i

TABLE OF CONTENTS

I. STATEMENT OF NEED FOR THE FINAL ACTION ........................... 1

 A. Statutory Directive .................................................. 1

 B. Methods of Analysis ................................................. 2

II. AN EXAMINATION OF SELECTED AND ALTERNATIVE OPTIONS ............ 5

 A. Number of Classes of Utilization and Class Prices ........................... 5

 B. Class I Price Mover .................................................. 6

 C. Class I Differentials .................................................. 8

 1. Final Decision Class I Differentials .................................. 8

 2. Option 1B, as Modified ......................................... 9

 3. Option 1A, as Modified ......................................... 10

 D. Class II Price Mover ................................................ 10

III. ANALYSIS OF BENEFITS AND COSTS ................................... 11

 A. Introduction ...................................................... 11

 B. Impact on Dairy Farmers ............................................. 12

 1. Final Decision Class I Differentials ................................. 13

 2. Option 1B, as Modified ......................................... 14

 3. Option 1A, as Modified ......................................... 15

 C. Impact on Fluid Milk Processors and Dairy Product Manufacturers ............. 17

 1. Final Decision Class I Differentials ................................. 17

 2. Option 1B, as Modified ......................................... 18

 3. Option 1A, as Modified ......................................... 18

 D. Effects on Consumers, Retail Prices .................................... 19

 1. Final Decision Class I Differentials ................................. 19

 2. Option 1B, as Modified ......................................... 20

 3 . Option 1A, as Modified ......................................... 20

 E. International Trade Impacts .......................................... 21

 F. Summary ........................................................ 21

IV. REASONS FOR OPTION PREFERRED ..................................... 22

V. APPENDICES

 APPENDIX CHARTS AND TABLES .................................. 23

 

 Charts: 1 Comparison of Class Prices as Established Under the Current 

 Pricing System Using the Basic Formula Price, by Month, 

 June-December 1998 ..................................... 24

 
ii

 1A Comparison of Class Skim Prices as Established Under the Current

 Pricing System Using the Basic Formula Price, by Month, 

 June-December 1998 ..................................... 25

 1B Comparison of Class Fat Prices as Established Under the Current

 Pricing System Using the Basic Formula Price, by Month, 

 June-December 1998 ..................................... 26

 2 Comparison of Class Prices as Established Under the Proposed 

 Rule Using a Six-Month Declining Average of the Higher of the 

 Class III and Class IV Prices as the Class I Price Mover, 

 by Month, June-December 1998 ............................. 27

 2A Comparison of Class Skim Prices as Established Under the Proposed 

 Rule Using a Six-Month Declining Average of the Higher of the 

 Class III and Class IV Prices as the Class I Price Mover, 

 by Month, June-December 1998 ............................. 28

 2B Comparison of Class Fat Prices as Established Under the Proposed 

 Rule Using a Six-Month Declining Average of the Higher of the 

 Class III and Class IV Prices as the Class I Price Mover, 

 by Month, June-December 1998 ............................. 29

 3 Comparison of Class Prices as Established Under the Final 

 Decision Using a Class I Price Mover Announced on the 23rd of

 the Preceding Month, by Month, June-December 1998 ............ 30

 3A Comparison of Class Skim Prices as Established Under the Final 

 Decision Using a Class I Price Mover Announced on the 23rd of

 the Preceding Month, by Month, June-December 1998 ............ 31

 3B Comparison of Class Fat Prices as Established Under the Final 

 Decision Using a Class I Price Mover Announced on the 23rd of

 the Preceding Month, by Month, June-December 1998 ............ 32

 Tables: 1 Comparison of Class Prices as Established Under the Current 

 Pricing System Using the Basic Formula Price, by Month, 

 June-December 1998 ..................................... 24

 1A Comparison of Class Skim Prices as Established Under the Current

 Pricing System Using the Basic Formula Price, by Month, 

 June-December 1998 ..................................... 25
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 1B Comparison of Class Fat Prices as Established Under the Current

 Pricing System Using the Basic Formula Price, by Month, 

 June-December 1998 ..................................... 26

 2 Comparison of Class Prices as Established Under the Proposed 

 Rule Using a Six-Month Declining Average of the Higher of 

 the Class III and Class IV Prices as the Class I Price 

 Mover, by Month, June-December 1998 ....................... 27

 2A Comparison of Class Skim Prices as Established Under the Proposed 

 Rule Using a Six-Month Declining Average of the Higher of the 

 Class III and Class IV Prices as the Class I Price Mover, 

 by Month, June-December 1998 ............................. 28

 2B Comparison of Class Fat Prices as Established Under the Proposed 

 Rule Using a Six-Month Declining Average of the Higher of the 

 Class III and Class IV Prices as the Class I Price Mover, 

 by Month, June-December 1998 ............................. 29

 3 Comparison of Class Prices as Established Under the Final 

 Decision Using a Class I Price Mover Announced on the 23rd 

 of the Preceding Month, by Month, June-December 1998 .......... 30

 3A Comparison of Class Skim Prices as Established Under the Final 

 Decision Using a Class I Price Mover Announced on the 23rd of

 the Preceding Month, by Month, June-December 1998 ............ 31

 3B Comparison of Class Fat Prices as Established Under the Final 

 Decision Using a Class I Price Mover Announced on the 23rd of

 the Preceding Month, by Month, June-December 1998 ............ 32

 4 Class I Differentials Under Current System; Final Decision; 

 Modified Option 1B; and Modified Option 1A .................. 33

 5 Differences Between the Blend Price and Class III Price, and 

 Estimated Milk Usually Pooled That Is Not Pooled Primarily 

 Because of the Small Differences Between the Blend Price and 

 Class III Prices, Chicago Regional and Upper Midwest Federal 

 Milk Orders, January 1996 Through December 1998 ............. 34

 6 Baseline: Selected Supply-Demand-Price Estimates From the 

 USDA Model Baseline, Current Marketing Areas, 2000-2005

 and Six-year Averages .................................... 35
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 7 Final Decision: Changes in Selected Supply-Demand-Price 

 Estimates From the USDA Model Baseline, by Consolidated and

 Current Marketing Areas, 2000-2005 and Six-year Averages ....... 41

 8 Modified Option 1B: Changes in Selected Supply-Demand-Price 

 Estimates From the USDA Model Baseline, by Consolidated and 

 Current Marketing Areas, 2000-2005 and Six-year Averages ....... 47

 9 Modified Option 1A: Changes in Selected Supply-Demand-Price 

 Estimates From the USDA Model Baseline, by Consolidated and 

 Current Marketing Areas, 2000-2005 and Six-year Averages ....... 53

 10 Change in the Class II, Class III, and Class IV Prices 

 From the USDA Model Baseline, by Option, 2000-2005, 

 and Six-year Average ..................................... 59

 11 Final Decision: Changes in Price per Gallon From the USDA 

 Model Baseline, by Consolidated and Current Marketing 

 Areas, 2000-2005 and Six-year Average ....................... 60

 12 Modified Option 1B: Changes in Price per Gallon From the 

 USDA Model Baseline, by Consolidated and Current Marketing 

 Areas, 2000-2005 and Six-year Average ....................... 61

 13 Modified Option 1A: Changes in Price per Gallon From the 

 USDA Model Baseline, by Consolidated and Current Marketing 

 Areas, 2000-2005 and Six-year Average ....................... 62

 14 Change in U.S. Fluid Milk Expenditures and Consumption 

 and Manufactured Product Expenditures and Consumption 

 From the USDA Model Baseline, by Option, 2000-2005, 

 and Six-year Average ..................................... 63

 15 International and Domestic, Baseline Prices for Butter, Cheese, 

 and Nonfat Dry Milk, 2000-2005 and Six-year Average ........... 64

 16 Summary of Impacts of Class I Pricing Options on All Federal 

 Order Markets; Six-year Average ............................ 65

 17 Summary of Impacts of Class I Pricing Options on the 

 United States; Six-year Average ............................. 66

 
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APPENDIX MAPS ......................................................... 67

 Maps: 1 All Milk Prices Under Final Decision: Average Changes at 

 Selected Locations, 2000-2005 .............................. 68

 

 2 Cash Receipts Under Final Decision: Average Changes at Selected 

 Locations, 2000-2005 ..................................... 69

 3 Class I Prices Under Final Decision: Average Changes at 

 Selected Locations, 2000-2005 ............................. 70

 4 Milk Marketings Under Final Decision: Average Changes at 

 Selected Locations, 2000-2005 .............................. 71

 APPENDIX A: FMMO Reform Impact on Food and Nutrition 

 Service Programs ...................................... 72

 

 Tables: 1 Change in Retail Price of Fluid Milk under Federal Order

 Options ($/gal.) .......................................... 72

 2 Total Impact, FY00-05 .................................... 72

 3 Annual Summary, Final Decision ............................. 76

 4 Annual Summary, Option 1B ................................ 77

 5 Annual Summary, Option 1A ............................... 78

 APPENDIX B: USDA Regional Dairy Model Used in Federal Milk Marketing Order 

 Analysis ............................................. 79

 Box: 1 Derived Regional Supply Response Parameters .................. 84

 Tables: 1 National Dairy Model Parameters ............................. 84

 2 Regional Supply Responses Used in Order Milk 

 Production Equations ...................................... 89

 
Final Regulatory Impact Analysis

of

Federal Milk Marketing Order Consolidation and Reform

I. STATEMENT OF NEED FOR THE FINAL ACTION

A. Statutory Directive

Section 143 of the Federal Agriculture Improvement and Reform Act of 1996, Public Law 104-

127-APR. 4, 1996 (1996 Act) mandates consolidation and authorizes reform of Federal Milk

Marketing Orders. The Secretary is to amend such orders to limit the number to not less than 10

and not more than 14. One order must be reserved for the State of California should dairy

farmers in that State choose to petition the Secretary to have their marketings of milk regulated

under the Federal Milk Marketing Order Program. All consolidated orders will be subject to dairy

farmer approval before they are implemented.

In the process of consolidation, the Secretary is authorized to review other aspects of the order

program such as (1) “the use of utilization rates and multiple basing points for the pricing of fluid

milk” and (2) “the use of uniform multiple component pricing when developing one or more basic

formula prices for manufacturing milk.”

The final decision consolidates the current 31 marketing order areas into 11 marketing order

areas. It also adds some previously unregulated areas (counties) into the new marketing order

areas. Decisions on the consolidation of marketing order areas and the inclusion of previously

unregulated areas were based on structural factors, reflecting movements of milk, numbers of

handlers in markets, natural boundaries and existing institutional or market arrangements, such as

cooperative membership areas. In addition, numerous public comments received on the proposed

rule were considered in arriving at the final consolidation. The final decision provides the

rationale for the consolidated marketing order areas.

In addition to establishing 11 marketing order areas, the final decision also classifies milk into four

classes according to the products made from such milk. Milk used to produce defined fluid milk

products is classified as Class I milk. Milk used to produce defined soft manufactured products is

classified as Class II milk. Class III is for milk used to produce cream cheese and defined hard

manufactured cheeses, and Class IV is for milk used to produce butter and all milk powders.

The minimum monthly price for milk classified as Class I is equal to the Class I differential

specified for each marketing order plus the Class I price mover announced on or before the 23rd

day of the month preceding the month for which the price is being announced. The Class I price

mover is equal to the higher result from the formulas used to establish Class III and Class IV

prices using weighted averages of the prices for manufactured products as published by the
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National Agricultural Statistics Service (NASS) for the most recent two weeks preceding the 23rd

of the month. Weekly prices are weighted by sales volumes reported by NASS. 

The final decision adopts a Class I pricing structure that provides incentives for greater structural

efficiencies in the assembly and shipment of milk for fluid milk products. The adopted pricing

surface is the result of consideration of public comments received on the options set forth in the

proposed rule and further evaluation by the U.S. Department of Agriculture (USDA) in light of

the objectives of the Agricultural Marketing Agreement Act of 1937, as amended (the 1937 Act;

7 U.S.C. 601 et seq.). The final decision Class I pricing structure utilizes the U.S. Dairy Sector

Simulator, Version 97.3 (USDSS), a Cornell University model developed to determine the

relative values of milk at various geographic locations. The model results, adjusted for all known

plant locations, establish differential levels that will generate sufficient revenue to assure an

adequate supply of milk while maintaining equity among handlers in the minimum prices they pay

for milk bought from dairy farmers. A Class I differential is established for each county in the 48

contiguous States.

The final decision also revises the proposed minimum Class II pricing formula, as well the

minimum pricing formulas for milk used in Class III and Class IV dairy products. Revisions were

based upon comments received, as well as upon further USDA evaluation of the proposed

formulas in light of intervening conditions. 

The objectives of the final decision are: (1) to comply with the requirements of the 1996 Act

which mandated marketing order area consolidation and (2) to make other changes in order

provisions consistent with the objectives and requirements of the 1937 Act. The focus of these

changes is to enhance the efficiencies of fluid milk markets while maintaining equity among

processors of fluid milk selling in marketing order areas and among dairy farmers supplying milk

for fluid markets.

This document, the Final Regulatory Impact Analysis of Federal Milk Marketing Order

Consolidation and Reform (RIA), is prepared in compliance with the provisions of Executive

Order 12866. The purpose of this final RIA is to evaluate the costs and benefits of the selected

option as well as other viable alternatives considered in the development of the final decision.

B. Methods of Analysis

The evaluation of the comments on the proposed rule and the development of the final decision

took several paths. USDA’s Agricultural Marketing Service’s Dairy Programs had established

four committees composed of Federal Milk Marketing Order Administrators and staff, and

Washington, D.C. Dairy Programs staff to assist in the development of the proposed rule. The

four committees were: (1) the Identical Provisions Committee, (2) the Price Structure Committee,

(3) the Basic Formula Price (BFP) Committee, and (4) the Classification of Milk Committee. 

These Committees which had established criteria to evaluate the numerous proposals received,

reviewed the relevant comments and recommended changes where appropriate.
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For the purpose of providing a quantitative evaluation, the USDA interagency dairy analysis team,

under the chairmanship of USDA’s Chief Economist, evaluated the impacts of the final decision

and the significant alternatives.

A multi-regional model of the U.S. dairy sector was used to generate a “model baseline” against

which impacts of the final decision’s order consolidation and pricing alternatives were compared. 

The model is specified to generate long term supply, demand and price projections that are

consistent with USDA’s official baseline projections for the dairy sector. Appendix B details the

specifications of the dairy model. 

USDA’s dairy baseline projects that the relative shortfall of butterfat experienced in 1998 as

evidenced by higher than normal butter prices, will persist through 2000. As a result, projected

net returns from the production of butter and nonfat dry milk exceed those from the production of

cheese until 2001. The long-run baseline assumption is that returns from the production of butter

and nonfat dry milk and those from the production of cheese will equalize. For information on

USDA's official baseline, see USDA Agricultural Baseline Projections to 2008, Interagency

Agricultural Projections Committee, U.S. Department of Agriculture, Office of the Chief

Economist, World Agricultural Outlook Board, Staff Report WAOB-99-1. 

For analytical purposes, the model baseline assumes the continuation of the Tennessee Valley

marketing order that was terminated on October 1, 1997. Nearly all the plants and milk regulated

under the Tennessee Valley order became regulated under adjacent Federal orders after it was

terminated. All the plants and milk of the former order will be regulated under the newly

consolidated orders. In order to estimate the effects of order consolidation and reform on

producers formerly associated by the Tennessee Valley order, estimates of milk marketings for

orders regulating milk that was formerly regulated under the Tennessee Valley order were

reduced in the baseline and those estimates of marketings that would have been regulated by the

Tennessee Valley order were combined to represent the continuation of that order.

The model divides the 48 contiguous States into 36 areas: 32 Federal order marketing areas

(including Tennessee Valley) and 4 non-Federally regulated areas (California, Unregulated

Western Counties, certain Unregulated New York and New England areas, and other Unregulated

Eastern Counties). The demarcation between the non-Federally regulated Western and Eastern

counties follows a line extending north to south on the eastern State borders of North and South

Dakota, Nebraska, Kansas, Oklahoma and Texas. For this analysis, the Unregulated New York

and New England areas exclude the area of western New York in which milk marketing is

regulated by the State government. Under the final decision, this New York State order area will

not become Federally regulated, therefore it has been included in the other Unregulated Eastern

Counties for this analysis. Under the proposed rule, the New York State order area would have

become Federally regulated. 

The final decision consolidation will merge 33 (the 31 current Federal marketing order areas, the

terminated Tennessee Valley area, and the Unregulated New York and New England areas) of
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these 36 areas into 11 marketing order areas. The final Class I pricing structure and the final

Class II, Class III, and Class IV pricing formulas are analyzed with this geographical

configuration. The two alternatives to the final Class I pricing structure also were similarly

analyzed. The output from the model included annual changes in supply, demand and price from

the baseline levels.

The model is not able to consider inter- or intra-order movements of milk. Also, as an annual

model, the effects of seasonal changes in production, consumption, and price cannot be analyzed.

The model estimates milk production via milk per cow and number of cows, both on a total U.S.

basis and individually for the 36 defined areas. Current milk prices and feed costs, and past net

returns (a measure of profitability) are considered in estimating milk production. National and

regional returns and costs of production are used to determine producer response to changes in

farm milk prices. Milk marketings are a function of the model’s milk production estimates. 

Once the volume of milk marketings is determined, it is distributed to seven uses: bottled whole

milk, bottled low-fat milk, soft manufactured dairy products, American cheese, other cheese,

butter, and nonfat dry milk. Each of the seven uses has retail demand equations. Generally, the

demand for the specific product is a function of income, the retail price or the Consumer Price

Index (CPI) for the product and for a product substitute (e.g., margarine for butter).

Demands for raw milk for use in fluid milk products and soft manufactured dairy products have

priority in the model, and such demands are filled regionally from the raw milk supply before the

demands of the hard manufactured product markets are met. The supply of raw milk allocated to

the four hard manufactured product uses equals total milk marketings less supplies allocated to

fluid milk and soft manufactured product uses.

To estimate the impacts of the final decision Class I pricing surface and the two alternative pricing

surfaces, specific policy parameters, such as class price formulas and class price differentials were

introduced into the model beginning in 2000. For each alternative, the model is solved for cheese,

butter, and nonfat dry milk prices that achieve market equilibrium between milk supply and

product demands. The cheese, butter and nonfat dry milk markets are solved on a national level. 

