimated Percentage Estimated price Estimated
Market marketeda utilizationb per hundredweightc value
mil Ib pct dol mil dol
Georgia
Class I 1,042 75.16 15.03 156.6
Class II 103 7.44 12.57 12.9
Class III 241 17.40 12.46 30.0
Total 1,386 100.00 14.40 199.5
Florida
Class I 1,884 88.27 17.00 320.3
Class II 250 11.73 12.57 31.4
Total 2,134 100.00 16.48 351.7
Louisiana & Mississippid
Class I 1,284 72.79 15.23 195.6
Class II 180 10.19 12.57 22.6
Class III 300 17.02 12.46 37.4
Total 1,764 100.00 14.49 255.6
South Carolina
Class I 497 88.00 15.95 79.3
Classes II & III 68 12.00 12.48 8.5
Total 565 100.00 15.53 87.8
Alabama
Class I 484 88.29 14.70 71.2
Classes II & III 64 11.71 12.57 8.0
Total 548 100.00 14.45 79.2
a Based on first 9 months of 1982 and last 3 months estimated based on 1981.
b Utilization in federal order and state order markets, July 1981-June 1982,
Alabama, April 1981-March 1982.
c Based on first 8 months of 1982, Class I prices estimated.
d Louisiana and Mississippi marketings and combined utilizations from federal
order markets.
40
the last three months of 1981 and adding the product to the 1982 data.
Marketings were assumed to be the same percentage 
of production as the
1981-82 data from Table 16. The estimated prices were 
based on data for
the first eight months of 1982 and estimated for the 
last four months.
Blend prices in the May-August 1982 period were averaging about 
30 cents
less than 1981, so the 1982 prices for the last four 
months were estimated
to average 30 cents less than the 1981 prices.
In assessing the impact of the assessments on milk producers 
in the
Southeast, a baseline estimate was made under the assumption 
that 1983 mar-
ketings would be the same as 1982, since there would be no price 
change.
With the assessments, economic theory would suggest that 
producers in the
aggregate will react to the lower prices in such a way 
that production will
decrease during the year
3
. Borrowing from some studies of milk supply
response to price changes, a short run supply elasticity 
of 0.25 was used
in this analysis. That is to say, a 10 percent change in 
producer price
will result in a 2.5 percent change in production in the same direction
(9).
Responses in production to the assessments were analyzed for two pos-
sible outcomes (Table 18). The following scenarios were analyzed:
Scenario Al - Producer response to the 50 cents per hundredweight
reduction in blend price.
3 Some have alleged that the assessment will result in an increase 
in
production, as dairy farmers squeeze out additional output in order to
maintain cash flow. However, it is more likely that production will
decline. Some individual dairy farmers will no doubt, expand production,
but such expansion will be more than offset by other dairy farmers who
will cull marginal cows made unprofitable by lower prices. Ultimately,
some firms will be driven from the industry resulting in a supply
decline.
41
Table 18. Utilization, Production, 
Class Prices, and Value of Production 
and
Producer Prices for Milk, Various Scenarios, 
Southeastern States,
Projected, 1983.
Baseline Scenario Scenario
Market/unit 1983 
Al A2
Georgia
Class I (mil lb) 1,042 
1,042 1,042
Class II (mil lb) 103 
103 103
Class III (mil lb) 241 
229 154
Total production (mil lb) 1,386 1,374 
1,299
Value (mil dol) 199.50 
198.00 188.70
Blend (dol/cwt) 14.40 14.41 
14.53
Adjusted value (mil/dol) 
--- 191.10 
179.00
Adjusted blend (dol/cwt) 
-- 13.91 
13.78
Florida
Class I (mil lb) 1,884 1,884 
1,884
Class II (mil lb) 250 
234 119
Total production (mil lb) 2,134 2,118 
2,003
Value (mil dol) 351.70 
349.70 335.24
Blend (dol/cwt) 16.48 
16.51 16.74
Adjusted value (mil dol) --- 
339.10 320.78
Adjusted blend (dol/cwt) 
--- 16.01 
15.99
Loui si ana-Mississippi
Class I (mil lb) 1,284 
1,284 1,284
Class II (mil Ib) 180 
180 180
Class III (mil lb) 300 
285 190
Total production (mil Ib) 1,764 
1,749 1,654
Value (mil dol) 255.60 
253.70 241.85
Blend (dol/cwt) 14.49 14.51 14.62
Adjusted value (mil dol) --- 245.00 229.41
Adjusted blend (dol/cwt) --- 
14.01 13.87
South Carolina
Cl ass I (mil Ib) 497 
497 497
Classes II & III (mil lb) 68 
63 33
Total production (mil lb) 565 
560 530
Value (mil dol) 87.80 
87.20 83.39
Blend (dol/cwt) 15.53 
15.57 15.73
Adjusted value (mil lb) --- 
84.40 79.39
Adjusted blend (dol/cwt) --- 
15.07 14.98
Alabama
Class I (mil lb) 
484 484 
484
Classes II & III (mil lb) 
64 59 
29
Total production (mil lb) 
548 543 
513
Value (mil dol) 79.20 
78.50 74.79
Blend (dol/cwt) 
14.45 14.46 
14.58
Adjusted value (mil dol) 
--- 75.80 
70.90
Adjusted blend (dol/cwt) 
--- 13.96 
13.82
42
Scenario A2 - Producers response to the first 50 cents assessment;
assume that production will need to be reduced 10 percent to obtain a
refund of the second 50 cents assessment and 50 percent of the producers
reduce production by 10 percent.