The milk supply and the amount of milk used for fluid and soft manufactured products are

balanced on a regional level. The model solves for price levels, milk production and demand,

sequentially along the designated time path of 1998 through 2005. Estimated milk and product

prices drive the demand equations (which use national demand elasticities) for the seven products

for each year. The product of per capita Class I and Class II demands and each marketing area’s

population (adjusted yearly with per annum changes) results in Class I and Class II use for each

region. The estimates of Class III and Class IV use for each region for a year are the previous

year’s use adjusted proportionally for the changes in the amounts of milk used nationally in Class

III and Class IV from the previous year to the current year.
Page 5

All model results are compared to the baseline over the period 2000 through 2005, and results are

presented as changes from the baseline. 

II. AN EXAMINATION OF SELECTED AND ALTERNATIVE OPTIONS

A. Number of Classes of Utilization and Class Prices

USDA received few comments which supported other than the proposed four-class classification

system that will place milk used to produce cheese and milk used to produce butter and all milk

powders in separate classes. Numerous comments, however, were received concerning the

proposed classification of certain dairy products. The final decision provides the details of the

product classification system and addresses the comments received regarding classification.

In general, the final decision classifies milk used to produce fluid milk and soft manufactured

products the same as under the current system. Milk used to produce cheese (other than those

varieties specified as Class II products) will be priced as Class III milk. A new class, Class IV,

will price milk used to produce butter and all milk powders.

The minimum price for skim milk used in Class I products will be equal to the sum of the Class I

differential for the specific market plus the Class I skim milk price mover announced on or before

the 23 of the preceding month. As previously described, the skim milk Class I price mover is rd

equal to the higher result from the formulas used to establish Class III and Class IV skim milk

prices, using the weighted averages of the prices for manufactured products as published by

NASS for the most recent two weeks preceding the 23 of the month. Weekly prices are rd

weighted by sales volumes reported by NASS. The Class I butterfat price is equal to the value of

butterfat during the same two-week period plus an amount equal to 0.01 times the Class I

differential. Class I prices will be expressed in dollars per hundredweight of skim milk and per

pound of butterfat in all markets.

Skim milk used in Class II products will be priced for the month by adding $0.70 cents per

hundredweight to the Class II skim milk price mover, announced on or before the 23 of the rd

preceding month. The Class II skim milk mover is equal to the value of the Class IV skim milk

formula using the weighted average of the prices for nonfat dry milk as published by NASS for

the most recent two weeks preceding the 23 of the month. Weekly prices are weighted by sales rd

volumes reported by NASS. The Class II butterfat price is based on the average butterfat price

for the month announced on or before the 5 day following the end of the month plus $0.007 per th

pound. In the seven markets adopting the multiple component pricing (MCP) system, the 

Class II price will be expressed in dollars per pound of butterfat and nonfat milk solids. In the

four markets pricing skim milk and butterfat, the Class II price will be expressed in dollars per

hundredweight of skim milk and dollars per pound of butterfat. 

The minimum Class III milk price will be determined by a product price formula incorporating

product yield factors, make allowances, and average product prices for Cheddar cheese packaged
Page 6

in 40-pound blocks and 500-pound barrels, butter, and dry whey as announced weekly by NASS. 

Weekly prices reported since the last class price announcement are used and are weighted by sales

volumes reported by NASS. The Class III price will be announced on or before the 5 day of the th

month following the month to which the price applies. The Class III price will be expressed in

terms of dollars per pound of butterfat, true protein, and other solids in the seven MCP markets,

and dollars per hundredweight of skim milk and per pound of butterfat in the other four markets.

 

The Class IV price for milk used to produce butter and milk powders will be determined by use of

a product price formula incorporating product yield factors, make allowances and product prices

for butter and nonfat dry milk as reported weekly by NASS. Weekly prices reported since the last

class price announcement are used and are weighted by sales volumes reported by NASS. The

Class IV price will be announced on or before the 5 day of the month following the month to th

which the price applies. The Class IV price will be expressed in terms of dollars per pound of

butterfat and nonfat milk solids in the seven MCP markets, and dollars per hundredweight of skim

milk and per pound of butterfat in the other four markets. 

All class prices are minimum prices. See the final decision for additional detail on classification

and pricing.

B. Class I Price Mover

The BFP for the second preceding month currently is used in all orders to establish Class I prices. 

Responding to public comments received prior to the proposed rule concerning (1) the volatility

of milk prices in general, and (2) the impact of the volatile cheese market on Class I prices, the

proposed option for moving the Class I price was a weighted six-month declining average of the

higher of either the Class III or Class IV price in each month, starting with the second preceding

month weighted by six, and reducing the weight by one for each preceding month. The

announcement of Class I prices for the month on or before the 5 of the previous month would th

have provided the same 25-day advance notice as the present system. 

Comments received and observation of marketing conditions which have existed since the

proposed rule was published have shown that the proposed Class I price mover would result in

disorderly marketing conditions by failing to reflect in Class I prices timely price signals during

periods of rapidly rising prices in manufacturing markets. Thus, the proposed Class I price mover

could act to mitigate the incentive needed to supply the Class I market, and would have

contributed to class price inversion in five months of 1998. Class price inversion occurs when a

market’s regulated price for milk used in manufacturing exceeds the Class I milk price in a given

month. The result of class price inversion is that there is a penalty, rather than an incentive, for

servicing the Class I market, resulting in serious competitive inequities among dairy farmers and

dairy cooperatives who have agreements to service the Class I market and among Class I

handlers. 
Page 7

Classified pricing is based on the premise that there are extra costs of servicing the Class I market

and that milk used for Class I purposes is able to command a higher price in the marketplace to

cover those costs. The Class I price must be related to the price of milk for manufacturing since

Class I handlers must compete with manufacturing plants for a supply of milk. Initially under

Federal Milk Marketing Order regulation, the Class I price for a month was determined by adding

a differential to the value of milk for manufacturing in that month. Over time, orders were

amended to provide for advanced pricing of Class I milk. As a result of advanced pricing, the

effective Class I differential varies monthly although it has remained generally positive except on

rare occasions until recently. 

Recent increased price volatility in manufactured product markets has resulted in increased

instances of class price inversion, especially in markets with low Class I differentials. Appendix

Tables and Charts 1 and 2 show, respectively, the level of class prices that occurred under the

current price system and what would have occurred under the proposed rule pricing system. 

Appendix Tables and Charts 1A and 2A show the class prices on a skim basis, while Appendix

Tables and Charts 1B and 2B show the class prices on a fat basis. These tables and charts

illustrate the instances of class price inversion that occurred under the current price system and

what would have occurred under the proposed rule pricing system at a location where the Class I

differential is $1.20 per hundredweight. 

Under current order provisions, Class I and Class II prices are announced on or before the 5 day th

of the month and apply to milk purchased by handlers during the following month. However, the

butterfat differential for the month is not announced until about the 5 day of the following th

month. As a result, under current provisions, Class I handlers do not know their minimum costs

for butterfat or skim milk until after their products have been sold. Under the final decision,

Class I handlers truly will have advanced pricing since they will know their costs for Class I skim

milk and butterfat by the 23 of the month preceding their milk purchases. rd

The final decision establishes Class I prices that are based on manufactured product markets that

are much nearer in time to the month for which the Class I prices are being established. Class I

prices will be announced on or before the 23 of the month preceding the month for which the rd

price is being established, and will be equal to the higher result from the formulas used to establish

Class III and Class IV prices using weighted averages of the prices for manufactured products as

published by NASS for the most recent two weeks preceding the 23 of the month. Under the rd

current system, the Class I price is announced on the 5 of the month prior to the month in which th

it is to be effective and reflects manufactured product prices five to nine weeks prior to the month

the Class I price is effective. Thus, Class I prices resulting from the final decision will better

reflect current market conditions. 
Page 8

C. Class I Differentials

The adopted Class I pricing surface utilizes the USDSS model adjusted for all known plant

locations and establishes differential levels that will result in prices that generate sufficient revenue

to assure an adequate supply of milk to meet fluid demand. 

Other alternatives considered in developing the final decision were: (1) Option 1B, but modified

based on comments and further evaluation by USDA, and (2) Option 1A, slightly modified from

the proposed rule. Following is a description of the final decision’s Class I pricing surface,

modified Option 1B, and modified Option 1A which were analyzed quantitatively.

Appendix Table 4 presents, for selected locations, the current Class I differentials, the final

decision Class I differentials, and the Class I differentials for Option 1B and Option 1A as

modified.

1. Final Decision Class I Differentials

The Class I differentials established by the final decision use a pricing surface based on the results

of the USDSS, a Cornell University model developed to determine the relative values of milk at

various geographic locations. The model results represent data for May 1995. 

The adopted Class I pricing surface was raised to a level that will assure an adequate supply of

milk for fluid use and position the milk marketing order program to lead the industry toward what

is judged to be a more efficient pattern of milk supply for Class I demand points throughout the

milk marketing order system. This pricing surface is generally flatter throughout much of the

country, reflecting that the Class I demand in many areas can be supplied with Grade A milk

locally or from closer sources at prices relatively lower than those needed to attract milk from

more distant surplus areas. 

Neither the current level of Class I differentials nor the Option 1B levels were considered high

enough to encourage the movement of Grade A milk into the Chicago and Minneapolis areas for

fluid processing since the current price paid for Grade A milk used in the manufacture of cheese in

Wisconsin and Minnesota exceeds the minimum Federal order Class III price. In studies

conducted by the Upper Midwest and Chicago Regional Market Administrator offices, the prices

paid to producers in Minnesota and Wisconsin for Grade A milk used primarily for manufacturing

in selected plants averaged $0.79 per hundredweight above the announced 

Class III price in the two orders during the 1991 through 1995 period. As a result, there is a

substantial over-order price structure in the Upper Midwest that operates in conjunction with milk

order provisions to move milk to where it is needed to satisfy fluid demand. Raising the Class I

differential in the consolidated Upper Midwest area, coupled with increased use of transportation

credits, is expected to promote greater market stability and pricing equity by reducing the

volatility in the amount of milk pooled. 
Page 9

Also, raising the Class I differentials in the areas with lower Class I utilization in conjunction with

about an 18-day shortening of the advance notice of Class I prices, will significantly reduce class

price inversions in the future. See Appendix Tables 3, 3A, and 3B and Charts 3, 3A, and 3B. As

noted earlier, class price inversion occurs when prices for manufacturing milk exceed the price for

Class I milk in the same month. Class price inversion is contrary to the objectives of the 1937

Act, results in a penalty rather than an incentive for supplying the Class I market, and causes

inequities among producers, cooperatives and Class I handlers. 

The Upper Midwest is identified as an area where the production of Grade A milk is significantly

in excess of the area’s Class I demand. The Southwest and the Northwest, likewise, are identified

as areas where the available milk supply significantly exceeds Class I demand. Prices in those

areas were set at levels to reflect those conditions. In general, east of the Rocky Mountains, Class

I prices increase north to south, and west to east along the pricing surface. 

The final decision reduces Class I differentials from current levels in 18 markets, including the

unregulated New York and New England areas. Reductions range from $0.02 per hundredweight

in Greater Kansas City (Kansas City) to $1.18 in Eastern Colorado (Denver). For 13 markets the

Class I differential is increased, ranging from $0.10 in Eastern S. Dakota (Sioux Falls) and Indiana

(Indianapolis) to $0.57 per hundredweight in Southeastern Florida (Miami). The Class I

differentials for the current Eastern Ohio-Western Pennsylvania (Cleveland) and Southern

Michigan (Detroit) markets are unchanged from the current levels. See Appendix Table 4.

2. Option 1B, as Modified

Option 1B was the preferred option in the proposed rule. Based on comments received and on

further evaluation by USDA personnel, the proposed Class I differentials for a number of counties

were revised. County price changes ranged from -$0.43 to $0.40 per hundredweight. Prices at

31 of the 33 order pricing points were revised, with seventeen of the changes being $0.05 or less

and 25 being $0.10 or less. In general, the revisions were made to reflect competitive conditions

among plants in adjacent counties not recognized by the USDSS model solution.

Although it had been proposed that Option 1B would be phased in over a 5-year period, there

were few comments that supported such an action. In addition, USDA expects in 2000 that the

value of milk used to produce butter and nonfat dry milk will exceed the value of milk used to

produce cheese. As a result, basing the Class I price on the higher value of either the Class III or

Class IV formula will raise farm income in the initial year even under Option 1B. For this

analysis, Option 1B Class I price levels were considered to be adopted immediately with

implementation of the final decision. 

Option 1B reduced Class I differentials from current levels in 29 markets, including the

unregulated New York and New England areas. Reductions ranged from $0.01 per

hundredweight in Central Illinois (Peoria) to $1.58 in Eastern Colorado (Denver). In seven

markets, Class I differentials were reduced by $1.00 or more. For two markets, Class I
Page 10

differentials were increased, ranging from $0.15 in Chicago Regional (Chicago) to $0.17 per

hundredweight in Southeastern Florida (Miami). Class I differentials for the current Upper

Midwest (Minneapolis) and Iowa (Des Moines) markets were unchanged from current levels.

3. Option 1A, as Modified

Option 1A was modified only slightly from the proposed rule. A number of county Class I

differentials were changed in the Northeast marketing area with adjustments ranging from -$0.20

to $0.20 per hundredweight. These changes, which did not affect prices at the three major pricing

points in the Northeast area, were made in response to comments from the industry in the

northeast. In Florida, Class I differentials were reduced by $0.30 per hundredweight in seven

counties to provide better alignment. 

 

Option 1A was drawn from the report of the Price Structure Committee and is based partly on

USDSS model results for 1993 (annual data), May 1995, and October 1995; partly on market

knowledge of the Committee members, and partly on the current Class I pricing surfaces. For the

Upper Midwest area, the Class I differential in Chicago was increased 40 cents per hundredweight

above the current level and in Minneapolis the differential was increased by 50 cents.

In the southwest markets, Class I differentials were reduced from their current levels reflecting the

increased supplies of milk in that area which are potentially available for fluid use. The New

Mexico-West Texas area was identified as a base zone, an area with a supply of Grade A milk

which is available to meet the demands of fluid milk processors in other marketing order areas. 

This base zone identification leads to a reduction in the Class I differentials in the consolidated

Southwest market (pricing points at Dallas and El Paso). The Class I differential in the

consolidated Arizona-Las Vegas market also was reduced for the same reason as for the

Southwest market. 

Option 1A, as modified, increased Class I differentials in 21 current markets including the

terminated Tennessee Valley order, ranging from $0.01 per hundredweight in New England

(Boston), New York-New Jersey (New York City), and the unregulated New York and New

England areas to $0.50 in Upper Midwest (Minneapolis). Class I differentials in four markets

were unchanged, and in eight markets, Class I differentials were reduced from $0.04 per

hundredweight in Ohio Valley (Columbus) to $0.18 in Eastern Colorado (Denver). 

D. Class II Price Mover

Presently the Class II price for the month is established by adding the Class II differential of $0.30

per hundredweight to the BFP for the second preceding month. This price is announced on or

before the 5 day of the month preceding the month for which the price is to be effective. th

Because of this pricing lag, the Class II price for a month rarely reflects current supply-demand

conditions for milk, or the value of milk used in manufactured products. Thus, the relative costs

to Class II handlers of using fresh milk versus manufactured dairy product ingredients to make
Page 11

Class II products is constantly changing. The problem is further compounded by the current Class

II formula which adds the Class II differential to the BFP price, which primarily reflects the price

of Cheddar cheese. 

The proposed rule would have established the Class II price for skim milk for the month by

adding a differential of $0.70 per hundredweight to the Class IV skim milk price for the month. 

The Class IV price is the price for milk used to produce butter and all milk powders--dairy

components that can be substituted for fresh milk to make most Class II products. By linking the

Class II price to the Class IV price, the relationship between the cost of alternative Class II

ingredients would have been unchanged from month to month. 

Responding to comments expressing concern about post-pricing of milk used in Class II products,

the final decision specifies that the Class II skim milk price will be announced on or before the 23rd

of the month preceding the month for which the price is being announced. Thus, the Class II skim

milk price and Class I prices for skim milk and butterfat will be announced at least seven days in

advance of their effective date, except in February.

III. ANALYSIS OF BENEFITS AND COSTS

A. Introduction

This section presents estimates of the impacts of consolidating the current 31 Federal milk

marketing orders plus the terminated Tennessee Valley order and the unregulated New York and

New England areas into 11 orders, and adopting the other elements of reform discussed above. 

For comparison, the impacts of two other levels of Class I differentials -- Options 1B and 1A, as

modified -- in conjunction with the other elements of milk order consolidation and reform are

presented. 

These analyses assume that milk will be classified into four classes as detailed in the final decision. 

Class IV milk will be priced using the final decision’s butter-nonfat dry milk product formula. 

Since sufficient historical data for the NASS survey product prices in this formula are not

presently available, the Chicago Mercantile Exchange spot price for Grade AA butter and the

average wholesale price for nonfat dry milk reported by USDA’s Dairy Market News for the

Western States were used to estimate Class IV prices. Class III milk will be priced using the final

decision’s cheese product price formula. The Class II milk price will be equal to the 

Class IV price plus 70 cents per hundredweight. 

Impacts were measured as changes from the model baseline as adapted from the USDA dairy

baseline. That baseline -- a national annual projection of the supply-demand-price situation for

milk and dairy products -- was the basis for the market-by-market baseline model projection. 

Both the USDA baseline and the model baseline assume: (1) the price support program would end

on December 31, 1999; (2) the Dairy Export Incentive Program would continue to be utilized;

and (3) the Federal Milk Marketing Order Program would continue unchanged. National
Page 12

assumptions for the cost of milk production, especially feed, and, the commercial utilization of

milk and dairy products are adjusted to a regional basis. Model relationships are based on 40

years (1955-1994) of historical data.

All analyses assume that all parameters, except those associated with the changes in the Federal

Milk Marketing Order Program, would remain unchanged. Appendix Table 6 presents selected

baseline supply, demand and price projections made by the model for 2000 through 2005. 

The indicators selected to measure impacts were: milk marketings, Class I use, Class I utilization, 

Class I price, prices of milk for manufacturing (Class II, Class III and Class IV), all milk price

(defined as the weighted-average minimum use value including Class I over order premiums) and

farm cash receipts from milk marketings. Changes in the all milk price and farm cash receipts

indicate changes in farmers’ ability and willingness to produce milk and the effects of those farm

decisions are reflected in the change in milk marketings. Changes in milk marketings, Class I use,

and other class prices provide measures of the adequacy of milk supplies to meet fluid needs and

the effect on consumer expenditures for fluid and manufactured dairy products. 