With the assessment program there would be no response in the market
side of the equation since consumer prices would not be affected.
Therefore, Class I and Class II sales were assumed to remain the same as in
1982. In fact, Class I and Class II sales may increase somewhat as a
result of the decreasing "real" prices for milk and population increases.
The supply elasticity was applied to the percentage decrease in pro-
ducer prices as a result of the assessments. Total production was adjusted
downward relative to the expected producer response to the lower prices.
Also, production was adjusted down in relationship to the expected response
to a refund of the second assessment of 50 cents. Since Class I and Class
II sales were assumed to hold at the 1982 level, the reduction in pro-
duction resulted in a reduction in Class III utilization or in Class II and
Class III.
Results show an estimated reduction in producer income in 1983 from
baseline estimates of $8 to $20 million in Georgia, $12 to $31 million in
Florida, $10 to $26 million in Louisiana-Mississippi and $3 to $8 million
each in South Carolina and Alabama (Table 18). Total value of milk pro-
duction would be reduced an estimated $38 to $95 million or about four to
10 percent. Total milk production would decrease one to six percent. On a
per cow basis, the average reduction in income would range from $61 to $68
per cow for the six states. This, of course, would vary by the
43
production level per cow. To the individual producer operation, the
reduction in income would vary by both herd size and production per cow.
The reduction would apply across the board on an equal per pound basis
regardless of the efficiency of the operation.
Potential action on the part of milk producer organizations may be to
increase the Class I price above the current level as a method of offset-
ting the decrease in the overall price. For example, an increase in the
Class I price of 30 cents in an 80 percent Class I utilization market would
result in an increase in the blend price of 24 cents. Thus, if producers
were effective in raising the level of Class I prices, such increases would
be reflected in higher retail prices for fluid milk products which would
have a direct effect on consumers' expenditures.
An additional serious issue to Southern milk consumers is that any
decrease in production could result in seasonal shortages in milk to meet
Class I needs in some already deficit markets. For example, substantial
volumes of both raw and packaged fluid milk are imported into Florida and
Alabama markets. Any reduced production in those markets could result in
an increased importation of milk and possible increased prices for such
milk to consumers. Thus, under the assessment program producers would
receive less, and yet consumers may be required to pay more.
Some Policy Alternatives to the Assessment Plan
Several alternatives to the assessment plan have been offered. Almost
all of the alternatives take into account the market demand for milk as
well as supply side. The following alternatives are considered in this
analysis":
44
i. Reduce the support price.
2. Reduce prices for Class II and Class III milk, but retain Class I
prices at current levels.
3. A formula plan for changing support prices.
4. A cull cow incentive plan.
5. A production base-excess and assessment plan.
The impact of these various alternatives on the Southeast was esti-
mated. Since the demand side of the market would be affected by reduced
support prices, it was necessary to select demand response variables to
apply to price changes. Most studies of demand for fluid milk products
indicate that the response to price change is very inelastic. For man-
ufactured products, the elasticity is somewhat higher. For this analysis
at the farm level, a short run price elasticity of-0.113 was used for
fluid milk, and a price elasticity of -0.49 was used for manufactured pro-
duct milk (9).
The following scenarios were analyzed:
Scenario BI - Decrease the support price $1.00 per hundredweight.
Scenario B2 - Decrease the support price $1.50 per hundredweight.
Scenario C - Decrease the Class II and Class III prices $1.00 per
hundredweight but retain Class I prices at the current level.
Scenario D - Decrease Class II and Class III prices $1.00 and
decrease the Class I price $.50.
Scenario E - Decrease Class II and Class III prices $1.50 and
decrease the Class I price $.50
45
Scenario F - Assess producers $0.50 per hundredweight and decrease
the support price $0.50 per hundredweight. Use the assessment as an
incentive to cull cows.
Scenario G - Establish production bases and assess producers for
excess production; hold support prices at current levels.
Compared to the baseline situation data, production would be down an
estimated 104 million pounds for the support price reduction of $1.00
(Scenario B1) and 158 million pounds for a $1.50 reduction in support price
(Scenario B2). Class I use would increase in the range of 38 to 56 million
pounds (Table 19). Milk for Class II and Class III use would decrease a
net of 143 to 214 million pounds, or about two to three percent. Total
value of milk to producers would range from $75 million to $112 million
less or down 8 to 12 percent.
The total effect of Scenario C (decrease Class II and Class III pri-
ces, but not Class I prices) would be to reduce production about 21 million
pounds and income about $14 million for the Southeast (10). Class I use
would remain the same since the price would not be affected. Reducing all
Class prices, but by different levels, shows somewhat similar results
(Scenarios D and E). Production would decrease 66 million pounds (D) to 73
million pounds (E). Class I use would increase 19 million pounds, while
Classes II and III would decrease 85 to 92 million pounds. Total value
would be reduced from $45 to $51 million compared to the base situation.
Decreasing the support price, which would affect prices for all milk,
would have the most severe effect on producer income. Some combination of
46
Table 19. Utilization, Production, Value of 
Production, and Blend Prices for
Producer Milk, Various Scenarios Related to Support Price Level,
Southeastern States, Projected 1983.
Scenario Scenario Scenario Scenario Scenario
State/unit B1 B2 
C D E
Georgia
Class I (mil Ib) 1,050 1,054 1,042 
1,046 1,046
Classll (mil lb) 107 109 107 107 
109
Class III (mil lb) 205 187 231 
217 213
Total production 1,362 1,350 1,380 1,370 1,368
(mil Ib)
Value (mil dol) 183.20 175.20 195.50 189.30 
187.40
Blend (dol/cwt) 13.45 12.98 14.17 13.82 13.70
Florida
Class I (mil Ib) 1,896 1,903 1,884 
1,890 1,890
Class II (mril lb) 206 183 246 225 
224
Total production 2,102 2,086 2,130 2,115 
2,114
(mil lb)
Value (mil dol) 327.20 315.20 348.80 337.90 336.60
Blend (dol/cwt) 15.57 15.11 16.38 15.98 15.92
Loui si ana-Mi ssi ssippi
Class I (mil lb) 1,294 1,298 1,284 
1,289 1,289
Class II (mil lb) 187 191 187 187 191
Class III (Mil lb) 252 229 285 268 261
Total production 1,733 1,718 1,756 1,744 
1,741
(mil Ib)
Value (mil dol) 234.60 224.40 249.90 242.20 
239.60
Blend (dol/cwt) 13.54 13.07 14.23 13.89 13.76
South Carolina
Class I (mi l 1 b) 501 502 497 499 
499
Classes II & III 55 49 67 61 
60
(mil Ib)
Total production 556 551 564 560 
559
(mil lb)
Value (mil dol) 81.20 77.90 87.00 84.10 
83.70
Blend (dol/cwt) 14.60 14.14 15.43 15.02 14.97
Alabama
Class I (mi I lb) 488 490 484 486 
486
Classes II & III 51 44 62 
56 56
(mil lb)
Total production 539 534 546 
542 542
(mil lb)
Value (mil dol) 72.80 69.60 78.30 
75.50 75.20
Blend (dol/cwt) 13.51 13.02 14.34 
13.93 13.87
47
decreasing all prices for milk but decreasing prices more for Class II and
Class III than for Class I, contains both the features of increasing the
sale of milk through commercial channels while reducing production, but
results in a more moderate reduction in value of milk to producers. The
impact would be more severe in lower utilization markets.
These results are based on short run responses to changes in prices.
Unless the price decreases are severe enough to cause wholesale herd dis-
posal and sale of cows for slaughter, the adjustments to price changes will
be slow and deliberate.
Longer run results with such price changes will have more effect.
Many studies concerning milk supply response in the longer run indicate a
much higher elasticity in the range of 0.8 to 1.2. This would mean that
changes of $1.00 to $1.50 reduction in producer prices which are in the
range of 6 to 10 percent would result in production decreases 6 to 10 per-
cent in the longer run, that is in two or three years. Thus, the problem
becomes one of the time that may evolve before the desired production
adjustments occur.
One policy proposal involves the determination of the support price
for milk by means of a formula which is based on the parity price and the
level of excess supplies in a previous period. The volume of CCC net pur-
chases of milk would determine the support price level as a percent of par-
ity. Current CCC purchases would direct that the support price be 60 per-
cent of parity, which is about $11.79 per cwt. This is about $1.00 under
the current support price so the results would be similar to those shown in
Scenario 131. However, with a reduction in CCC purchases the support price
48
would increase the following year so that the longer 
run results may be an
increase in production instead of a decrease.