B. Impact on Dairy Farmers

To evaluate the impacts of the final decision and the other Class I alternatives , the model’s

analytical results were compared against the model baseline. As noted in the description of the

model, the baseline estimates were constructed assuming that the current 31 orders, the

constructed Tennessee Valley order, and the unregulated New York and New England areas

would continue through the study period, 2000-2005. To make comparisons, pricing points (for

Class I and blend prices) in the consolidated orders were identified to correspond with the major

pricing points of the current marketing orders. For example, for the consolidated Northeast

marketing area, New York City is designated as its major pricing point, and additional Class I and

blend price estimates are provided for Boston and Philadelphia. These three pricing points

correspond with the major pricing points of the three current marketing order areas that will be

combined into the Northeast market. This assumption is consistent with the final decision pricing

provisions in most Federal orders. 

Even though the Tennessee Valley marketing order has been terminated, the analysis identifies

Knoxville as a pricing point. Most plants and producer milk associated with the former Tennessee

Valley market have become regulated under other Federal milk orders, and will be regulated

under the consolidated orders.

These analyses assume that Class I differentials in California would remain unchanged. It also

was assumed that all over-order premiums would remain unchanged. 
Page 13

1. Final Decision Class I Differentials

For all Federal order markets combined, marketings are projected to increase 1.6 billion pounds

(1.4 percent) on average over the six-year analytical period primarily as a result of additional

pooling of milk under the Chicago Regional order. In the Chicago Regional, the higher Class I

differentials encourage the year-round pooling of milk that occasionally has not been pooled in

recent years due to low blend prices relative to manufacturing use prices. See Appendix 

Table 5. In addition, the higher all milk price in 2000 (a result of the Class I price being set by the

higher value of milk for butter-nonfat dry milk that year) stimulates additional milk production by

producers delivering milk into the Federal order system.

Under the final decision, six current Federal order major pricing points will have Class I

differentials lower than the Upper Midwest market’s Class I differential recognizing that adequate

supplies of milk can be attracted to these six Class I markets at lower costs. Under the current

pricing system, the Upper Midwest market (Minneapolis) has the lowest Class I differential of the

major Federal milk order pricing points. 

The adopted Class I pricing surface recognizes several additional areas of milk production which

can serve as alternative supplies for fluid milk markets where assuring local supplies would be

more expensive. For fluid markets needing supplemental supplies of milk, Class I differentials

reflect part of the cost of moving milk from the closest of these alternative supply areas. 

The all milk price for all Federal order markets combined for the 2000-2005 period is expected to

average $0.02 per hundredweight lower under the final decision compared to the baseline. The

estimated average all milk price for 13 current markets will increase from $0.01 to $0.52 per

hundredweight. For 19 markets, the all milk price is estimated to decrease from $0.01 to $0.56

per hundredweight. For one market, the all milk price is estimated to average unchanged. In

general under the final decision, all milk prices and cash receipts from milk marketings would

decline most in markets located in the western, southwestern and northeastern areas of the

country. See Appendix Table 7 and Appendix Maps 1 and 2. 

The six markets with the greatest increases in the estimated all milk price, per hundredweight,

were: Iowa (Des Moines: $0.52), Tampa Bay (Tampa: $0.50), Southeastern Florida

(Miami: $0.42), Nebraska-Western Iowa (Omaha: $0.33), and Southern Michigan (Detroit) and

Southwestern Idaho-Eastern Oregon (Boise) both $0.23. The market with the greatest reduction

in the all milk price was Greater Kansas City (Kansas City: -$0.56), followed by Texas

(Dallas: -$0.50), Eastern Colorado (Denver: -$0.48), Middle Atlantic (Philadelphia: -$0.47), and

the unregulated New York and New England areas (-$0.40). The all milk price in a current

Federal order area can be impacted considerably by the change in the Class I utilization due to

consolidation of existing marketing areas, and by the alignment of Class I prices and blend prices

within the new consolidated marketing areas.
Page 14

To estimate changes in cash receipts from milk marketings, it was assumed that the milk

associated with a current market continued to be associated with the same pricing point in the

consolidated market. Over the period 2000-2005, the final decision resulted in higher estimated

gross cash receipts from milk marketings in 15 markets compared to the baseline. Average annual

receipts for producers in the current New York-New Jersey market increased by $36.7 million. 

However, about half of this increase was the result of adding to the all milk price $0.15 per

hundredweight which is currently deducted from the producer settlement pool for transportation

prior to the computation of the market minimum blend price. The consolidated Northeast order

does not include the 15-cent transportation credit that was in the New York-New Jersey order. It

is expected that this increase in dairy farmer receipts from the elimination of the transportation

credit will be offset by an equivalent increase in transportation costs paid by the producer. Also,

83 percent of the $249.8 million increase in cash receipts in the current Chicago Regional market

is the result of pooling milk that was not pooled due to blend/Class III price relationships. The

five markets with the largest average annual increases in gross cash receipts from milk marketings

were Chicago Regional (Chicago: $43.1 million, adjusted to remove additional pooled milk), New

York-New Jersey (New York City: $18.7 million, after adjustment for transportation credit),

Iowa (Des Moines: $17.5 million), Southern Michigan (Detroit: $14.1 million), and Tampa Bay

(Tampa: $12.2 million). 

Eighteen markets will have lower estimated annual average cash receipts from milk marketings

during 2000-2005 compared to the baseline. Texas (Dallas: -$39.7 million), Middle Atlantic

(Philadelphia: -$39.5 million), Eastern Colorado (Denver: -$11.4 million), Southwest Plains

(Oklahoma City: -$11.3 million), and Arizona-Las Vegas (Phoenix: -$10.4 million) will have the

greatest reductions compared to the baseline.

2. Option 1B, as Modified

The Class I pricing surface under Option 1B, as modified, also recognized several additional areas

of milk production which could serve as alternative supplies of milk for fluid milk markets. For

areas needing supplemental supplies of milk for use in fluid milk products, Class I differentials

reflected the cost of moving milk from the closest of these alternative supply areas.

Similar to the Class I pricing structure adopted by the final decision, six current Federal order

major pricing points would have had Class I differentials lower than the Upper Midwest market’s

Class I differential, recognizing that these areas have adequate supplies of milk to meet their Class

I needs at lesser costs. Under the current pricing system, the Upper Midwest market

(Minneapolis) has the lowest Class I differential of all major Federal milk order pricing points. 

Option 1B would have reduced producer income in total and would have reduced the proportion

of the Class I value captured in Federal order pools. Greater reliance would have been placed on

competitive market forces to assure markets were adequately supplied with fluid milk. Thus, the

sharing of the Class I value among producers serving the fluid market could have been affected

under this option. 
Page 15

In general under Option 1B, producers delivering to markets with greater proportions of milk

used in manufactured products would have fared better than those delivering to markets with

higher Class I utilization. Reduced producer revenue in high Class I use markets would have

resulted in reduced marketings in those areas. The annual average milk marketings in the United

States during 2000-2005 would have been reduced by 91.2 million pounds and Class I utilization

would have been increased by 99.0 million pounds annually, thus slightly reducing the amount of

milk available for manufacturing which averaged 106.3 billion pounds in the baseline.

The all milk price for all Federal order markets combined for the 2000-2005 period would have

been expected to average $0.10 per hundredweight lower with Option 1B Class I differentials

compared to the baseline. The estimated average all milk price for 10 current markets would have

increased from $0.06 to $0.42 per hundredweight. For 23 markets, the estimated all milk price

would have decreased from less than $0.01 to $0.66 per hundredweight. See Appendix Table 8. 

The five markets with the greatest increases in average all milk prices, per hundredweight, for the

2000-2005 period would have been: Iowa (Des Moines: $0.42), Tampa Bay (Tampa: $0.28), 

Nebraska-Western Iowa (Omaha: $0.22), Chicago Regional (Chicago: $0.22), and Southeastern

Florida (Miami: $0.21). The five markets with the greatest reductions in average all milk prices

would have been: Greater Kansas City (Kansas City: -$0.66), Texas (Dallas: -$0.61), Eastern

Colorado (Denver: -$0.58), Middle Atlantic (Philadelphia: -$0.55), and the unregulated New

York and New England areas (-$0.49). 

Over the period 2000-2005, Option 1B would have lowered producer gross cash receipts from

milk marketings in 22 of the current markets. The five current markets with the greatest average

annual decreases would have been: Texas (Dallas: -$48.4 million), Middle Atlantic

(Philadelphia: -$46.7 million), Southwest Plains (Oklahoma City: -$15.2 million), Carolina

(Charlotte: -$14.1 million), and Southeast (Atlanta: -$14.1 million). Gross cash receipts from

milk marketings would have increased in 11 markets. The five markets with the largest increases

would have been: Chicago Regional (Chicago: $38.5 million), Iowa (Des Moines: $14.1 million),

Tampa Bay (Tampa: $7.0 million), Southern Michigan (Detroit: $6.9 million), and Southwestern

Idaho-Eastern Oregon (Boise: $6.0 million).

1. Option 1A, as Modified

The Class I pricing surface in Option 1A, as modified, was closest to the current pricing surface,

but reflected changes in milk supplies and demand that occurred since Class I differentials were

last reviewed in 1990. Option 1A also recognized additional basing points where changes in milk

production have made some areas sources of reserve milk for other areas of the order system. 

Three base zones were identified: one in the Upper Midwest, one in the Southwest, and one in

the West. For other areas, Class I differentials were established to reflect the cost of moving milk

from these base zones to the principal fluid milk consumption centers. 
Page 16

The all milk price for all current Federal order markets combined would have averaged $0.03 per

hundredweight higher under Option 1A compared to the baseline during 2000-2005. The

estimated average all milk price for 15 markets would have increased from $0.01 to $0.34 per

hundredweight. For the 18 other markets, the all milk price would have decreased from less than

$0.01 to $0.66 per hundredweight. See Appendix Table 9.

The five markets with the greatest increases in the estimated all milk price, per hundredweight,

would have been: New York-New Jersey (New York City: $0.34 including the additional $0.15

resulting from the termination of the transportation credit), Eastern Colorado (Denver: $0.32),

Tampa Bay (Tampa: $0.31), New Mexico-West Texas (El Paso: $0.22), and Southwestern IdahoEastern Oregon (Boise: $0.19). The markets with the greatest reduction in the all milk price

would have been: Greater Kansas City (Kansas City) and Western Colorado (Grand Junction)

at -$0.66 per hundredweight, followed by Central Illinois (Peoria: -$0.57), the unregulated New

York and New England areas (-$0.36), and Southern Illinois-Eastern Missouri (Alton: -$0.20). 

Many of the larger changes in price, both increases and decreases, would have occurred in the

markets destined to be merged into the Central market, reflecting the wide variation in Class I

utilization that currently exists among those orders. The realignment of Class I prices within

consolidated areas also affects blend prices by comparable amounts.

Over the period 2000-2005, Option 1A would have resulted in higher estimated gross cash

receipts from milk marketings in 18 markets compared to the baseline. Average annual receipts

for producers in the current New York-New Jersey market (New York City) would have

increased the most -- $48.4 million after adjustment for the transportation credit; followed by

Chicago Regional (Chicago: $14.3 million adjusted for the additional pooling), Southern

Michigan (Detroit: $8.2 million), Eastern Colorado (Denver: $7.8 million), and Tampa Bay

(Tampa: $7.7 million). 

Gross cash receipts in the current Chicago Regional and Upper Midwest markets would have

increased more under Option 1A, but the flatter Class I surface in these areas necessitated the use

of additional transportation credits to move milk for fluid purposes. Thus, additional

transportation credits were deducted from the producer settlement pool prior to the calculation of

blend prices. These additional credits were expected to use 20 percent of the dollars generated by

the higher Class I differentials.

Fifteen markets would have had lower estimated annual average cash receipts from milk

marketings during 2000-2005 compared to the baseline. The largest declines in cash receipts

would have been in: Middle Atlantic (Philadelphia: -$10.3 million), Texas (Dallas: -$5.7 million),

Great Basin (Salt Lake City: -$4.6 million), Southern Illinois-Eastern Missouri 

(Alton: -$4.6 million), and Greater Kansas City (Kansas City: -$2.4 million).

Under Option 1A, the estimated average annual gross cash receipts for all Federal order markets

combined would have increased by $105 million (adjusting New York-New Jersey for the
Page 17

transportation credit and Chicago Regional and Upper Midwest for additional pooling) compared

to the baseline for the 2000-2005 period.

C. Impact on Fluid Milk Processors and Dairy Product Manufacturers

Impacts on fluid milk processors and soft dairy product manufacturers will result from changes in

the minimum Class I and Class II prices that are the handlers’ obligations under the Federal milk

order system. Those fluid processors facing higher Class I differentials (See Appendix Table 4)

will see their monthly obligations to the markets’ producer settlement funds increase, while those

facing lower Class I differentials will see their obligations decrease. Milk processors in areas with

increases in Class I differentials may see Class I use decline, while those in areas with decreases in

Class I differentials may see Class I use increase. See Appendix Tables 7, 8, and 9 and Appendix

Map 3. On average, fluid milk processors in the Federal milk orders system will see their Class I

obligations decline. Manufacturers of Class II products likely will see their pool obligations

increase.

Estimated changes in Class II, Class III, and Class IV prices are shown in Appendix Table 10. 

For analytical purposes, Class IV prices are compared with Class III-a prices. 

1. Final Decision Class I Differentials

 

Fluid processors in 13 of the current Federal order markets will face increased Class I differentials

at major pricing points under the final decision compared with Class I differentials under the

baseline. Two markets, Eastern Ohio-Western Pennsylvania (Cleveland) and Southern Michigan

(Detroit) will see no change. The remaining 17 markets will see decreases in Class I differentials

at major pricing points compared with the baseline. The increases in Class I differentials ranged

from $0.10 per hundredweight in Eastern S. Dakota (Sioux Falls) and Indiana (Indianapolis) to

$0.57 per hundredweight in the Southeastern Florida (Miami). Decreases in Class I differentials,

which will occur primarily in the western and southwestern areas, will range from -$0.02 per

hundredweight in Greater Kansas City (Kansas City) to -$1.18 per hundredweight in Eastern

Colorado (Denver). The estimated weighted average Class I differential for all current Federal

order markets will decrease by $0.29 per hundredweight. See Appendix Table 16.

The all-market average Federal order Class I price will decrease, on average, $0.19 per

hundredweight during 2000-2005 from the baseline, ranging from $0.20 in 2000 to -$0.29 in

2002.

 

The volume of milk available nationally for manufacturing will average 23.0 million pounds (about

-0.02 percent) lower under this final decision during 2000-2005 compared with baseline volumes. 

Since the final decision is expected to have minor effects on where milk is produced, little impact

is expected on processors or manufacturers of dairy products. The average value of 
Page 18

milk for manufacturing in the United States will increase by $82.5 million per year during the sixyear analytical period. See Appendix Table 17.

Appendix Map 4 shows expected average changes in milk marketings for 2000-2005.

2. Option 1B, as Modified

Option 1B, as modified, would have lowered Class I differentials at major pricing points for fluid

processors in 29 markets compared with Class I differentials under the baseline. For two of the

current markets, the Class I differentials would have been unchanged, and for the remaining two

markets, Class I differentials would have increased compared with the baseline. 

The estimated weighted average Class I differential for all current Federal order markets would

have declined $0.69 per hundredweight over the 2000-2005 period. Under this option, the allmarket average Class I price for fluid milk handlers would have declined, on average, by $0.49

per hundredweight during 2000-2005 compared to the baseline, ranging from a decline of $0.12

per hundredweight in 2000 to a decline of $0.61 in 2004. Lower Class I prices would have been

expected to increase sales of fluid milk in Federal order markets by an average of 106.8 million

pounds annually. Fluid handlers would have benefitted from lower Class I prices and higher fluid

milk sales.

The volume of milk available nationally for manufacturing would have averaged 190.2 million

pounds less annually under this option during 2000-2005 compared with baseline volumes. The

value of milk used to manufacturer dairy products would have increased an average of $119.8

million, annually.

3. Option 1A, as Modified

Fluid processors in 21 of the current Federal order markets would have faced higher Class I

differentials at major pricing points under Option 1A compared with Class I differentials under the

baseline. Four of the current markets would have seen no change in Class I differentials. The

remaining eight markets would have seen decreases in Class I differentials compared with the

baseline. The increases in Class I differentials would have ranged from $0.01 per hundredweight

in the Northeast markets to $0.50 per hundredweight in the Upper Midwest (Minneapolis). 

Decreases in Class I differentials, which would have occurred primarily in the western and

southwestern markets, would have ranged from $0.04 per hundredweight in Ohio Valley

(Columbus) to $0.18 per hundredweight in Eastern Colorado (Denver). The estimated weighted

average Class I differential for all current markets would have increased $0.04 per hundredweight.

The all-market average Federal order Class I price would have increased, on average, $0.08 per

hundredweight during 2000-2005 from the baseline, ranging from -$0.01 in 2002, 2003, and 2005

to $0.46 in 2000.

 
Page 19

The volume of milk available nationally for manufacturing would have averaged 144 million

pounds higher annually under this option during 2000-2005 compared with baseline volumes. 

Since this option would not have altered significantly where milk is produced, little impact would

have been expected on processors or manufacturers of dairy products. The value of milk for

manufacturing would have been virtually unchanged.

D. Effects on Consumers, Retail Prices

The potential impact of the final decision and alternatives on retail prices, and thus consumers, is

somewhat less certain than the other impacts considered. In general, changes in farm milk and

wholesale product prices are passed through to consumers, but how fast price changes are passed

on to consumers continues to be a point of debate. It has been assumed for this evaluation that all

changes in fluid processor costs and the wholesale costs of manufactured products would be

passed through immediately to the retail level without any changes in the processor-retail or

wholesale-retail margins. 

Under the final decision, consumers of manufactured products will find that the prices of products

made from milk priced in Class II may increase, while the prices of those products made from

milk priced in Class III or Class IV may be virtually unchanged on average for the 2000-2005

period. See Appendix Table 10. 

Appendix A provides information of the impacts of the final decision and Option 1B and 1A on

the cost of programs administered by the Food and Nutrition Service. 

1. Final Decision Class I Differentials

Since the final decision results in a decrease in the annual all Federal order market average Class I

price for the period 2000-2005, the average impact on retail prices is a decrease of $0.02 per

gallon. In some markets, however, the change in Class I prices will have a noticeable effect on

retail prices. Consumers in the current Chicago Regional (Chicago) and Southeastern Florida

(Miami) markets would see the retail price of a gallon of milk increase by an average of $0.06

during the 2000-2005 period. In the Upper Midwest (Minneapolis), Iowa (Des Moines), Central

Illinois (Peoria), and Tampa Bay (Tampa) markets, the retail price of a gallon of milk would

increase by an average of $0.04 for the six-year period. However, consumers in Eastern

Colorado (Denver) would see prices decline by an average of $0.09 per gallon. Texas (Dallas)

consumers would see an $0.08 per gallon decline, while those in Arizona-Las Vegas (Phoenix)

and Middle Atlantic (Philadelphia) would see a drop of $0.07 per gallon. And, a $0.06 per gallon

price decline would be seen by consumers in Southwest Plains (Oklahoma City). See Appendix

Table 11. 

Federal order consumers would spend, on average, $80.4 million less on fluid milk products

annually during 2000-2005 compared to the baseline. Consumption of fluid milk products will be

virtually unchanged, increasing 42.1 million pounds annually for the period. Sales of dairy
Page 20

products manufactured with Federal order milk will decrease by an average of 34.1 million

pounds, milk equivalent, annually during 2000-2005 compared to the baseline. Expenditures on

manufactured products would average $77.6 million per year higher for the six-year analytical

period compared to the baseline, primarily because of the expected increase in the prices of 

Class II products. See Appendix Table 16.

2. Option 1B, as Modified

Option 1B would have resulted in a $0.04 per gallon reduction of the average retail price of milk

during the 2000-2005 period compared to the baseline. For all Federal order markets, the

average price per gallon would have been $0.01 below the baseline in 2000, and $0.05 below

baseline in 2002-2005 period. The five markets with the greatest average decreases in retail

prices per gallon would have been: Eastern Colorado (Denver: -$0.12), Texas (Dallas: -$0.11),

Arizona-Las Vegas (Phoenix: -$0.10), and Middle Atlantic (Philadelphia) and Southwest Plains

(Oklahoma City: -$0.09). Retail prices for a gallon of milk in the Chicago Regional (Chicago)

and Southeastern Florida (Miami) markets would have increased by $0.03, while consumers in

Iowa (Des Moines), Upper Midwest (Minneapolis), and Cental Illinois (Peoria) would have seen

average increases of $0.02 per gallon. See Appendix Table 12.

As a result of the minimum price decrease of fluid milk products, consumers of Federal order fluid

milk products would have spent, on average, $215.6 million less and consumed 106.8 million

pounds more during the analytical period. Average annual consumer expenditures on Federal

order manufactured products would have increased $86.9 million per year for 2000-2005

compared to the baseline. Consumers would have consumed, on average, 237.9 million pounds,

milk equivalent, less dairy products manufactured with Federal order milk. See Appendix Table

16.

3. Option 1A, as Modified

Option 1A would have increased average retail prices of milk by $0.01 per gallon during the

2000-2005 period compared to the baseline. For all Federal order markets, the average price per

gallon would have been $0.04 above the baseline in 2000, and dropped to less than $0.005 below

the baseline in 2002-2005 period. The markets with the greatest average decreases in retail prices

per gallon would have been: Eastern Colorado (Denver), Southwest Plains (Oklahoma City),

Texas (Dallas), and Arizona-Las Vegas (Phoenix) at -$0.01 per gallon. Retail prices for a gallon

would have increased in the Upper Midwest (Minneapolis: $0.05), Michigan Upper Peninsula

(Marquette: $0.04) and Chicago Regional (Chicago: $0.04), Eastern South Dakota (Sioux Falls:

$0.03), and Iowa (Des Moines: $0.03) markets. See Appendix Table 13.

As a result of the slight price increase of fluid milk products, consumers of Federal order fluid

milk products would have spent $36.4 million more and consumed 16.6 million pounds less. 

Average annual consumer expenditures on dairy products manufactured with Federal order milk

would have been increased by $68.5 million per year for 2000-2005 compared to the baseline. 
Page 21

Consumers would have consumed, on average, 165.6 million pounds, milk equivalent, more dairy

products manufactured with Federal order milk than under the baseline. See Appendix Table 16.

E. International Trade Impacts

Because of the bulky and perishable nature of packaged fluid (Class I) milk and most soft

manufactured (Class II) products, most international trading of dairy products is in hard

manufactured products -- butter, milk powders, and cheese. Appendix Table 15 details USDA’s

baseline estimates of international and domestic prices for butter, nonfat dry milk and cheese. For

the period 2000-2005, domestic butter prices are expected to average 45 percent above

international prices, while domestic nonfat dry milk prices are expected to average 70 percent

above international prices. The final decision is not expected to have a significant impact on

domestic prices of butter and nonfat dry milk, thus, little change in international trade is expected. 

Little change also would have been expected had Option 1A or Option 1B Class I pricing

structures been selected.

International trade of raw milk and fluid milk products between the United States, Mexico, and

Canada should be unaffected by the final decision, and also would have been unaffected by the

selection of either Option 1A or Option 1B as the Class I pricing surface. Even though the final

decision would reduce Class I differentials in the southwest Federal order markets, such

reductions should not increase the attractiveness of the Mexican market. However, lower Class I

prices in the southwest markets would reduce the attractiveness of the American market to

Mexican fluid milk processors. Lower Class I prices in the southwest also may reduce the

incentive for the construction of fluid milk processing plants just south of the Mexican border to

process U.S. milk for sale back into the United States to avoid Federal regulation. 

Higher Class II prices expected under the final decision may dampen exports of soft manufactured

products to Mexico and other countries.

F. Summary

A summary of the average six-year impacts of the final decision and Options 1A and 1B for all

Federal milk order markets is presented in Appendix Table 16. 

Under the final decision, the all-market average Class I differential is reduced an estimated $0.29

per hundredweight. Since the Class I price mover is based on the higher of the Class III or 

Class IV value, the Class I price is expected to average down only $0.19 per hundredweight. As

a result, milk used in Class I products is estimated to increase an average of 42.1 million pounds

annually for the 2000-2005 period. Even though consumption of Class I products increases, price

decreases result in $80.4 million less costs annually to consumers and less revenue to dairy

farmers delivering to Federal order markets. On the other hand, primarily because of the increase

in the Class II price, consumers spend $77.6 million more for manufactured dairy products even

though 34.1 million pounds less Federal order milk is sold in manufactured products. 
Page 22

Changes in Federal order markets impact the U. S. dairy situation. Appendix Table 17 presents

the six-year impacts of the final decision and Options 1B and 1A, as modified, for the United

States. 

Over the 2000-2005 period, the final decision has very minor impacts on the overall production

and consumption of milk and dairy products in the United States. U.S. cash receipts to producers

for milk marketings will be virtually unchanged as will annual U.S. milk marketings. Consumers

of Class I products will see their costs reduced modestly while consumers of soft and hard

manufactured products will see their costs increase modestly. Thus, slightly more milk will be

consumed as fluid products because of slightly lower prices, but slightly less milk will be

consumed as manufactured products because of slightly higher prices -- mainly those of Class II

products.

IV. REASONS FOR OPTION PREFERRED

USDA believes the final decision sets the stage for the U.S. dairy industry to gradually adopt what

is believed to be the most efficient system of supplying the demand for fluid milk in the United

States. The Class I price mover which has been made more representative of current market 

conditions, along with the higher Class I differentials provided in markets with lower Class I

utilization, should virtually eliminate class price inversion which recently has lead to market

instability and inequities among producers and cooperatives supplying the Class I market and

among Class I processors.

It is USDA’s conclusion that the objectives of the 1937 Act will be met by the adoption of the

final decision. The public would continue to be assured of an adequate supply of pure and

wholesome milk at reasonable prices. In addition, the public welfare also would be enhanced by

moving toward a more efficient system of meeting the needs of Class I markets. Under the final

decision, handlers will know their costs for Class I skim milk and butterfat and their cost for Class

II skim milk by the 23 of the month preceding their purchases. The transparency of the formulas rd

used to establish Class I skim and butterfat prices and Class II skim milk prices will enable

processors to track and better estimate these prices prior to announcement. In addition,

processors can continue to use futures markets for milk and dairy products to protect themselves

against price volatility.
Page 23

 

APPENDIX CHARTS AND TABLES
Page 24

APPENDIX TABLE 1:

Comparison of Class Prices as Established Under the Current Pricing System Using the

Basic Formula Price, by Month, June-December 1998.

Class Prices 1/ Units June July August September October November December

Class I Dol. / Cwt. 13.21 12.08 14.30 15.97 16.19 16.30 17.24

Class II Dol. / Cwt. 12.31 11.18 13.40 15.07 15.29 15.40 16.34

Class III Dol. / Cwt. 13.10 14.77 14.99 15.10 16.04 16.84 17.34

Class IIIA Dol. / Cwt. 15.38 15.59 16.52 19.81 18.13 14.87 13.48

1/ Class I Price includes differential ($1.20 per cwt).

 Class II Price includes differential ($0.30 per cwt).

CHART 1:

Comparison of Class Prices as Established Under the Current Pricing System Using the

Basic Formula Price, by Month, June-December 1998.

11.00

12.00

13.00

14.00

15.00

16.00

17.00

18.00

19.00

20.00

21.00

1998

$ per cwt., 3.5 bf

June July August September October November December

Class I Class II Class III Class IIIA
Page 25

APPENDIX TABLE 1A:

Comparison of Class Skim Prices as Established Under the Current Pricing System Using the

Basic Formula Price, by Month, June-December 1998.

Class Prices 1/ Units June July August September October November December

Class I dol / cwt 5.62 4.28 5.73 4.60 6.64 10.07 12.62

Class II dol / cwt 4.72 3.38 4.83 3.70 5.74 9.17 11.72

Class III dol / cwt 5.51 6.97 6.42 3.73 6.49 10.61 12.72

Class IIIA dol / cwt 7.79 7.79 7.95 8.44 8.58 8.64 8.86

1/ Class I skim includes differential ($1.20 per cwt).

 Class II skim includes differential ($0.30 per cwt).

 Class I, II, III & III-A skim calculated with a butterfat differential announced on the 5th of the month 

 following the effective month.

CHART 1A:

Comparison of Class Skim Prices as Established Under the Current Pricing System Using the

Basic Formula Price, by Month, June-December 1998.

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

11.00

12.00

13.00

14.00

1998

$ per cwt.

June July August September October November December

Class I Class II Class III Class IIIA
APPENDIX TABLE 1B:

Comparison of Class Fat Prices as Established Under the Current Pricing System Using the

Basic Formula Price, by Month, June-December 1998.

Class Prices 1/ Units June July August September October November December

Class I dol / lb 2.2262 2.2728 2.5073 3.2960 2.7964 1.8807 1.4462

Class II dol / lb 2.2172 2.2638 2.4983 3.2874 2.7874 1.8717 1.4372

Class III dol / lb 2.2251 2.2997 2.5142 3.2873 2.7949 1.8861 1.4472

Class IIIA dol / lb 2.2479 2.3079 2.5295 3.3344 2.8158 1.8664 1.4086

1/ Class I fat includes differential ($0.012 per pound).

 Class II fat includes differential ($0.003 per pound).

 Class I, II, III & III-A fat calculated with a butterfat differential announced on the 5th of the month 

 following the effective month.

CHART 1B:

Comparison of Class Fat Prices as Established Under the Current Pricing System Using the

Basic Formula Price, by Month, June-December 1998.

1.40

1.60

1.80

2.00

2.20

2.40

2.60

2.80

3.00

3.20

3.40

1998

$ per lb

June July August September October November December

Class I Class II Class III Class IIIA
Page 27

APPENDIX TABLE 2:

Comparison of Class Prices as Established Under the Proposed Rule Using a Six-Month 

Declining Average of the Higher of the Class III and Class IV Prices as the Class I Price

Mover, by Month, June-December 1998.

Class Prices 1/ Units June July August September October November December

Class I Dol. / Cwt. 14.80 14.96 15.53 16.20 16.94 18.19 19.01

Class II Dol. / Cwt. 16.30 17.04 17.79 20.13 19.62 17.15 14.82

Class III Dol. / Cwt. 13.27 14.74 14.83 15.28 16.67 17.51 18.12

Class IV Dol. / Cwt. 15.62 16.36 17.12 19.46 18.95 16.47 14.15

1/ Class I Price includes differential ($1.20 per cwt).

 Class II Price includes differential ($0.70 per cwt).

CHART 2:

Comparison of Class Prices as Established Under the Proposed Rule Using a Six-Month 

Declining Average of the Higher of the Class III and Class IV Prices as the Class I Price

Mover, by Month, June-December 1998.

11.00

12.00

13.00

14.00

15.00

16.00

17.00

18.00

19.00

20.00

21.00

1998

$ per cwt., 3.5 bf

June July August September October November December

Class I Class II Class III Class IV
Page 28

APPENDIX TABLE 2A:

Comparison of Class Skim Prices as Established Under the Proposed Rule Using a Six-Month 

Declining Average of the Higher of the Class III and Class IV Prices as the Class I Price

Mover, by Month, June-December 1998.

Class Prices 1/ Units June July August September October November December

Class I dol / cwt 9.78 9.74 9.71 9.72 9.72 9.77 9.87

Class II dol / cwt 9.18 9.28 9.22 9.39 9.59 9.60 9.71

Class III dol / cwt 6.04 6.90 6.15 4.36 6.53 9.98 13.13

Class IV dol / cwt 8.48 8.58 8.52 8.69 8.89 8.90 9.01

1/ Class I skim includes differential ($1.20 per cwt).

 Class II skim includes differential ($0.70 per cwt).

 Class I skim announced on the 5th of the month preceding the effective month (6 month declining average).

 Class II skim announced on the 5th of the month following the effective month, based on Class IV skim.

 Class III & IV skim announced on the 5th of the month following the effective month.

CHART 2A:

Comparison of Class Skim Prices as Established Under the Proposed Rule Using a Six-Month 

Declining Average of the Higher of the Class III and Class IV Prices as the Class I Price

Mover , by Month, June-December 1998.

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

11.00

12.00

13.00

14.00

1998

$ per cwt.

June July August September October November December

Class I Class II Class III Class IV
APPENDIX TABLE 2B:

Comparison of Class Fat Prices as Established Under the Proposed Rule Using a Six-Month 

Declining Average of the Higher of the Class III and Class IV Prices as the Class I Price

Mover, by Month, June-December 1998.

Class Prices 1/ Units June July August September October November December

Class I dol / lb 1.5308 1.5902 1.7595 1.9498 2.1611 2.5042 2.7110

Class II dol / lb 2.1254 2.3088 2.5417 3.1629 2.9623 2.2524 1.5577

Class III dol / lb 2.1254 2.3088 2.5417 3.1629 2.9623 2.2524 1.5577

Class IV dol / lb 2.1254 2.3088 2.5417 3.1629 2.9623 2.2524 1.5577

1/ Class I fat includes differential ($0.012 per pound).

 Class I fat announced on the 5th of the month preceding the effective month (6 month declining average).

 Class II, III & IV fat announced on the 5th of the month following the effective month (1 month of prices).

CHART 2B:

Comparison of Class Fat Prices as Established Under the Proposed Rule Using a Six-Month 

Declining Average of the Higher of the Class III and Class IV Prices as the Class I Price

Mover , by Month, June-December 1998.

1.40

1.60

1.80

2.00

2.20

2.40

2.60

2.80

3.00

3.20

3.40

1998

$ per lb.

June July August September October November December

Class I Class II, III, and IV
Page 30

APPENDIX TABLE 3:

Comparison of Class Prices as Established Under the Final Decision Using a Class I Price 

Mover Announced on the 23rd of the Preceding Month, by Month, June-December 1998.

Class Prices 1/ Units June July August September October November December

Class I Dol. / Cwt. 14.87 15.80 16.95 17.85 19.92 19.66 18.42

Class II Dol. / Cwt. 15.54 16.15 16.96 19.28 18.67 16.39 13.98

Class III Dol. / Cwt. 12.65 14.12 14.21 14.66 16.05 16.90 17.51

Class IV Dol. / Cwt. 14.89 15.62 16.38 18.71 18.19 15.71 13.39

1/ Class I Price includes differential ($1.60 per cwt).

 Class II Price includes differential ($0.70 per cwt)

CHART 3:

Comparison of Class Prices as Established Under the Final Decision Using a Class I Price 

Mover Announced on the 23rd of the Preceding Month, by Month, June-December 1998.

11.00

12.00

13.00

14.00

15.00

16.00

17.00

18.00

19.00

20.00

21.00

1998

$ per cwt., 3.5 bf

June July August September October November December

Class I Class II Class III Class IV
APPENDIX TABLE 3A:

Comparison of Class Skim Prices as Established Under the Final Decision Using a Class I Price 

Mover Announced on the 23rd of the Preceding Month, by Month, June-December 1998.

Class Prices 1/ Units June July August September October November December

Class I dol / cwt 9.42 9.39 9.39 9.54 9.63 9.84 10.30

Class II dol / cwt 8.52 8.49 8.49 8.64 8.73 8.94 8.97

Class III dol / cwt 5.55 6.41 5.66 3.87 6.04 9.50 12.65

Class IV dol / cwt 7.88 7.97 7.91 8.07 8.26 8.27 8.38

1/ Class I skim includes differential ($1.60 per cwt).

 Class II skim includes differential ($0.70 per cwt).

 Class I & II skim announced on the 23rd of the month preceding the effective month (2 weeks of prices).

 Class III & IV skim announced on the 5th of the month following the effective month (1 month of prices).

CHART 3A:

Comparison of Class Skim Prices as Established Under the Final Decision Using a Class I Price 

Mover Announced on the 23rd of the Preceding Month, by Month, June-December 1998.

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

11.00

12.00

13.00

14.00

1998

$ per cwt.

June July August September October November December

Class I Class II Class III Class IV
APPENDIX TABLE 3B:

Comparison of Class Fat Prices as Established Under the Final Decision Using a Class I Price 

Mover Announced on the 23rd of the Preceding Month, by Month, June-December 1998.

Class Prices 1/ Units June July August September October November December

Class I dol / lb 1.6520 1.9258 2.2534 2.4687 3.0377 2.9048 2.4244

Class II dol / lb 2.0897 2.2731 2.5060 3.1272 2.9266 2.2168 1.5220

Class III dol / lb 2.0827 2.2661 2.4990 3.1202 2.9196 2.2098 1.5150

Class IV dol / lb 2.0827 2.2661 2.4990 3.1202 2.9196 2.2098 1.5150

1/ Class I fat includes differential ($0.016 per pound).

 Class II fat includes differential ($0.007 per pound).

 Class I fat announced on the 23rd of the month preceding effective the month (2 weeks of prices).

 Class II, III & IV fat announced on the 5th of the month following the effective month (1 month of prices).