Cull Cow Incentive Program. A method that would have an immediate 
effect
on milk production would be for dairy farmers to cull low producing 
milk
cows from the herds. Beef prices in 1981-82 have provided 
little incentive
for dairy farmers to sell cows for slaughter 
beyond those that have
disease, health and breeding problems. Therefore, there are cows in many
herds that are producing enough to milk to cover variable costs 
but pro-
bably not all costs. Milk producers will not cull their herds unless there
is an economic incentive such as high beef prices, a low 
milk-feed price
ratio, or an incentive payment to cull cows beyond 
an average or normal
rate of culling.
Could some kind of incentive be offered through a government 
program
that might bring about culling of dairy cows? How many cows would need 
to
be culled? What would the incentive need to be and the total cost? 
How
would it be operated? In any case such a program would need 
to be vol-
untary, which means one could not expect 100 percent participation. 
Also,
would a limit need to be placed on the number of cows that one 
farmer could
cull?
Generally, from the assessment program concepts it could 
be acceptable
for CCC to remove 6 billion pounds of milk for use in various 
programs.
Therefore, using 13.9 billion pounds as the projected CCC removal for 1983
and subtracting 6 billion, then about 7.9 billion pounds reduction would be
a goal through reducing cow numbers by culling. Production per cow
averaged about 12,175 pounds per cow in 1982. The low end of production
49
per cow may be assumed to be 80 percent of average or about 9,750 pounds
per cow. Therefore, to reduce production 7.9 billion pounds it would
require the culling of about 810,000 cows or about seven percent of the
U.S. herd and about 44,000 cows in the Southeast.
One way to view the incentive that might be provided is to consider
the cost to CCC of taking such milk off the market. At the support price
of $13.10, the 7.9 billion pounds amount to $1 billion. At an incentive
rate paid to producers for culling of $400 per cow, the total cost would be
$324 million. Thus, the cost-benefit ratio looks reasonable.
The 50 cents assessment in the current program could be placed into a
fund that could be used to pay the culling incentive. A method could be
established that would allow cows to be sold each month relative to the
amount of funds available that month. Thus, production would decrease over
a period of six months. Scenario F shows the results of a cull cow incen-
tive program that includes a 50 cents assessment and a 50 cents decrease in
the support price (Table 20). It is assumed seven percent of the cows
would be culled in the first six months resulting in a reduction of 428
million pounds of milk production for the year for the six states. Total
value of production including the vaue of the incentive would be $68.5
million less than the base estimate. Since production, and therefore
surplus would be reduced sustantially, support prices would be expected to
increase to $13.10 or higher for 1984. Since the plan could cause a
shortage of mi 1k i n Fl onida, Fl onida producers may choose to not parti -
ci pate on an equal basis.
Table 20. Utilization, Production, Value of Production, and Blend Prices for Producer Milk, Cow Culling Incen
Plan, Southeastern States, Projected 1983.
Louisiana- South
Item/unit Georgia Florida Mississippi Carolina Alabama Tot
Class I (mil lb) 1,046 1,189 1,289 500 487 5,21
Class II (mil Ib) 105 116 183 40
Class Ill (mil lb) 144 -- 159 
31
a 
20
a3
Total production (mil Ib) 1,295 2,005 1,631 531 507 5,96
Value (mil dol) 175.4 315.6 222.8 78.3 69.1 862
Blend (dol/cwt) 13.55 15.74 13.66 14.75 13.62143
Value including Incentive for culling
(mil dol) 179.1 320.9 228.4 79.6 70.9 90.
Number cows culled (thou) 9.1 13.3 13.9 3.44 44.1
a Class II and Class Ill combined.
0I
51
There would be problems inherent in administering the culling pro-
gram. All producers would not participate equally, some producers would
replace culled cows with two-year-old replacement heifers and a dairy cow
would have to be clearly defined. Spreading the culling over a six-month
period would have a less devastating affect on the beef market. The pro-
gram would decrease production quickly, it would be producer financed
through the assessment and it would cure the ills of the surplus problem
without dragging it out for two or three years.
There are other administrative problems associated with a cow culling
plan. Normal turnover, or culling rate, is relatively high (27 to 30 per-
cent) and such an incentive program would have to increase normal culling
to have an effect. Advance notification of a plan could ruin its
effectiveness, as producers might hold back cull cows in order to collect
the incentive payment. Further, a culling plan could have a short-term
impact on reducing milk production and would not bring about longer-term
supply adjustments.
A Modified Base-Excess Plan. There are several versions of base plans that
have been offered as a solution to the excess production plan. A somewhat
simple one is analyzed in this paper. The premise is that the plan begins
from the current situation with the supply-demand balance or base calcu-
lated from two previous marketing years and the projected current marketing
year. The national base and excess is determined as follows:
52
FY 1980-81 FY 1981-82 FY 1982-83 Average
. . . . . . . . . . . b i l l b -. . .