CHART 3B:

Comparison of Class Fat Prices as Established Under the Final Decision Using a Class I Price 

Mover Announced on the 23rd of the Preceding Month, by Month, June-December 1998.

1.40

1.60

1.80

2.00

2.20

2.40

2.60

2.80

3.00

3.20

3.40

1998

$ per lb.

June July August September October November December

Class I Class II Class III and IV
APPENDIX TABLE 4:

Class I Differentials Under Current System; Final Decision; Modified Option 1B;

and Modified Option 1A.

Consolidated Order (Pricing Point) Final Modified Modified

 Current order (Pricing Point) Unit Current Decision Option 1B Option 1A

Northeast (New York City)

New England (Boston) dol. / cwt 3.24 2.75 2.35 3.25

New York-New Jersey (New York City) dol. / cwt 3.14 2.50 2.10 3.15

Middle Atlantic (Philadelphia) dol. / cwt 3.09 2.20 1.80 3.00

Unregulated NY and New England dol. / cwt 2.54 2.05 1.65 2.55

Appalachian (Charlotte)

Carolina (Charlotte) dol. / cwt 3.08 2.55 2.15 3.10

Tennessee Valley (Knoxville) dol. / cwt 2.77 2.25 1.85 2.80

Louisville-Lexington-Evansville (Louisville) dol. / cwt 2.11 1.95 1.55 2.20

Southeast (Atlanta) dol. / cwt 3.08 2.90 2.50 3.10

Florida (Tampa)

Upper Florida (Jacksonville) dol. / cwt 3.58 3.80 3.40 3.70

Tampa Bay (Tampa) dol. / cwt 3.88 4.20 3.80 4.00

Southeastern Florida (Miami) dol. / cwt 4.18 4.75 4.35 4.30

Mideast (Cleveland)

Michigan Upper Peninsula (Marquette) dol. / cwt 1.35 1.50 1.10 1.80

Southern Michigan (Detroit) dol. / cwt 1.85 1.85 1.45 1.80

E. Ohio-W. Pennsylvania (Cleveland) dol. / cwt 2.00 2.00 1.60 2.00

Ohio Valley (Columbus) dol. / cwt 2.04 2.00 1.60 2.00

Indiana (Indianapolis) dol. / cwt 1.90 2.00 1.60 2.00

Upper Midwest (Chicago)

Chicago Regional (Chicago) dol. / cwt 1.40 1.95 1.55 1.80

Upper Midwest (Minneapolis) dol. / cwt 1.20 1.60 1.20 1.70

Central (Kansas City)

Iowa (Des Moines) dol. / cwt 1.55 1.95 1.55 1.80

Nebraska-Western Iowa (Omaha) dol. / cwt 1.75 2.00 1.60 1.85

Eastern S. Dakota (Sioux Falls) dol. / cwt 1.50 1.60 1.20 1.75

Central Illinois (Peoria) dol. / cwt 1.61 2.00 1.60 1.80

Southern Illinois-Eastern Missouri (Alton) dol. / cwt 1.92 2.10 1.70 2.00

Southwest Plains (Oklahoma City) dol. / cwt 2.77 1.95 1.55 2.60

Eastern Colorado (Denver) dol. / cwt 2.73 1.55 1.15 2.55

Western Colorado (Grand Junction) dol. / cwt 2.00 2.20 1.80 2.00

Greater Kansas City (Kansas City) dol. / cwt 1.92 1.90 1.50 2.00

Southwest (Dallas)

Texas (Dallas) dol. / cwt 3.16 2.10 1.70 3.00

New Mexico-West Texas (El Paso) dol. / cwt 2.35 1.75 1.35 2.25

Western (Salt Lake City)

Southwestern Idaho-Eastern Oregon (Boise) dol. / cwt 1.50 1.35 0.95 1.60

Great Basin (Salt Lake City) dol. / cwt 1.90 1.50 1.10 1.90

Arizona-Las Vegas (Phoenix) dol. / cwt 2.52 1.55 1.15 2.35

Pacific Northwest (Seattle) dol. / cwt 1.90 1.45 1.05 1.90
APPENDIX TABLE 5:

Differences Between the Blend Price and Class III Price, and Estimated Milk Usually

Pooled That Is Not Pooled Primarily Because of the Small Differences Between the Blend Price and

Class III Prices, Chicago Regional and Upper Midwest Federal Milk Orders,

January 1996 Through December 1998.

 Chicago Regional Upper Midwest

Year / Month Blend Price Milk Usually Blend Price Milk Usually

Minus Pooled, Not Minus Pooled, Not

Class III Price Pooled Class III Price Pooled

Per Cwt Mil Lbs Per Cwt Mil Lbs

1996

January $0.41 - - - $0.21 - - -

February $0.44 - - - $0.21 - - -

March $0.37 250 $0.14 35

April $0.21 600 $0.05 615

May ($0.16) 1,000 ($0.26) 677

June $0.24 600 $0.07 280

July $0.28 500 $0.11 208

August ($0.02) 650 $0.05 579

September $0.23 650 $0.11 219

October $0.61 - - - $0.48 - - -

November $1.27 - - - $1.00 - - -

December $1.00 - - - $0.73 - - -

1997

January $0.37 225 $0.17 33

February ($0.07) 850 $0.01 535

March $0.32 400 $0.13 168

April $0.62 - - - $0.41 - - -

May $0.79 - - - $0.57 - - -

June $0.54 - - - $0.35 56

July $0.41 150 $0.23 47

August ($0.13) 650 ($0.16) 626

September ($0.45) 750 ($0.58) 596

October $0.26 550 $0.11 75

November $0.38 200 $0.22 10

December $0.33 300 $0.15 62

1998

January $0.37 250 $0.16 33

February $0.43 30 $0.22 6

March $0.52 30 $0.31 9

April $0.70 30 $0.47 28

May $0.80 25 $0.58 30

June $0.13 950 $0.00 613

July ($1.83) 850 ($2.29) 756

August ($0.52) 850 ($0.65) 748

September $0.40 350 $0.21 54

October ($0.07) 800 $0.10 614

November ($0.45) 900 ($0.48) 696

December ($0.32) 800 ($0.43) 760
Page 35

APPENDIX TABLE 6:

Baseline: Selected Supply-Demand-Price Estimates From the USDA Model Baseline, Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Northeast (New York City)

New England (Boston)

 Marketings Mil. Lb. 5,633.4 5,633.8 5,648.2 5,662.2 5,697.8 5,686.1 5,660.3

 Class I Utilization Percent 44.9 44.3 43.7 43.1 42.5 42.2 43.4

 Class I Use Mil. Lb. 2,527.0 2,494.3 2,468.0 2,442.3 2,418.8 2,399.5 2,458.3

 Class I Price Dol. / Cwt. 15.15 16.11 16.72 17.37 17.88 18.14 16.89

 All Milk Price Dol. / Cwt. 13.93 14.79 15.36 15.99 16.46 16.71 15.54

 Cash Receipts Mil. Dol. 784.6 833.5 867.4 905.3 937.9 950.2 879.8

New York-New Jersey (New York City)

 Marketings Mil. Lb. 12,038.2 12,005.0 12,005.4 12,007.3 12,056.9 12,006.2 12,019.8

 Class I Utilization Percent 37.8 37.4 36.9 36.4 35.9 35.7 36.7

 Class I Use Mil. Lb. 4,556.1 4,486.8 4,430.1 4,375.1 4,324.6 4,281.9 4,409.1

 Class I Price Dol. / Cwt. 15.05 16.01 16.62 17.27 17.78 18.04 16.79

 All Milk Price Dol. / Cwt. 13.31 14.24 14.83 15.47 15.95 16.20 15.00

 Cash Receipts Mil. Dol. 1,584.5 1,691.4 1,762.3 1,839.2 1,904.9 1,927.2 1,784.9

Middle Atlantic (Philadelphia)

 Marketings Mil. Lb. 6,702.3 6,703.0 6,719.5 6,738.5 6,787.3 6,775.7 6,737.7

 Class I Utilization Percent 43.7 43.4 43.1 42.9 42.4 42.4 43.0

 Class I Use Mil. Lb. 2,926.3 2,908.7 2,897.9 2,887.6 2,879.5 2,876.2 2,896.0

 Class I Price Dol. / Cwt. 15.00 15.96 16.57 17.22 17.73 17.99 16.74

 All Milk Price Dol. / Cwt. 13.92 14.77 15.34 15.98 16.46 16.73 15.53

 Cash Receipts Mil. Dol. 932.8 990.1 1,030.6 1,076.9 1,117.5 1,133.3 1,046.9

Unregulated NY and New England

 Marketings Mil. Lb. 494.6 496.6 496.2 497.8 503.1 504.2 498.7

 Class I Utilization Percent 85.5 84.5 84.1 83.3 82.0 81.6 83.5

 Class I Use Mil. Lb. 422.9 419.5 417.1 414.7 412.7 411.3 416.4

 Class I Price Dol. / Cwt. 14.45 15.41 16.02 16.67 17.18 17.44 16.19

 All Milk Price Dol. / Cwt. 13.23 14.09 14.66 15.29 15.76 16.01 14.84

 Cash Receipts Mil. Dol. 65.4 70.0 72.7 76.1 79.3 80.7 74.0

Appalachian (Charlotte)

Carolina (Charlotte)

 Marketings Mil. Lb. 2,948.4 2,956.9 2,968.6 2,978.3 2,999.7 2,994.7 2,974.4

 Class I Utilization Percent 75.1 74.6 74.3 74.1 73.6 73.9 74.3

 Class I Use Mil. Lb. 2,213.4 2,207.1 2,206.4 2,206.2 2,207.8 2,213.1 2,209.0

 Class I Price Dol. / Cwt. 14.99 15.95 16.56 17.21 17.72 17.98 16.73

 All Milk Price Dol. / Cwt. 15.40 16.31 16.90 17.54 18.02 18.30 17.08

 Cash Receipts Mil. Dol. 454.0 482.3 501.6 522.4 540.6 547.9 508.2

Tennessee Valley (Knoxville)

 Marketings Mil. Lb. 1,442.6 1,445.0 1,448.9 1,452.9 1,464.5 1,461.3 1,452.5

 Class I Utilization Percent 75.0 74.8 74.6 74.5 74.1 74.5 74.6

 Class I Use Mil. Lb. 1,081.5 1,080.2 1,081.5 1,082.8 1,085.0 1,089.0 1,083.3

 Class I Price Dol. / Cwt. 14.68 15.64 16.25 16.90 17.41 17.67 16.42

 All Milk Price Dol. / Cwt. 15.06 16.00 16.60 17.25 17.74 18.02 16.78

 Cash Receipts Mil. Dol. 217.3 231.2 240.5 250.6 259.8 263.3 243.8

Louisville-Lexington-Evansville (Louisville)

 Marketings Mil. Lb. 1,156.2 1,151.3 1,149.3 1,149.0 1,155.9 1,150.0 1,152.0

 Class I Utilization Percent 75.7 75.9 76.2 76.4 76.1 76.8 76.2

 Class I Use Mil. Lb. 874.8 874.4 875.9 877.5 879.6 883.2 877.6

 Class I Price Dol. / Cwt. 14.02 14.98 15.59 16.24 16.75 17.01 15.76

 All Milk Price Dol. / Cwt. 14.38 15.34 15.96 16.62 17.11 17.40 16.14

 Cash Receipts Mil. Dol. 166.3 176.6 183.4 191.0 197.8 200.1 185.9
Page 36

APPENDIX TABLE 6:

Baseline: Selected Supply-Demand-Price Estimates From the USDA Model Baseline, Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Southeast (Atlanta)

 Marketings Mil. Lb. 5,658.7 5,662.5 5,672.2 5,683.5 5,725.0 5,708.3 5,685.0

 Class I Utilization Percent 73.7 73.7 73.8 73.9 73.7 74.3 73.9

 Class I Use Mil. Lb. 4,173.1 4,174.5 4,186.6 4,199.8 4,216.9 4,241.4 4,198.7

 Class I Price Dol. / Cwt. 14.99 15.95 16.56 17.21 17.72 17.98 16.73

 All Milk Price Dol. / Cwt. 14.85 15.78 16.39 17.05 17.54 17.83 16.57

 Cash Receipts Mil. Dol. 840.5 893.8 929.6 968.9 1,004.3 1,017.7 942.5

Florida (Tampa)

Upper Florida (Jacksonville)

 Marketings Mil. Lb. 332.3 341.4 348.4 356.5 367.4 375.3 353.6

 Class I Utilization Percent 91.1 91.1 91.9 92.3 92.2 93.1 92.0

 Class I Use Mil. Lb. 302.9 311.0 320.0 329.2 338.9 349.4 325.2

 Class I Price Dol. / Cwt. 15.49 16.45 17.06 17.71 18.22 18.48 17.23

 All Milk Price Dol. / Cwt. 17.27 18.23 18.88 19.56 20.06 20.37 19.06

 Cash Receipts Mil. Dol. 57.4 62.2 65.8 69.8 73.7 76.5 67.6

Tampa Bay (Tampa)

 Marketings Mil. Lb. 1,715.8 1,748.4 1,782.6 1,815.6 1,856.0 1,880.9 1,799.9

 Class I Utilization Percent 78.6 78.6 78.8 79.1 79.1 79.9 79.0

 Class I Use Mil. Lb. 1,348.5 1,375.1 1,405.2 1,435.9 1,468.0 1,503.0 1,422.6

 Class I Price Dol. / Cwt. 15.79 16.75 17.36 18.01 18.52 18.78 17.53

 All Milk Price Dol. / Cwt. 17.12 18.07 18.69 19.36 19.87 20.18 18.88

 Cash Receipts Mil. Dol. 293.8 316.0 333.2 351.5 368.7 379.6 340.5

Southeastern Florida (Miami)

 Marketings Mil. Lb. 1,146.2 1,173.8 1,202.2 1,229.8 1,262.5 1,284.9 1,216.6

 Class I Utilization Percent 88.2 88.2 88.4 88.8 88.8 89.8 88.7

 Class I Use Mil. Lb. 1,010.6 1,035.4 1,063.3 1,091.8 1,121.8 1,154.2 1,079.5

 Class I Price Dol. / Cwt. 16.09 17.05 17.66 18.31 18.82 19.08 17.83

 All Milk Price Dol. / Cwt. 18.17 19.12 19.74 20.42 20.93 21.26 19.94

 Cash Receipts Mil. Dol. 208.3 224.4 237.3 251.1 264.2 273.2 243.1

Mideast (Cleveland)

Michigan Upper Peninsula (Marquette)

 Marketings Mil. Lb. 67.1 66.7 66.5 66.3 66.4 65.9 66.5

 Class I Utilization Percent 76.3 76.5 76.5 76.6 76.5 77.1 76.6

 Class I Use Mil. Lb. 51.1 51.0 50.9 50.8 50.8 50.8 50.9

 Class I Price Dol. / Cwt. 13.26 14.22 14.83 15.48 15.99 16.25 15.00

 All Milk Price Dol. / Cwt. 14.16 15.12 15.73 16.39 16.89 17.17 15.91

 Cash Receipts Mil. Dol. 9.5 10.1 10.5 10.9 11.2 11.3 10.6

Southern Michigan (Detroit)

 Marketings Mil. Lb. 4,514.1 4,532.0 4,562.7 4,593.7 4,643.6 4,658.0 4,584.0

 Class I Utilization Percent 45.1 44.7 44.3 43.8 43.2 43.1 44.0

 Class I Use Mil. Lb. 2,037.0 2,025.8 2,019.2 2,012.8 2,007.9 2,006.2 2,018.2

 Class I Price Dol. / Cwt. 13.76 14.72 15.33 15.98 16.49 16.75 15.50

 All Milk Price Dol. / Cwt. 13.34 14.25 14.83 15.48 15.96 16.22 15.01

 Cash Receipts Mil. Dol. 602.2 645.8 676.8 711.0 741.2 755.4 688.7

E. Ohio-W. Pennsylvania (Cleveland)

 Marketings Mil. Lb. 3,333.6 3,306.1 3,289.6 3,273.5 3,270.9 3,240.7 3,285.7

 Class I Utilization Percent 51.3 51.4 51.4 51.4 51.2 51.5 51.4

 Class I Use Mil. Lb. 1,711.2 1,698.9 1,690.5 1,682.1 1,674.9 1,670.4 1,688.0

 Class I Price Dol. / Cwt. 13.91 14.87 15.48 16.13 16.64 16.90 15.65

 All Milk Price Dol. / Cwt. 13.58 14.54 15.15 15.80 16.30 16.57 15.32

 Cash Receipts Mil. Dol. 452.7 480.6 498.3 517.3 533.2 537.0 503.2
Page 37

APPENDIX TABLE 6:

Baseline: Selected Supply-Demand-Price Estimates From the USDA Model Baseline, Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Ohio Valley (Columbus)

 Marketings Mil. Lb. 3,067.0 3,047.1 3,036.4 3,026.7 3,030.4 3,007.3 3,035.8

 Class I Utilization Percent 54.1 54.3 54.5 54.6 54.6 55.1 54.5

 Class I Use Mil. Lb. 1,658.6 1,654.4 1,653.7 1,653.1 1,653.5 1,656.6 1,655.0

 Class I Price Dol. / Cwt. 13.95 14.91 15.52 16.17 16.68 16.94 15.69

 All Milk Price Dol. / Cwt. 13.99 14.95 15.56 16.22 16.73 17.01 15.74

 Cash Receipts Mil. Dol. 429.0 455.4 472.5 491.0 506.8 511.4 477.7

Indiana (Indianapolis)

 Marketings Mil. Lb. 1,989.0 1,978.8 1,974.5 1,970.7 1,975.6 1,963.0 1,975.3

 Class I Utilization Percent 61.9 62.3 62.7 63.0 63.1 63.8 62.8

 Class I Use Mil. Lb. 1,231.2 1,233.0 1,237.2 1,241.5 1,246.4 1,253.4 1,240.5

 Class I Price Dol. / Cwt. 13.81 14.77 15.38 16.03 16.54 16.80 15.55

 All Milk Price Dol. / Cwt. 14.27 15.24 15.86 16.53 17.03 17.32 16.04

 Cash Receipts Mil. Dol. 283.9 301.5 313.1 325.7 336.5 340.0 316.8

Upper Midwest (Chicago)

Chicago Regional (Chicago)

 Marketings Mil. Lb. 13,062.4 13,075.8 13,128.0 13,188.7 13,313.8 13,327.1 13,182.6