. . . ..-
Marketings 129.4 132.0 135.3 
132.2
Beginning stocks 6.1 5.3 4.5 5.3
Imports 2.3 2.4 
2.4 2.4
Total supply 137.8 139.7 142.2 139.9
Commercial use 119.8 
120.8 123.3 121.3
Ending stocks 5.3 5.1 5.0 5.1
Government purchase 5.0 5.0 
5.0 5.0
Total use 130.1 130.9 133.3 131.4
The producers national base is determined by 
dividing total use by
total supply (131.4/139.9); thus the national 
producer base would be 96
percent of marketings.
Each producer would have a base equal to 96 percent of marketings
based on the last marketing year. Depending on the market for each 
pro-
ducer the base would be first used to fill Class I and Class 
II needs. The
difference between a producer base and the sum of Class I and II 
would
receive the Class III price. For any milk marketed over base 
and not uti-
lized as above, the producer would be required to pay an assessment through
a reduced blend price.
It is assumed under the plan that the support 
price would remain at
the current level of $12.80 (3.5 percent) 
for the first year and adjusted
upward on the basis of 70 percent of parity as soon as the 
use/supply equal
100.
The results of such a plan on the six Southeastern States 
are shown in
Table 21. It is assumed that utilizations 
would be the same as the base
data except for that milk in excess. Class prices are higher, reflecting a
support price of $12.80 with prices for manufactured 
milk (the M-W price)
53
Table 21. Estimated Milk Marketed, Value, and Blend Prices for Producer Milk
Under a Base Plan, Southeastern States, Projected 1983.
Scenarl o
Estimated Estimated Estimated
Market marketings price value
mil l b do/cwt mi dol
Georgia
Class I 1,042 15.40 160.5
Class II 103 12.90 13.3
Class III 158 12.80 20.2
Total (base) 1,303 14.89 194.0
Excess 83 12.80 -10.6
Total marketings 1,386 13.23 183.4
Florida
Class I 1,884 17.34 326.7
Class II 250 12.90 32.3
Total (base) 2,006 16.82 359.0
Excess 0 0 0
Total marketings 2,134 16.82 359.0
Louisiana
Mississippi
Class I 1,284 15.57 199.9
Class II 180 12.90 23.2
Class III 194 12.80 24.8
Total (base) 1,658 14.95 247.9
Excess 106 12.80 -13.6
Total marketings 1,764 13.28 234.3
South Carolina
Class I 497 15.95 79.3
Classes II & III 34 12.80 4.4
Total (base) 531 15.76 83.7
Excess 34 12.80 -4.4
Total marketings 565 14.04 79.3
Alabama
Class I 484 15.04 72.8
Classes II & III 31 12.80 4.0
Total (base) 515 14.91 76.8
Excess 33 12.80 -4.2
Total marketings 548 13.25 72.6
54
to be near the support price since the cost of the excess milk would be
paid for by producers by reduced blend prices depending on their base mar-
keting balance. If marketings did not change, the overall blend in Georgia,
for example, was estimated at $13.23 or $1.66 less to pay for the excess.
If producers marketed only their base in Georgia the blend would be an
estimated $14.89.
The base plan would not penalize Florida producers since their base
was less than Class I and II needs. Therefore, high utilization markets
would be benefitted. The total value for all milk would be an estimated
$928.6 million for the six states if producers followed the expected mar-
ketings. However, if all producers marketed only their base, the total
value would increase to $961 million. The plan as shown is designed for
producers to make a choice. If they produce excess then they will be
assessed to pay for the government costs of the excess.
Such a plan would require substantial new regulations and would
require a good deal of administration especially in the initial phases.
Producers would probably reduce production when they realized the dif-
ferences in their gross incomes. Production would be frozen to current
locations with interregional movements of milk rather restricted. The plan
does allow producers as individuals to make a choice, and it does allow for
differences among markets that have differing utilization patterns.
Tables 22, 23 and 24 summarize and show the expected direction of
changes in the various factors affecting the dairy industry as a result of
the several alternatives analyzed. All alternatives are expected to result
in decreased production, decreased prices and gross income to producers and
55
Summary of Class Utilization of Producer Milk, Ble
Total Value, Under Various Scenarios, Southeastern
Projected, 1983.