 Class I Utilization Percent 21.4 21.4 21.4 21.3 21.2 21.3 21.3

 Class I Use Mil. Lb. 2,798.7 2,800.3 2,807.7 2,815.1 2,824.2 2,837.8 2,814.0

 Class I Price Dol. / Cwt. 13.31 14.27 14.88 15.53 16.04 16.30 15.05

 All Milk Price Dol. / Cwt. 12.70 13.66 14.26 14.92 15.42 15.68 14.44

 Cash Receipts Mil. Dol. 1,658.8 1,785.6 1,872.4 1,967.3 2,052.4 2,089.5 1,904.4

Upper Midwest (Minneapolis)

 Marketings Mil. Lb. 8,756.6 8,756.1 8,782.2 8,813.6 8,886.9 8,887.6 8,813.8

 Class I Utilization Percent 21.1 21.3 21.4 21.5 21.5 21.7 21.4

 Class I Use Mil. Lb. 1,850.9 1,862.2 1,877.0 1,891.6 1,907.2 1,925.8 1,885.8

 Class I Price Dol. / Cwt. 13.11 14.07 14.68 15.33 15.84 16.10 14.85

 All Milk Price Dol. / Cwt. 12.52 13.48 14.09 14.75 15.25 15.52 14.27

 Cash Receipts Mil. Dol. 1,096.1 1,180.1 1,237.3 1,299.8 1,355.3 1,379.1 1,258.0

Central (Kansas City)

Iowa (Des Moines)

 Marketings Mil. Lb. 2,724.8 2,695.1 2,674.8 2,656.0 2,649.6 2,619.8 2,670.0

 Class I Utilization Percent 31.5 31.9 32.2 32.5 32.7 33.2 32.3

 Class I Use Mil. Lb. 859.2 859.7 861.7 863.7 866.2 869.9 863.4

 Class I Price Dol. / Cwt. 13.46 14.42 15.03 15.68 16.19 16.45 15.20

 All Milk Price Dol. / Cwt. 12.96 13.90 14.51 15.18 15.69 15.96 14.70

 Cash Receipts Mil. Dol. 353.0 374.5 388.2 403.1 415.6 418.2 392.1

Nebraska-Western Iowa (Omaha)

 Marketings Mil. Lb. 1,645.4 1,636.8 1,633.4 1,630.6 1,634.7 1,624.8 1,634.3

 Class I Utilization Percent 39.9 40.2 40.3 40.5 40.6 41.0 40.4

 Class I Use Mil. Lb. 656.7 657.3 659.1 660.8 663.0 666.2 660.5

 Class I Price Dol. / Cwt. 13.66 14.62 15.23 15.88 16.39 16.65 15.40

 All Milk Price Dol. / Cwt. 13.37 14.25 14.84 15.50 16.00 16.28 15.04

 Cash Receipts Mil. Dol. 220.0 233.2 242.3 252.7 261.6 264.5 245.7

Eastern S. Dakota (Sioux Falls)

 Marketings Mil. Lb. 228.1 227.2 227.0 227.0 228.2 227.2 227.5

 Class I Utilization Percent 53.9 54.5 54.9 55.3 55.5 56.3 55.1

 Class I Use Mil. Lb. 123.0 123.8 124.7 125.6 126.6 127.8 125.3

 Class I Price Dol. / Cwt. 13.41 14.37 14.98 15.63 16.14 16.40 15.15

 All Milk Price Dol. / Cwt. 13.54 14.51 15.13 15.80 16.31 16.59 15.31

 Cash Receipts Mil. Dol. 30.9 33.0 34.4 35.9 37.2 37.7 34.8
Page 38

APPENDIX TABLE 6:

Baseline: Selected Supply-Demand-Price Estimates From the USDA Model Baseline, Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Central Illinois (Peoria)

 Marketings Mil. Lb. 190.4 189.8 189.8 189.7 190.6 189.7 190.0

 Class I Utilization Percent 78.2 78.3 78.4 78.4 78.1 78.7 78.4

 Class I Use Mil. Lb. 148.9 148.7 148.7 148.8 148.9 149.3 148.9

 Class I Price Dol. / Cwt. 13.52 14.48 15.09 15.74 16.25 16.51 15.26

 All Milk Price Dol. / Cwt. 14.75 15.71 16.32 16.97 17.47 17.75 16.49

 Cash Receipts Mil. Dol. 28.1 29.8 31.0 32.2 33.3 33.7 31.3

Southern Illinois-Eastern Missouri (Alton)

 Marketings Mil. Lb. 1,972.1 1,959.4 1,952.6 1,946.6 1,949.4 1,934.6 1,952.4

 Class I Utilization Percent 53.3 53.5 53.6 53.7 53.6 54.0 53.6

 Class I Use Mil. Lb. 1,051.0 1,047.5 1,046.2 1,044.9 1,044.2 1,045.1 1,046.5

 Class I Price Dol. / Cwt. 13.83 14.79 15.40 16.05 16.56 16.82 15.57

 All Milk Price Dol. / Cwt. 13.96 14.92 15.53 16.19 16.69 16.97 15.71

 Cash Receipts Mil. Dol. 275.3 292.4 303.3 315.2 325.4 328.3 306.6

Southwest Plains (Oklahoma City)

 Marketings Mil. Lb. 3,107.0 3,085.2 3,071.6 3,060.1 3,064.9 3,039.3 3,071.4

 Class I Utilization Percent 47.1 47.3 47.4 47.5 47.4 47.9 47.4

 Class I Use Mil. Lb. 1,464.1 1,458.3 1,455.9 1,453.8 1,452.9 1,454.4 1,456.6

 Class I Price Dol. / Cwt. 14.68 15.64 16.25 16.90 17.41 17.67 16.42

 All Milk Price Dol. / Cwt. 13.63 14.59 15.21 15.87 16.37 16.64 15.39

 Cash Receipts Mil. Dol. 423.6 450.3 467.1 485.6 501.7 505.9 472.3

Eastern Colorado (Denver)

 Marketings Mil. Lb. 1,832.2 1,894.1 1,950.2 2,014.6 2,093.4 2,160.3 1,990.8

 Class I Utilization Percent 41.5 40.8 40.3 39.7 38.9 38.4 39.9

 Class I Use Mil. Lb. 760.5 772.0 785.4 799.0 813.4 829.3 793.3

 Class I Price Dol. / Cwt. 14.64 15.60 16.21 16.86 17.37 17.63 16.38

 All Milk Price Dol. / Cwt. 13.16 14.08 14.67 15.31 15.78 16.03 14.84

 Cash Receipts Mil. Dol. 241.1 266.7 286.1 308.3 330.4 346.3 296.5

Western Colorado (Grand Junction)

 Marketings Mil. Lb. 124.7 128.2 132.3 136.3 140.9 144.6 134.5

 Class I Utilization Percent 78.9 77.9 76.8 75.9 74.8 74.3 76.4

 Class I Use Mil. Lb. 98.3 99.9 101.6 103.4 105.3 107.4 102.7

 Class I Price Dol. / Cwt. 13.91 14.87 15.48 16.13 16.64 16.90 15.65

 All Milk Price Dol. / Cwt. 13.73 14.65 15.22 15.85 16.33 16.58 15.39

 Cash Receipts Mil. Dol. 17.1 18.8 20.1 21.6 23.0 24.0 20.8

Greater Kansas City (Kansas City)

 Marketings Mil. Lb. 289.2 292.3 295.8 299.6 305.3 307.6 298.3

 Class I Utilization Percent 82.8 81.8 80.9 80.0 78.6 78.3 80.4

 Class I Use Mil. Lb. 239.5 239.2 239.4 239.6 240.0 240.8 239.8

 Class I Price Dol. / Cwt. 13.83 14.79 15.40 16.05 16.56 16.82 15.57

 All Milk Price Dol. / Cwt. 14.82 15.72 16.28 16.91 17.36 17.61 16.45

 Cash Receipts Mil. Dol. 42.9 45.9 48.2 50.7 53.0 54.2 49.1

Southwest (Dallas)

Texas (Dallas)

 Marketings Mil. Lb. 6,482.7 6,442.9 6,414.2 6,382.9 6,376.7 6,312.1 6,401.9

 Class I Utilization Percent 51.6 52.0 52.5 53.0 53.4 54.3 52.8

 Class I Use Mil. Lb. 3,342.6 3,350.5 3,366.9 3,384.1 3,404.3 3,430.5 3,379.8

 Class I Price Dol. / Cwt. 15.07 16.03 16.64 17.29 17.80 18.06 16.81

 All Milk Price Dol. / Cwt. 13.88 14.85 15.47 16.15 16.67 16.96 15.66

 Cash Receipts Mil. Dol. 900.0 956.5 992.5 1,030.8 1,062.8 1,070.8 1,002.2
Page 39

APPENDIX TABLE 6:

Baseline: Selected Supply-Demand-Price Estimates From the USDA Model Baseline, Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

New Mexico-West Texas (El Paso)

 Marketings Mil. Lb. 2,262.4 2,292.9 2,333.5 2,373.1 2,420.2 2,450.5 2,355.4

 Class I Utilization Percent 28.9 28.4 27.9 27.5 27.0 26.8 27.8

 Class I Use Mil. Lb. 652.8 651.6 652.2 652.9 654.3 656.8 653.4

 Class I Price Dol. / Cwt. 14.26 15.22 15.83 16.48 16.99 17.25 16.00

 All Milk Price Dol. / Cwt. 12.81 13.71 14.29 14.93 15.42 15.68 14.47

 Cash Receipts Mil. Dol. 289.8 314.3 333.5 354.4 373.3 384.2 338.2

Western (Salt Lake City)

Southwestern Idaho-Eastern Oregon (Boise)

 Marketings Mil. Lb. 2,435.6 2,488.3 2,553.6 2,620.3 2,697.3 2,756.6 2,591.9

 Class I Utilization Percent 8.1 8.1 8.1 8.1 8.1 8.2 8.1

 Class I Use Mil. Lb. 198.2 202.8 208.0 213.2 218.8 224.8 211.0

 Class I Price Dol. / Cwt. 13.41 14.37 14.98 15.63 16.14 16.40 15.15

 All Milk Price Dol. / Cwt. 12.06 13.01 13.62 14.28 14.78 15.04 13.80

 Cash Receipts Mil. Dol. 293.7 323.8 347.9 374.1 398.7 414.7 358.8

Great Basin (Salt Lake City)

 Marketings Mil. Lb. 2,531.7 2,566.6 2,613.8 2,662.2 2,721.7 2,760.2 2,642.7

 Class I Utilization Percent 37.9 38.4 38.7 39.1 39.4 40.0 38.9

 Class I Use Mil. Lb. 959.6 984.8 1,012.6 1,041.3 1,071.4 1,104.0 1,028.9

 Class I Price Dol. / Cwt. 13.81 14.77 15.38 16.03 16.54 16.80 15.55

 All Milk Price Dol. / Cwt. 12.75 13.72 14.33 15.00 15.51 15.78 14.51

 Cash Receipts Mil. Dol. 322.8 352.0 374.6 399.3 422.0 435.6 384.4

Arizona-Las Vegas (Phoenix)

 Marketings Mil. Lb. 2,706.5 2,775.1 2,857.4 2,940.2 3,032.8 3,107.9 2,903.3

 Class I Utilization Percent 40.5 40.3 40.0 39.8 39.5 39.6 39.9

 Class I Use Mil. Lb. 1,095.3 1,118.2 1,144.1 1,170.7 1,198.7 1,229.4 1,159.4

 Class I Price Dol. / Cwt. 14.43 15.39 16.00 16.65 17.16 17.42 16.17

 All Milk Price Dol. / Cwt. 13.05 13.93 14.50 15.16 15.65 15.91 14.70

 Cash Receipts Mil. Dol. 353.2 386.5 414.5 445.6 474.6 494.5 428.1

Pacific Northwest (Seattle)

 Marketings Mil. Lb. 7,122.2 7,295.7 7,504.2 7,715.6 7,955.6 8,145.9 7,623.2

 Class I Utilization Percent 31.7 31.4 31.1 30.8 30.4 30.3 31.0

 Class I Use Mil. Lb. 2,258.0 2,293.9 2,334.8 2,376.3 2,419.9 2,467.9 2,358.4

 Class I Price Dol. / Cwt. 13.81 14.77 15.38 16.03 16.54 16.80 15.55

 All Milk Price Dol. / Cwt. 12.86 13.67 14.22 14.87 15.36 15.62 14.43

 Cash Receipts Mil. Dol. 915.8 997.3 1,067.3 1,147.5 1,222.2 1,272.3 1,103.7

All Federal Order Markets

 Marketings Mil. Lb. 109,713.5 110,050.0 110,685.7 111,359.8 112,524.9 112,758.3 111,182.0

 Class I Utilization Percent 42.6 42.4 42.3 42.2 41.9 42.0 42.2

 Class I Use Mil. Lb. 46,683.5 46,700.6 46,829.5 46,967.7 47,146.4 47,406.7 46,955.7

 Class I Price Dol. / Cwt. 14.48 15.43 16.04 16.70 17.20 17.46 16.22

 All Milk Price Dol. / Cwt. 13.53 14.45 15.05 15.70 16.19 16.46 15.23

 Cash Receipts Mil. Dol. 14,844.1 15,905.8 16,656.2 17,482.7 18,220.2 18,557.9 16,944.5

State of California

 Marketings Mil. Lb. 30,595.2 31,314.3 32,185.4 33,060.4 34,044.5 34,826.6 32,671.1

 Class I Utilization Percent 19.9 19.3 18.8 18.3 17.8 17.4 18.6

 Class I Use Mil. Lb. 6,079.5 6,058.7 6,052.5 6,047.2 6,046.8 6,056.5 6,056.9

 Class I Price Dol. / Cwt. 14.71 15.67 16.28 16.93 17.44 17.70 16.45

 All Milk Price Dol. / Cwt. 12.71 13.49 14.02 14.67 15.15 15.40 14.24

 Cash Receipts Mil. Dol. 3,887.4 4,223.6 4,513.8 4,848.8 5,157.5 5,362.1 4,665.5
Page 40

APPENDIX TABLE 6:

Baseline: Selected Supply-Demand-Price Estimates From the USDA Model Baseline, Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

United States

 Marketings Mil. Lb. 161,452.9 162,487.1 164,045.3 165,646.1 167,928.4 169,293.6 165,142.2

 Class I Utilization Percent 36.3 36.0 35.8 35.5 35.1 35.0 35.6

 Class I Use Mil. Lb. 58,568.4 58,540.5 58,651.7 58,773.2 58,944.0 59,215.2 58,782.2

 All Milk Price Dol. / Cwt. 13.03 13.92 14.57 15.21 15.67 15.96 14.73

 Cash Receipts Mil. Dol. 21,034.7 22,623.9 23,896.0 25,199.1 26,317.5 27,016.3 24,347.9
APPENDIX TABLE 7:

Final Decision: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Northeast (New York City)

New England (Boston)

 Marketings Mil. Lb. 5.6 4.7 3.5 2.9 2.7 2.7 3.7

 Class I Utilization 1/ Percent (2.9) (2.6) (2.4) (2.3) (2.1) (2.0) (2.4)

 Class I Use Mil. Lb. (0.1) 4.9 5.5 5.1 4.9 4.7 4.2

 Class I Price Dol. / Cwt. 0.01 -0.42 -0.48 -0.47 -0.46 -0.45 -0.38

 All Milk Price Dol. / Cwt. 0.18 -0.03 -0.04 -0.02 -0.01 -0.00 0.01

 Cash Receipts Mil. Dol. 10.7 (1.0) (1.9) (0.9) (0.1) 0.4 1.2

New York-New Jersey (New York City)

 Marketings Mil. Lb. 15.7 13.5 9.3 6.2 3.5 1.2 8.2

 Class I Utilization 1/ Percent 4.1 4.3 4.4 4.4 4.4 4.5 4.4

 Class I Use Mil. Lb. 3.4 13.1 14.1 13.2 12.7 12.2 11.4

 Class I Price Dol. / Cwt. -0.14 -0.57 -0.63 -0.62 -0.61 -0.60 -0.53

 All Milk Price 2/ Dol. / Cwt. 0.38 0.12 0.08 0.09 0.10 0.11 0.15

 Cash Receipts 3/ Mil. Dol. 66.2 33.8 28.7 30.1 30.6 31.0 36.7

 Cash Receipts, Net Transportation Adjustment 4/ Mil. Dol. 48.1 15.8 10.7 12.1 12.6 13.0 18.7

Middle Atlantic (Philadelphia)

 Marketings Mil. Lb. (11.5) (28.6) (44.9) (60.3) (75.4) (89.6) (51.7)

 Class I Utilization 1/ Percent (1.7) (1.7) (1.9) (2.0) (2.1) (2.3) (2.0)

 Class I Use Mil. Lb. 5.5 11.0 11.6 11.1 10.7 10.4 10.1

 Class I Price Dol. / Cwt. -0.39 -0.82 -0.88 -0.87 -0.86 -0.85 -0.78

 All Milk Price Dol. / Cwt. -0.31 -0.50 -0.51 -0.50 -0.49 -0.49 -0.47

 Cash Receipts Mil. Dol. (22.1) (37.4) (40.9) (43.0) (45.6) (47.9) (39.5)

Unregulated NY and New England

 Marketings Mil. Lb. (0.7) (1.9) (2.9) (3.9) (4.9) (5.8) (3.3)

 Class I Utilization 1/ Percent (43.5) (42.8) (42.8) (42.5) (41.7) (41.4) (42.5)

 Class I Use Mil. Lb. (0.0) 0.8 0.9 0.8 0.8 0.8 0.7

 Class I Price Dol. / Cwt. 0.01 -0.42 -0.48 -0.47 -0.46 -0.45 -0.38

 All Milk Price Dol. / Cwt. -0.25 -0.45 -0.46 -0.43 -0.41 -0.40 -0.40

 Cash Receipts Mil. Dol. (1.3) (2.5) (2.7) (2.7) (2.8) (2.9) (2.5)

Appalachian (Charlotte)

Carolina (Charlotte)

 Marketings Mil. Lb. 1.8 (1.4) (4.9) (7.9) (10.8) (13.5) (6.1)

 Class I Utilization 1/ Percent 0.0 0.5 0.7 0.9 1.0 1.2 0.7

 Class I Use Mil. Lb. 0.4 5.0 5.6 5.3 5.1 5.0 4.4

 Class I Price Dol. / Cwt. -0.03 -0.46 -0.52 -0.51 -0.50 -0.49 -0.42

 All Milk Price Dol. / Cwt. 0.12 -0.23 -0.27 -0.25 -0.24 -0.23 -0.18

 Cash Receipts Mil. Dol. 3.8 (6.9) (8.7) (8.7) (9.0) (9.2) (6.5)

Tennessee Valley (Knoxville)

 Marketings Mil. Lb. 0.6 (1.4) (3.6) (5.5) (7.5) (9.2) (4.4)

 Class I Utilization 1/ Percent 0.1 0.3 0.4 0.5 0.6 0.6 0.4

 Class I Use Mil. Lb. 0.1 2.2 2.5 2.3 2.3 2.2 1.9

 Class I Price Dol. / Cwt. -0.02 -0.45 -0.51 -0.50 -0.49 -0.48 -0.41

 All Milk Price Dol. / Cwt. 0.08 -0.29 -0.34 -0.32 -0.32 -0.31 -0.25

 Cash Receipts Mil. Dol. 1.2 (4.4) (5.5) (5.6) (5.9) (6.1) (4.4)

Louisville-Lexington-Evansville (Louisville)

 Marketings Mil. Lb. 1.4 0.8 (0.1) (0.8) (1.6) (2.3) (0.4)

 Class I Utilization 1/ Percent (0.6) (0.8) (1.1) (1.4) (1.5) (1.7) (1.2)

 Class I Use Mil. Lb. (1.3) 0.3 0.6 0.5 0.5 0.4 0.2

 Class I Price Dol. / Cwt. 0.34 -0.09 -0.15 -0.14 -0.13 -0.12 -0.05

 All Milk Price Dol. / Cwt. 0.26 -0.12 -0.19 -0.18 -0.18 -0.17 -0.10

 Cash Receipts Mil. Dol. 3.2 (1.3) (2.2) (2.2) (2.3) (2.4) (1.2)
APPENDIX TABLE 7:

Final Decision: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Southeast (Atlanta)

 Marketings Mil. Lb. 8.9 7.8 5.6 3.8 2.2 0.7 4.8

 Class I Utilization 1/ Percent (0.2) (0.1) (0.0) 0.0 0.0 0.0 (0.0)

 Class I Use Mil. Lb. (6.5) 2.1 3.4 3.0 2.9 2.7 1.3

 Class I Price Dol. / Cwt. 0.32 -0.11 -0.17 -0.16 -0.15 -0.14 -0.07

 All Milk Price Dol. / Cwt. 0.30 -0.04 -0.09 -0.08 -0.07 -0.06 -0.01

 Cash Receipts Mil. Dol. 18.2 (1.1) (4.2) (3.6) (3.7) (3.5) 0.3

Florida (Tampa)

Upper Florida (Jacksonville)

 Marketings Mil. Lb. 0.5 0.3 0.1 (0.2) (0.4) (0.7) (0.1)

 Class I Utilization 1/ Percent (8.5) (8.4) (9.0) (9.2) (9.2) (9.3) (8.9)

 Class I Use Mil. Lb. (1.1) (0.4) (0.3) (0.4) (0.4) (0.4) (0.5)

 Class I Price Dol. / Cwt. 0.72 0.29 0.23 0.24 0.25 0.26 0.33

 All Milk Price Dol. / Cwt. 0.29 -0.10 -0.18 -0.17 -0.17 -0.16 -0.08

 Cash Receipts Mil. Dol. 1.0 (0.3) (0.6) (0.6) (0.7) (0.7) (0.3)

Tampa Bay (Tampa)

 Marketings Mil. Lb. 7.7 11.8 15.2 18.6 22.1 25.6 16.8

 Class I Utilization 1/ Percent 4.0 4.1 4.1 4.0 3.9 3.9 4.0

 Class I Use Mil. Lb. (5.3) (2.6) (2.1) (2.3) (2.3) (2.4) (2.8)

 Class I Price Dol. / Cwt. 0.82 0.39 0.33 0.34 0.35 0.36 0.43

 All Milk Price Dol. / Cwt. 0.86 0.47 0.41 0.42 0.41 0.42 0.50

 Cash Receipts Mil. Dol. 16.1 10.4 10.2 11.3 12.2 13.1 12.2

Southeastern Florida (Miami)

 Marketings Mil. Lb. 4.7 7.0 9.0 10.9 12.9 14.8 9.9

 Class I Utilization 1/ Percent (5.5) (5.5) (5.6) (5.7) (5.8) (6.0) (5.7)

 Class I Use Mil. Lb. (5.6) (3.4) (3.1) (3.2) (3.3) (3.4) (3.6)

 Class I Price Dol. / Cwt. 1.07 0.64 0.58 0.59 0.60 0.61 0.68

 All Milk Price Dol. / Cwt. 0.78 0.40 0.34 0.34 0.33 0.33 0.42

 Cash Receipts Mil. Dol. 9.9 6.1 5.8 6.5 7.0 7.4 7.1

Mideast (Cleveland)

Michigan Upper Peninsula (Marquette)

 Marketings Mil. Lb. 0.0 (0.1) (0.2) (0.3) (0.3) (0.4) (0.2)

 Class I Utilization 1/ Percent (24.9) (25.1) (25.3) (25.5) (25.6) (26.0) (25.4)

 Class I Use Mil. Lb. (0.1) (0.0) (0.0) (0.0) (0.0) (0.0) (0.1)

 Class I Price Dol. / Cwt. 0.65 0.22 0.16 0.17 0.18 0.19 0.26

 All Milk Price Dol. / Cwt. 0.01 -0.30 -0.35 -0.34 -0.34 -0.33 -0.28

 Cash Receipts Mil. Dol. 0.0 (0.2) (0.3) (0.3) (0.3) (0.3) (0.2)

Southern Michigan (Detroit)

 Marketings Mil. Lb. 11.8 16.5 20.2 24.2 28.5 32.9 22.3

 Class I Utilization 1/ Percent 6.2 6.7 7.0 7.3 7.6 8.0 7.1

 Class I Use Mil. Lb. (4.7) (0.7) (0.1) (0.2) (0.2) (0.3) (1.0)

 Class I Price Dol. / Cwt. 0.50 0.07 0.01 0.02 0.03 0.04 0.11

 All Milk Price Dol. / Cwt. 0.46 0.19 0.16 0.18 0.19 0.20 0.23

 Cash Receipts Mil. Dol. 22.4 11.1 10.5 12.2 13.5 14.9 14.1

E. Ohio-W. Pennsylvania (Cleveland)

 Marketings Mil. Lb. 7.9 10.6 12.5 14.4 16.3 18.0 13.3

 Class I Utilization 1/ Percent 0.0 (0.0) (0.1) (0.2) (0.3) (0.5) (0.2)

 Class I Use Mil. Lb. (3.8) (0.5) (0.0) (0.2) (0.2) (0.2) (0.8)

 Class I Price Dol. / Cwt. 0.50 0.07 0.01 0.02 0.03 0.04 0.11

 All Milk Price Dol. / Cwt. 0.50 0.19 0.14 0.15 0.15 0.16 0.22

 Cash Receipts Mil. Dol. 17.8 8.0 6.6 7.4 7.7 8.1 9.3
APPENDIX TABLE 7:

Final Decision: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Ohio Valley (Columbus)

 Marketings Mil. Lb. 5.4 6.2 6.3 6.5 6.7 6.8 6.3

 Class I Utilization 1/ Percent (2.7) (2.9) (3.2) (3.5) (3.7) (4.0) (3.3)

 Class I Use Mil. Lb. (3.4) (0.2) 0.2 0.1 0.1 0.0 (0.5)

 Class I Price Dol. / Cwt. 0.46 0.03 -0.03 -0.02 -0.01 -0.00 0.07

 All Milk Price Dol. / Cwt. 0.37 0.06 0.01 0.02 0.02 0.01 0.08

 Cash Receipts Mil. Dol. 12.2 2.9 1.3 1.6 1.6 1.6 3.5

Indiana (Indianapolis)

 Marketings Mil. Lb. 2.8 2.6 2.1 1.6 1.1 0.6 1.8

 Class I Utilization 1/ Percent (10.6) (10.9) (11.4) (11.8) (12.2) (12.8) (11.6)

 Class I Use Mil. Lb. (3.1) (0.9) (0.5) (0.6) (0.6) (0.6) (1.1)

 Class I Price Dol. / Cwt. 0.60 0.17 0.11 0.12 0.13 0.14 0.21

 All Milk Price Dol. / Cwt. 0.29 -0.01 -0.07 -0.06 -0.07 -0.07 0.00

 Cash Receipts Mil. Dol. 6.3 0.2 (1.0) (1.0) (1.1) (1.3) 0.3

Upper Midwest (Chicago)

Chicago Regional (Chicago)

 Marketings 5/ Mil. Lb. 2,943.2 1,285.6 1,303.3 1,322.0 1,347.7 1,362.6 1,594.1

 Class I Utilization 1/ Percent (2.7) (1.3) (1.2) (1.2) (1.1) (1.1) (1.5)

 Class I Use Mil. Lb. (12.6) (7.3) (6.4) (6.4) (6.3) (6.4) (7.6)

 Class I Price Dol. / Cwt. 1.05 0.62 0.56 0.57 0.58 0.59 0.66

 All Milk Price 6/ Dol. / Cwt. 0.17 0.16 0.15 0.16 0.17 0.18 0.16

 Cash Receipts 7/ Mil. Dol. 400.2 199.0 207.6 220.1 232.5 239.7 249.8

 Cash Receipts, Net Pooling 8/ Mil. Dol. 52.0 37.1 37.2 40.3 44.2 47.6 43.1

Upper Midwest (Minneapolis)

 Marketings Mil. Lb. (0.7) (3.5) (6.7) (9.6) (12.1) (14.2) (7.8)

 Class I Utilization 1/ Percent (2.4) (1.1) (1.2) (1.3) (1.4) (1.5) (1.5)

 Class I Use Mil. Lb. (6.6) (3.4) (2.9) (2.9) (2.9) (3.0) (3.6)

 Class I Price Dol. / Cwt. 0.90 0.47 0.41 0.42 0.43 0.44 0.51

 All Milk Price 6/ Dol. / Cwt. -0.04 -0.09 -0.11 -0.10 -0.09 -0.08 -0.09

 Cash Receipts Mil. Dol. (3.9) (8.5) (10.2) (10.2) (9.8) (9.5) (8.7)

Central (Kansas City)

Iowa (Des Moines)

 Marketings Mil. Lb. 9.5 15.3 20.3 25.1 29.8 34.2 22.4

 Class I Utilization 1/ Percent 13.0 12.8 12.5 12.2 11.9 11.7 12.3

 Class I Use Mil. Lb. (3.1) (1.6) (1.3) (1.4) (1.4) (1.4) (1.7)

 Class I Price Dol. / Cwt. 0.90 0.47 0.41 0.42 0.43 0.44 0.51

 All Milk Price Dol. / Cwt. 0.73 0.51 0.47 0.48 0.48 0.48 0.52

 Cash Receipts Mil. Dol. 21.2 15.9 15.6 16.6 17.5 18.3 17.5

Nebraska-Western Iowa (Omaha)

 Marketings Mil. Lb. 3.6 5.8 7.7 9.5 11.4 13.2 8.5

 Class I Utilization 1/ Percent 4.6 4.5 4.4 4.2 4.0 3.9 4.3

 Class I Use Mil. Lb. (2.0) (0.9) (0.7) (0.7) (0.7) (0.7) (0.9)

 Class I Price Dol. / Cwt. 0.75 0.32 0.26 0.27 0.28 0.29 0.36

 All Milk Price Dol. / Cwt. 0.47 0.30 0.29 0.30 0.30 0.31 0.33

 Cash Receipts Mil. Dol. 8.2 5.8 5.9 6.4 6.8 7.2 6.7

Eastern S. Dakota (Sioux Falls)

 Marketings Mil. Lb. 0.1 (0.0) (0.2) (0.4) (0.5) (0.7) (0.3)

 Class I Utilization 1/ Percent (9.4) (9.8) (10.2) (10.6) (10.9) (11.4) (10.4)

 Class I Use Mil. Lb. (0.3) (0.1) (0.0) (0.1) (0.1) (0.1) (0.1)

 Class I Price Dol. / Cwt. 0.60 0.17 0.11 0.12 0.13 0.14 0.21

 All Milk Price Dol. / Cwt. 0.10 -0.15 -0.19 -0.19 -0.18 -0.18 -0.13

 Cash Receipts Mil. Dol. 0.2 (0.4) (0.5) (0.5) (0.5) (0.5) (0.4)
APPENDIX TABLE 7:

Final Decision: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Central Illinois (Peoria)

 Marketings Mil. Lb. 0.0 (0.1) (0.3) (0.5) (0.6) (0.8) (0.4)

 Class I Utilization 1/ Percent (33.7) (33.7) (33.6) (33.7) (33.6) (33.8) (33.7)

 Class I Use Mil. Lb. (0.5) (0.3) (0.2) (0.2) (0.2) (0.2) (0.3)

 Class I Price Dol. / Cwt. 0.89 0.46 0.40 0.41 0.42 0.43 0.50

 All Milk Price Dol. / Cwt. 0.04 -0.20 -0.24 -0.22 -0.21 -0.21 -0.17

 Cash Receipts Mil. Dol. 0.1 (0.4) (0.5) (0.5) (0.5) (0.5) (0.4)

Southern Illinois-Eastern Missouri (Alton)

 Marketings Mil. Lb. 3.0 3.6 3.9 4.3 4.7 5.1 4.1

 Class I Utilization 1/ Percent (8.8) (8.8) (8.8) (8.9) (9.0) (9.2) (8.9)

 Class I Use Mil. Lb. (3.0) (1.1) (0.8) (0.8) (0.8) (0.9) (1.2)

 Class I Price Dol. / Cwt. 0.68 0.25 0.19 0.20 0.21 0.22 0.29

 All Milk Price Dol. / Cwt. 0.32 0.08 0.04 0.05 0.06 0.06 0.10

 Cash Receipts Mil. Dol. 6.8 2.1 1.4 1.7 1.9 2.1 2.6

Southwest Plains (Oklahoma City)

 Marketings Mil. Lb. (1.3) (5.7) (10.3) (14.4) (18.4) (22.1) (12.0)

 Class I Utilization 1/ Percent (2.6) (2.6) (2.7) (2.7) (2.8) (3.0) (2.7)

 Class I Use Mil. Lb. 2.3 5.2 5.5 5.3 5.1 5.0 4.7

 Class I Price Dol. / Cwt. -0.32 -0.75 -0.81 -0.80 -0.79 -0.78 -0.71

 All Milk Price Dol. / Cwt. -0.08 -0.33 -0.37 -0.36 -0.35 -0.35 -0.31

 Cash Receipts Mil. Dol. (2.8) (11.0) (12.8) (13.2) (13.7) (14.2) (11.3)

Eastern Colorado (Denver)

 Marketings Mil. Lb. (2.6) (6.7) (10.9) (14.9) (19.0) (22.9) (12.8)

 Class I Utilization 1/ Percent 3.0 3.9 4.5 5.1 5.7 6.5 4.8

 Class I Use Mil. Lb. 2.3 3.7 3.9 3.8 3.8 3.8 3.6

 Class I Price Dol. / Cwt. -0.68 -1.11 -1.17 -1.16 -1.15 -1.14 -1.07

 All Milk Price Dol. / Cwt. -0.32 -0.53 -0.54 -0.51 -0.49 -0.46 -0.48

 Cash Receipts Mil. Dol. (6.2) (11.0) (12.2) (12.6) (13.1) (13.5) (11.4)

Western Colorado (Grand Junction)

 Marketings Mil. Lb. (0.1) (0.2) (0.4) (0.5) (0.7) (0.8) (0.4)

 Class I Utilization 1/ Percent (34.4) (33.2) (32.1) (31.1) (30.2) (29.4) (31.7)

 Class I Use Mil. Lb. (0.3) (0.1) (0.1) (0.1) (0.1) (0.1) (0.1)

 Class I Price Dol. / Cwt. 0.70 0.27 0.21 0.22 0.23 0.24 0.31

 All Milk Price Dol. / Cwt. -0.11 -0.31 -0.32 -0.28 -0.26 -0.23 -0.25

 Cash Receipts Mil. Dol. (0.1) (0.4) (0.5) (0.5) (0.5) (0.5) (0.4)

Greater Kansas City (Kansas City)

 Marketings Mil. Lb. (0.6) (1.3) (2.0) (2.7) (3.3) (3.9) (2.3)

 Class I Utilization 1/ Percent (38.3) (37.2) (36.2) (35.2) (34.0) (33.4) (35.7)

 Class I Use Mil. Lb. (0.5) (0.1) 0.0 (0.0) (0.0) (0.0) (0.1)

 Class I Price Dol. / Cwt. 0.48 0.05 -0.01 0.00 0.01 0.02 0.09

 All Milk Price Dol. / Cwt. -0.42 -0.62 -0.63 -0.59 -0.56 -0.53 -0.56

 Cash Receipts Mil. Dol. (1.3) (2.0) (2.2) (2.2) (2.3) (2.3) (2.0)

Southwest (Dallas)

Texas (Dallas)

 Marketings Mil. Lb. (9.0) (25.6) (42.1) (57.6) (72.7) (87.0) (49.0)

 Class I Utilization 1/ Percent (5.7) (5.9) (6.1) (6.4) (6.7) (7.1) (6.3)

 Class I Use Mil. Lb. 9.8 16.6 17.4 16.8 16.5 16.2 15.5

 Class I Price Dol. / Cwt. -0.56 -0.99 -1.05 -1.04 -1.03 -1.02 -0.95

 All Milk Price Dol. / Cwt. -0.25 -0.51 -0.56 -0.56 -0.56 -0.57 -0.50

 Cash Receipts Mil. Dol. (17.5) (36.5) (42.1) (44.4) (47.3) (50.1) (39.7)
APPENDIX TABLE 7:

Final Decision: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

New Mexico-West Texas (El Paso)

 Marketings Mil. Lb. 3.0 4.2 5.3 6.5 8.0 9.6 6.1

 Class I Utilization 1/ Percent 17.0 17.7 18.4 19.1 19.7 20.5 18.7

 Class I Use Mil. Lb. 0.4 1.9 2.0 1.9 1.9 1.8 1.7

 Class I Price Dol. / Cwt. -0.10 -0.53 -0.59 -0.58 -0.57 -0.56 -0.49

 All Milk Price Dol. / Cwt. 0.35 0.15 0.14 0.17 0.19 0.22 0.20

 Cash Receipts Mil. Dol. 8.3 4.0 4.0 5.0 5.9 6.9 5.68

Western (Salt Lake City)

Southwestern Idaho-Eastern Oregon (Boise)