nd Price and
States,
C ass C ass C ass Total Bl en Total
State I II III Volume price value
------------------il b---------.- dol/cwt mil dol
Georgi a
Baseline
Scenario
Florida
Baseline
Scenario
Lousiana and
Mi ssi ssi ppi
Baseline
Scenario0
Al
Bl
B2
C
D
E
F
G
Al
Bi
B2
C
D
E
F
G
Al
A2
Bi
B2
C
9
E
F
G
1,042
1,042
1,042
1,050
1,054
1,042
1,046
1,046
1,046
1,042
1,884
1,884
1,884
1,896
1,903
1,884
1,890
1,890
1,889
1,884
1,284
1,284
1,284
1,294
1,298
1,284
1,289
1,289
1,289
1,284
103
103
103
107
109
107
107
109
105
103
250
234
119
206
183
246
225
224
116
250
180
180
180
187
191
187
187
191
183
180
241
229
154
205
187
231
217
213
144
158
300
285
190
252
229
285
268
261
159
194
1,386
1,374
1,299
1,362
1,350
1,380
1,370
1,368
1,295
2,134
2,118
2,003
2,102
2,086
2,130
2,115
2,114
2,005
2,134
1,764
1,749
1,654
1,733
1,718
1,756
1,744
1,741
1,631
1,764
14.40
13.91
13.78
13.45
12.98
14.17
13.82
13.70
13.55
13.23
16.48
16.01
15.99
15.57
15.11
16.38
15.98
15.92
15.74
16.82
14.49
14.01
13.87
13.54
13.07
14.23
13.89
13.76
13.66
13.28
199.5
191.1
179.0
183.2
175.2
19 5.5
189.3
187.4
183.4
351.7
339.1
320.3
337.2
315.2
348.8
347.9
336.6
359.0
255.6
245.0
229.4
234.6
224.4
249.9
242.2
239.6
234.3
Table 22.
56
Table 22. cont'd
Class Class Class Blend 
Total
State I II III Total 
price value
South Carolina
Baseline
Scenario Al
A2
Bi
B2
C
D
E
F
G
Alabama
Basel i ne
Scenario
a
b
c
497
497
497
501
502
497
499
499
500
497
484
484
484
488
490
484
486
486
487
484
Al
A2
Bi
B2
C
D
E
F
G
68
C
63
33
55
49
67
61
60
31
34
59
29
51
44
62
56
56
21
31
565
560
530
556
551
564
560
559
531
548
543
513
539
534
546
542
542
507
548
b
15.53
15.07
14.98
14.60
14.14
15.43
15.02
14.97
14.75
14.04
14.45
13.96
13.82
13.51
13.02
14.34
13.93
13.87
13.62
13.25
87.8
84.4
79.4
81.2
77.9
87.0
84.1
83.7
79.3
79.2
75.8
70.9
72.8
69.6
78.3
75.5
75.2
72.6
Includes incentive received for cows sold.
Total includes excess iarketi ngs.
Class II and Class III combined.
Source: Tables 18 and 19.
n~ -L
Table 23. Summary of Utilization of Producer Milk, Production, Total Value
Under Various Scenarios, Southeastern States, Projected, 
1983.
and Blend Price,
Total value
Production under various
Classes under various scenarios minus
Class II & Total Total Blend scenarios minus value of
Scenario I III production value price baseline baseline
-------- mil lb --------- mil dol dol/cwt 
mil lb mil dol
Baseline 5,191 1,206 6,397 973.8 15.22 0 0
Al 5,191 1,153 6,344 935.4 14.75 -53 -38.4
A2 5,191 808 5,999 879.0 14.65 -398 -94.8
BI1 5,229 1,063 6,292 899.0 14.29 -104 -74.8
B2 5,247 992 6,239 862.3 13.82 -158 -111.5
C 5,191 1,185 6,376 959.5 15.05 -21 -14.3
D 5,210 1,121 6,331 929.0 14.67 -66 -44.8
E 5,210 1,114 6,324 922.5 14.59 -73 
-51.3
F 5,211 758 5,969 905.3 14.43 -428 -68.5
G 5,191 
1
,
206
a 6,397 
928
.
6
b 14.52 0 -45.2
a Includes 256 million pounds excess*
b Total value with no excess would equal
$961.4 million.
Source: Table 22
01
Expected Direction of Changes in Various Factors Affecting
Demand and Prices Under Various Policy Alternatives.
Milk Production,
Fluid Gross
Scenarioa Milk milk Prices to Prices to 
income to Class III
production demand producers consumers producers milk
Al dec nch dec nch dec dec
A2 dec nch dec nch dec 
dec
Bi dec inc dec dec dec dec
B2 dec inc dec dec dec dec
C dec nch dec dec dec dec
D dec inc dec dec dec dec
E dec inc dec dec dec dec
F dec inc dec dec dec dec
G dec nch dec inc dec dec
dec = decrease, nch = no change, inc = increase.
a
Al
A2
Bl
B2
C
D
E
F
G
-50 cents assessment.
$1.00 assessment with 50 cents refund.
Decrease support price $1.00.
Decrease support price $1.50.
Decrease Class II & III price $1.00, no change in Class I price.
Decrease Class II & III price $1.00, decrease Class I price 50 cents.
Decrease Class II & III price $1.50, decrease Class I price 50 cents.
Assess 50 cents, decrease support price 50 cents, pay to cull cows.
Base-excess plan with assessment for producing excess milk.
Table 24.
01
59
less Class III or surplus milk. Fluid milk demand is dependent on the
direction of support prices changes that would be expected to be reflected
in market prices at the retail level. The base plan may increase consumer
prices slightly but not enough to result in much change in demand. 
These
changes are all short run; the analysis does not carry over into several
marketing years.
LITERATURE CITED
(1) Federal Register. Proposed Rules Governing Certain Deductions of
Milk Marketings of Producers. 7 CFR. Part 1430, 47:243, p. 56500.
Dec. 17, 1982.
(2) State of South Carolina, et al. vs John R. Block, USDA. Civil Action
no. 82-3172-0. Memorandum Opinion and Order. U.S. District Court,
South Carolina, Columbia Division. Jan 10, 1983.
(3) Costs and Returns of Producing Milk in the United States - 1979, 1980
and Preliminary 1981. Prepared by ERS, USDA for the Committee on
Agriculture, Nutrition, and Forestry, United States Senate 97th
Congress. 1982.
(4) Milk Production, Disposition, Income 1979-81. SRS. USDA. DA 1-2.
1982.
(5) Wilson, Lowell E. et al. The Emerging Structure of the Southern
Dairy Industry. Sou. Coop. Series Bull. 224. Ala. Agr. Exp.
Sta. 1978.
(6) Gauthier, Wayne M., M. Heagler and Ernest A. Keith. Relationships
Among the Milk Price Support Program, the Federal Milk Order Program
and Structural Changes on Dairy Farms. Manuscript under review for
publication. La. Agr. Exp. Sta., Louisiana State University
Agricultural Center. 1983.
(7) World Agricultural Supply and Demand Estimates, ERS/FAS. USDA.
Dec. 13, 1982.
(8) Shaw, Charles N. "Support Program for Milk, 1982-83 Marketing Year"
Final Regulatory Impact Analysis. ASCS, USDA. Sept. 1982.
(9) Hallberg, M.C. et al. Impact of Alternative Federal Milk Marketing
Pricing Policies on the United States Industry. Pennsylvania State
Univ. Coll. of Agr. Exp. Sta. Bul. 818, 1978.
(10) Barber, J. Roger. A proposal to Reduce Government Expenditures and
U.S. Milk Production. A report of the Commissioner, New York State
Department of Agriculture and Markets. Fall 1982.
60
Milk Production by States and Regions, 1978 to 1982 with Comparisons.
Increase in milk production from:
State and 1982 as percent 1978 to 1979 to 
1980 to 1981 to 1978 to
region 1978 1979 1980 
1981
a 
1982
a of U.S. total 1979 1980 
1981 1982 1982
------------- million pounds--------------- percent 
---------------- million pounds
Northeast
Maine 641 641 665 699 737 .5 
0 24 34 38 96
New Hampshire 341 341 347 344 366 .3 0 6 -3 22 25
Vermont 2,136 2,179 2,289 2,301 2,323 1.7 43 110 
12 22 187
Massachusetts 571 566 570 578 596 .4 -5 4 8 18 25
Rhode Island 55 50 47 46 46 b -5 -3 -1 0 -9
Connecticut 612 606 612 620 641 .5 -6 
6 8 21 29
New York 10,408 10,630 10,974 11,093 11,185 8.3 
222 344 119 92 777
New Jersey 525 494 494 494 492 .4 -31 0 0 -2 33
Pennsylvania 7,881 8,084 8,496 8,965 9,264 6.9 203 
412 469 299 1,383
Delaware 129 127 125 124 131 .1 -2 -2 -1 7 
2
Maryland 1, 540 1, 520 1 520 1 556 15891.2 -20 0 36 33 
49
Total 24,839 25,238 26,139 26,820 27,370 20.3 399 901 681 550 2,531
Lake States
Michigan 4,793 4,830 4,970 5,103 5,267 3.9 37 140 133 164 474
Wisconsin 21,152 21,850 22,380 22,705 22,724 16.8 598 530 325 19 1,472
Minnesota 9089 9 145 9,535 10061 10,339 7.6 56 390 526 278 1,250
Total 35,134 35,825 36,885 37,869 38,330 28.3 691 1,060 984 461 3,196
Corn States
Ohio 4,275 4,265 4,310 4,385 4,550 3.4 -10 45 
75 165 275
Indiana 2,178 2,175 2,210 2,282 2,334 1.7 -3 35 72 52 156
Illinois 2,403 2,391 2,540 2,604 2,657 2.0 -12 149 64 53 254
Iowa 3,960 3,920 4,108 4,298 4,301 3.2 -40 188 190 3 341
Missouri 2,746 ~J2,714j 2,826 2877 81 2.1 -32 112 51 -6 125
Total 15,562 15,465 15,994 16,446 16,713 12.4 -97 529 452 267 1,151
Appendix Table 1.
Appendix Table, 1 (cont'd)
Increase in milk production from:
State and 1982 as percent 1978 to 1979 to 1980 to 1981 to 1978 to
region 1978 1979 1980 
1981
a 
1982
a of U.S total 1979 1980 1981 1982 1982
--------- million pounds------------- percent ----------------- million 
pounds
Northern Plains
North Dakota 903 874 939 963 973 .7 -29 65 24 10 70
South Dakota 1,600 1,549 1,669 1,757 1,760 1.3 -51 120 88 3 161
Nebraska 1,269 1,260 1,315 1,400 1,360 1.0 -9 55 85 -40 91
Kansas 1 375 1,330 1 30 1 397 1.0 -45 0 67 -32 -10
Total 5,147 5,013 5,253 5,517 5,458 4.0 -134 240 264 59 311
Appalachian
Virginia 1,902 1,937 1,974 2,009 2,034 1.5 35 37 35 25 132
West Virginia 342 350 350 350 352 .3 8 0 0 2 10
North Carolina 1,557 1,565 1,631 1,654 1,676 1.2 8 66 23 22 119
Kentucky 2,274 2,220 2,219 2,281 2,344 1.7 -54 -1 62 63 70
Tennessee 2,124 2 091 2, 241 2 2326 1.7 -33 150 55 30 202
Total 8,199 8,163 8,415 8,590 8,732 6.4 -36 252 175 142 533
Southeastc
South Carolina 516 542 541 552 575 .4 26 -1 11 23 59
Georgia 1,305 1,338 1,367 1,396 1,410 1.0 33 29 29 14 105
Florida 1,948 1,996 2,028 2,082 2,109 1.6 48 32 54 27 161
Alabama 631 606 610 582 563 .4 -25 4 -28 -19 68
Mississippi 836 814 817 845 873 .6 -22 3 28 28 37
Louisiana 1,j6 1 2 1,012 993 957 .7 -41 -10 -19 -36 -106
Total 6,299 6,318 6,375 6,450 6,487 4.7 19 57 75 37 188
Southern Plains
and Arkansas
Oklahoma 1,090 1,070 1,110 1,150 1,159 .9 -20 40 40 9 69
Texas 3,433 3,377 3,625 3,665 3,770 2.8 -56 248 40 105 337
Arkansas 729 725 745 793 821 .6 -4 20 48 28 92
Total 5,252 5,172 5,480 5,608 5,750 4.3 -80 308 128 142 498
Appendix Table, 1 (cont'd)
Increase In milk productio frm
State and 1982 as percent 1978 to 1979 to 1980 to191t 178o
reln1978 1979 1980 
1981
a 
1982
a of U.S total 1979 1980 1981 19298
-- Illion pounds-- ------ cnt-----------pcet------million pounds---- 
-
Mountain
Montana
Idaho
Wyoming
Colorado
New Mexico
Arizona
Utah
Nevada
TotalI
Pacific
Washington
Oregon
California
Total
Alaska'
Hawaii
United States
306
1, 633
117
872
458
906
940
187
5,419
2,669
1,065
15, 593
14.8
150
297
1, 721
119
857
507
941
948
199
5, 589
2,817
1, 103-
12,-563.
16,483
13
150
314
1, 947
132
858
602
1,9031
1, 028
219
6, 131
2,942
1, 169
13,577
17,688
13
152
331
2, 160
136
928
670
1, 133
1,110
222
6,690
3,017
1,220
18,481
13
150
341
2, 256
138
972
811
1,214
1,161
227
7, 120
3, 196
1,279
14, 576
19, 051
14
144
121,609 123,411 128,525 132,634 135,169
.3
1.7
.1
.7
.6
.9
.9
.2
5.4
2.4
.9
10.8
14.1
b
.1
100.0
-9
88
2
-15
49
35
8
12
170
148
38
704
890
-1.8
0
1,802
17
226
13
95
90
80
20
542
125
66
1,014
1,205
0
2
5,114
17
213
4
70
68
102
82
3
559
75
51
667
793
0
-2
10
96
2
44
141
81
51
5
430
179
59
332
570
-6
35
62 3
21
100
353
308
221
40
1,701
527
214
3,9458
-98
-6
4,109 2,535 13,560
a Preliminary.
Source: Dairy Outlook and Situation. ERS. USDA; Milk Production. SRS. USDA.
W~
b Less than 0.05 percent. c Includes Alabama, Florida, Georgia, Louisiana, Mississippi and South Carolina.