 Marketings Mil. Lb. 3.4 5.6 7.6 9.8 12.1 14.6 8.9

 Class I Utilization 1/ Percent 15.1 15.4 15.5 15.6 15.7 16.0 15.6

 Class I Use Mil. Lb. (0.3) 0.1 0.1 0.1 0.1 0.1 0.0

 Class I Price Dol. / Cwt. 0.35 -0.08 -0.14 -0.13 -0.12 -0.11 -0.04

 All Milk Price Dol. / Cwt. 0.32 0.21 0.20 0.21 0.22 0.23 0.23

 Cash Receipts Mil. Dol. 8.2 5.9 6.0 6.8 7.7 8.6 7.2

Great Basin (Salt Lake City)

 Marketings Mil. Lb. (1.4) (3.8) (6.2) (8.6) (11.1) (13.4) (7.4)

 Class I Utilization 1/ Percent (14.6) (14.9) (15.1) (15.3) (15.5) (15.9) (15.2)

 Class I Use Mil. Lb. (0.4) 1.3 1.6 1.6 1.6 1.5 1.2

 Class I Price Dol. / Cwt. 0.10 -0.33 -0.39 -0.38 -0.37 -0.36 -0.29

 All Milk Price Dol. / Cwt. -0.15 -0.27 -0.29 -0.28 -0.28 -0.28 -0.26

 Cash Receipts Mil. Dol. (4.0) (7.4) (8.4) (8.9) (9.2) (9.7) (7.9)

Arizona-Las Vegas (Phoenix)

 Marketings Mil. Lb. (1.7) (5.5) (9.4) (13.1) (16.9) (20.7) (11.2)

 Class I Utilization 1/ Percent 0.1 0.2 0.3 0.3 0.4 0.4 0.3

 Class I Use Mil. Lb. 2.4 4.4 4.8 4.7 4.7 4.7 4.3

 Class I Price Dol. / Cwt. -0.47 -0.90 -0.96 -0.95 -0.94 -0.93 -0.86

 All Milk Price Dol. / Cwt. -0.15 -0.33 -0.34 -0.33 -0.32 -0.31 -0.30

 Cash Receipts Mil. Dol. (4.2) (9.9) (11.1) (11.6) (12.3) (13.0) (10.4)

Pacific Northwest (Seattle)

 Marketings Mil. Lb. 1.7 (1.1) (3.8) (6.1) (8.4) (10.6) (4.7)

 Class I Utilization 1/ Percent (0.0) 0.1 0.1 0.1 0.1 0.1 0.1

 Class I Use Mil. Lb. (0.4) 3.5 4.1 3.9 3.9 3.8 3.1

 Class I Price Dol. / Cwt. 0.05 -0.38 -0.44 -0.43 -0.42 -0.41 -0.34

 All Milk Price Dol. / Cwt. 0.05 -0.10 -0.09 -0.08 -0.07 -0.07 -0.06

 Cash Receipts Mil. Dol. 4.0 (7.2) (7.5) (7.1) (7.1) (7.4) (5.4)

All Federal Order Markets

 Marketings 5/ Mil. Lb. 3,012.8 1,315.1 1,283.1 1,259.0 1,245.2 1,224.2 1,556.6

 Class I Utilization 1/ Percent (1.2) (0.5) (0.4) (0.4) (0.4) (0.4) (0.5)

 Class I Use Mil. Lb. (38.6) 52.7 65.1 60.1 57.9 55.2 42.1

 Class I Price Dol. / Cwt. 0.20 -0.22 -0.29 -0.27 -0.27 -0.26 -0.19

 All Milk Price Dol. / Cwt. 0.14 -0.05 -0.07 -0.06 -0.06 -0.05 -0.02

 Cash Receipts 9/ Mil. Dol. 582.6 155.5 127.8 145.2 157.1 163.6 222.0

 Cash Receipts, Net Transportation 

 Adjustment and Pooling 10/ Mil. Dol. 216.3 (24.4) (60.6) (52.5) (49.2) (46.5) (2.8)

State of California

 Marketings Mil. Lb. (6.9) (9.7) (8.2) (5.7) (2.0) 2.2 (5.1)

 Class I Utilization 1/ Percent 0.0 0.0 0.0 0.0 (0.0) (0.0) 0.0

 Class I Use Mil. Lb. 0.7 (0.0) (0.2) (0.3) (0.7) (0.9) (0.2)

 Class I Price Dol. / Cwt. -0.02 0.00 0.01 0.01 0.03 0.04 0.01

 All Milk Price Dol. / Cwt. -0.05 -0.02 0.01 0.02 0.03 0.04 0.01

 Cash Receipts Mil. Dol. (16.5) (7.9) 3.7 6.6 10.7 12.5 1.5
APPENDIX TABLE 7:

Final Decision: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

United States

 Marketings Mil. Lb. 82.7 55.5 21.1 (5.0) (24.9) (40.4) 14.8

 Class I Utilization 1/ Percent (0.0) 0.0 0.0 0.0 0.0 0.0 0.0

 Class I Use Mil. Lb. (40.9) 48.7 60.8 55.7 52.7 49.5 37.8

 Class I Price Dol. / Cwt. 0.15 -0.18 -0.23 -0.22 -0.21 -0.20 -0.15

 All Milk Price Dol. / Cwt. 0.11 -0.02 -0.03 -0.02 -0.02 -0.01 0.00

 Cash Receipts 11/ Mil. Dol. 213.9 (12.7) (35.6) (22.9) (11.5) (3.9) 21.2

 Cash Receipts, Net Transportation Adjustment 12/ Mil. Dol. 195.8 (30.7) (53.6) (41.0) (29.5) (21.9) 3.2

1/ Changes in Class I utilization compare the total Class I utilization for the consolidated market with baseline utilizations for the individual

 current markets.

2/ All milk price in New York-New Jersey reflects the termination of a $0.15 per cwt reduction in pool value for the transportation credit.

3/ Cash receipts reflect the termination of the $0.15 per cwt reduction in pool value for the transportation credit.

4/ Cash receipts do not reflect the termination of the $0.15 per cwt reduction in pool value for the transportation credit.

5/ Chicago Regional marketings include additional milk that would be expected to be pooled due to favorable price relationships.

 The amount of additional milk pooled by year: 2000: 2,928.6 mil. lbs.; 2001: 1,257.7 mil. lbs.; 2002: 1,263.8 mil. lbs.; 2003: 1,270.8 mil. lbs.; 

 2004: 1,284.0 mil. lbs., and 2005: 1,286.5 mil. lbs. 

6/ All milk price in Chicago and Minneapolis is reduced by $0.03 per cwt to account for funding transportation credits.

7/ Cash receipts include the income obtained from the additional pooled milk. 

8/ Cash receipts exclude the income from additional pooled milk, and reflect only the milk supply either lost or gained in response to change in all milk price.

9/ Cash receipts reflect the termination of the $0.15 per cwt transportation credit in New York-New Jersey and the additional pooled 

 milk in the Chicago Regional.

10/ Cash receipts do not reflect the termination of the $0.15 per cwt transportation credit in New York-New Jersey, exclude the income

 from the additional pooled milk in Chicago Regional, and reflect only the milk supply either lost or gained in response to change in all milk price. 

11/ Cash receipts reflect the termination of the $0.15 per cwt transportation credit in New York-New Jersey.

12/ Cash receipts do not reflect the termination of the $0.15 per cwt transportation credit in New York-New Jersey.
APPENDIX TABLE 8:

Modified Option 1B: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Northeast (New York City)

New England (Boston)

 Marketings Mil. Lb. 2.3 (1.0) (4.1) (6.6) (9.2) (11.4) (5.0)

 Class I Utilization 1/ Percent (2.8) (2.5) (2.3) (2.2) (2.0) (1.9) (2.3)

 Class I Use Mil. Lb. 3.8 8.4 8.7 8.4 8.6 8.2 7.7

 Class I Price Dol. / Cwt. -0.31 -0.71 -0.77 -0.76 -0.80 -0.79 -0.69

 All Milk Price Dol. / Cwt. 0.07 -0.12 -0.12 -0.09 -0.10 -0.09 -0.07

 Cash Receipts Mil. Dol. 4.5 (6.7) (7.2) (6.4) (7.5) (6.9) (5.0)

New York-New Jersey (New York City)

 Marketings Mil. Lb. 8.7 1.3 (7.0) (14.1) (21.9) (28.6) (10.3)

 Class I Utilization 1/ Percent 4.2 4.4 4.5 4.5 4.6 4.7 4.5

 Class I Use Mil. Lb. 11.1 19.9 20.4 19.6 19.8 19.0 18.3

 Class I Price Dol. / Cwt. -0.46 -0.86 -0.92 -0.91 -0.95 -0.94 -0.84

 All Milk Price 2/ Dol. / Cwt. 0.28 0.03 0.00 0.02 0.00 0.02 0.06

 Cash Receipts 3/ Mil. Dol. 52.9 21.9 17.4 18.5 15.1 15.6 23.6

 Cash Receipts, Net Transportation Adjustment 4/ Mil. Dol. 34.8 3.8 (0.6) 0.5 (3.0) (2.3) 5.5

Middle Atlantic (Philadelphia)

 Marketings Mil. Lb. (15.3) (35.3) (53.9) (71.4) (89.4) (106.1) (61.9)

 Class I Utilization 1/ Percent (1.6) (1.6) (1.8) (1.9) (2.0) (2.1) (1.8)

 Class I Use Mil. Lb. 9.9 15.1 15.4 14.9 15.0 14.6 14.1

 Class I Price Dol. / Cwt. -0.71 -1.11 -1.17 -1.16 -1.20 -1.19 -1.09

 All Milk Price Dol. / Cwt. -0.41 -0.58 -0.58 -0.57 -0.59 -0.58 -0.55

 Cash Receipts Mil. Dol. (29.4) (44.0) (47.1) (49.4) (54.1) (56.4) (46.7)

Unregulated NY and New England

 Marketings Mil. Lb. (1.0) (2.4) (3.6) (4.8) (5.9) (7.0) (4.1)

 Class I Utilization 1/ Percent (43.4) (42.7) (42.7) (42.3) (41.6) (41.2) (42.3)

 Class I Use Mil. Lb. 0.6 1.4 1.4 1.4 1.4 1.4 1.3

 Class I Price Dol. / Cwt. -0.31 -0.71 -0.77 -0.76 -0.80 -0.79 -0.69

 All Milk Price Dol. / Cwt. -0.35 -0.54 -0.53 -0.51 -0.51 -0.49 -0.49

 Cash Receipts Mil. Dol. (1.9) (3.0) (3.2) (3.2) (3.5) (3.6) (3.0)

Appalachian (Charlotte)

Carolina (Charlotte)

 Marketings Mil. Lb. (1.5) (7.5) (13.3) (18.7) (24.4) (29.5) (15.8)

 Class I Utilization 1/ Percent 0.2 0.7 1.1 1.3 1.5 1.7 1.1

 Class I Use Mil. Lb. 3.9 8.2 8.6 8.3 8.6 8.3 7.7

 Class I Price Dol. / Cwt. -0.35 -0.75 -0.81 -0.80 -0.84 -0.83 -0.73

 All Milk Price Dol. / Cwt. -0.10 -0.42 -0.45 -0.43 -0.46 -0.44 -0.38

 Cash Receipts Mil. Dol. (3.1) (13.6) (15.4) (16.0) (18.0) (18.5) (14.1)

Tennessee Valley (Knoxville)

 Marketings Mil. Lb. (1.0) (4.4) (7.7) (10.8) (14.1) (17.1) (9.2)

 Class I Utilization 1/ Percent 0.3 0.6 0.7 0.8 1.0 1.1 0.8

 Class I Use Mil. Lb. 1.7 3.6 3.8 3.7 3.8 3.7 3.4

 Class I Price Dol. / Cwt. -0.34 -0.74 -0.80 -0.79 -0.83 -0.82 -0.72

 All Milk Price Dol. / Cwt. -0.14 -0.48 -0.52 -0.51 -0.54 -0.52 -0.45

 Cash Receipts Mil. Dol. (2.1) (7.6) (8.8) (9.2) (10.3) (10.6) (8.1)

Louisville-Lexington-Evansville (Louisville)

 Marketings Mil. Lb. 0.2 (1.3) (3.0) (4.6) (6.4) (8.0) (3.8)

 Class I Utilization 1/ Percent (0.4) (0.6) (0.8) (1.0) (1.0) (1.2) (0.8)

 Class I Use Mil. Lb. (0.1) 1.4 1.6 1.6 1.7 1.6 1.3

 Class I Price Dol. / Cwt. 0.02 -0.38 -0.44 -0.43 -0.47 -0.46 -0.36

 All Milk Price Dol. / Cwt. 0.04 -0.32 -0.37 -0.36 -0.40 -0.39 -0.30

 Cash Receipts Mil. Dol. 0.6 (3.8) (4.7) (4.9) (5.7) (5.8) (4.1)
APPENDIX TABLE 8:

Modified Option 1B: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Southeast (Atlanta)

 Marketings Mil. Lb. 2.6 (3.7) (10.5) (16.6) (23.5) (29.6) (13.6)

 Class I Utilization 1/ Percent (0.0) 0.2 0.3 0.4 0.5 0.5 0.3

 Class I Use Mil. Lb. (0.1) 8.0 8.9 8.6 9.2 8.9 7.3

 Class I Price Dol. / Cwt. 0.00 -0.40 -0.46 -0.45 -0.49 -0.48 -0.38

 All Milk Price Dol. / Cwt. 0.09 -0.23 -0.27 -0.26 -0.29 -0.28 -0.21

 Cash Receipts Mil. Dol. 5.3 (13.7) (16.9) (17.5) (20.6) (21.0) (14.1)

Florida (Tampa)

Upper Florida (Jacksonville)

 Marketings Mil. Lb. 0.1 (0.4) (1.0) (1.6) (2.2) (2.8) (1.3)

 Class I Utilization 1/ Percent (8.3) (8.1) (8.6) (8.8) (8.7) (8.7) (8.5)

 Class I Use Mil. Lb. (0.6) 0.0 0.1 0.1 0.1 0.1 (0.0)

 Class I Price Dol. / Cwt. 0.40 -0.00 -0.06 -0.05 -0.09 -0.08 0.02

 All Milk Price Dol. / Cwt. 0.05 -0.31 -0.37 -0.37 -0.40 -0.38 -0.30

 Cash Receipts Mil. Dol. 0.2 (1.1) (1.5) (1.6) (1.9) (2.0) (1.3)

Tampa Bay (Tampa)

 Marketings Mil. Lb. 5.6 7.8 9.7 11.5 13.1 14.7 10.4

 Class I Utilization 1/ Percent 4.3 4.4 4.4 4.4 4.5 4.5 4.4

 Class I Use Mil. Lb. (3.3) (0.7) (0.3) (0.3) (0.0) (0.2) (0.8)

 Class I Price Dol. / Cwt. 0.50 0.10 0.04 0.05 0.01 0.02 0.12

 All Milk Price Dol. / Cwt. 0.62 0.26 0.21 0.22 0.18 0.19 0.28

 Cash Receipts Mil. Dol. 11.7 6.0 5.6 6.2 5.9 6.6 7.0

Southeastern Florida (Miami)

 Marketings Mil. Lb. 3.3 4.4 5.3 6.1 6.8 7.5 5.6

 Class I Utilization 1/ Percent (5.3) (5.2) (5.2) (5.2) (5.3) (5.4) (5.3)

 Class I Use Mil. Lb. (4.0) (1.8) (1.6) (1.6) (1.4) (1.5) (2.0)

 Class I Price Dol. / Cwt. 0.75 0.35 0.29 0.30 0.26 0.27 0.37

 All Milk Price Dol. / Cwt. 0.55 0.19 0.14 0.14 0.10 0.11 0.21

 Cash Receipts Mil. Dol. 6.9 3.1 2.8 3.0 2.7 3.0 3.6

Mideast (Cleveland)

Michigan Upper Peninsula (Marquette)

 Marketings Mil. Lb. (0.0) (0.2) (0.3) (0.4) (0.5) (0.6) (0.3)

 Class I Utilization 1/ Percent (24.8) (25.0) (25.1) (25.3) (25.4) (25.8) (25.2)

 Class I Use Mil. Lb. (0.1) 0.0 0.0 0.0 0.0 0.0 0.0

 Class I Price Dol. / Cwt. 0.33 -0.07 -0.13 -0.12 -0.16 -0.15 -0.05

 All Milk Price Dol. / Cwt. -0.13 -0.42 -0.45 -0.44 -0.47 -0.46 -0.40

 Cash Receipts Mil. Dol. (0.1) (0.3) (0.3) (0.4) (0.4) (0.4) (0.3)

Southern Michigan (Detroit)

 Marketings Mil. Lb. 8.3 10.2 11.5 13.2 14.5 16.0 12.3

 Class I Utilization 1/ Percent 6.3 6.8 7.2 7.5 7.8 8.2 7.3

 Class I Use Mil. Lb. (1.7) 2.0 2.4 2.3 2.6 2.5 1.7

 Class I Price Dol. / Cwt. 0.18 -0.22 -0.28 -0.27 -0.31 -0.30 -0.20

 All Milk Price Dol. / Cwt. 0.32 0.08 0.06 0.08 0.05 0.07 0.11

 Cash Receipts Mil. Dol. 15.7 4.9 4.3 5.5 4.9 6.1 6.9

E. Ohio-W. Pennsylvania (Cleveland)

 Marketings Mil. Lb. 5.8 6.8 7.3 7.9 8.1 8.3 7.4

 Class I Utilization 1/ Percent 0.1 0.1 0.0 (0.1) (0.1) (0.2) (0.0)

 Class I Use Mil. Lb. (1.4) 1.6 2.0 1.9 2.1 2.0 1.4

 Class I Price Dol. / Cwt. 0.18 -0.22 -0.28 -0.27 -0.31 -0.30 -0.20

 All Milk Price Dol. / Cwt. 0.37 0.08 0.04 0.05 0.02 0.03 0.10

 Cash Receipts Mil. Dol. 13.0 3.5 2.4 2.8 1.9 2.3 4.3
APPENDIX TABLE 8:

Modified Option 1B: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Ohio Valley (Columbus)

 Marketings Mil. Lb. 3.4 2.7 1.5 0.5 (0.8) (2.0) 0.9

 Class I Utilization 1/ Percent (2.6) (2.8) (3.0) (3.3) (3.5) (3.8) (3.2)

 Class I Use Mil. Lb. (1.1) 1.9 2.2 2.1 2.4 2.2 1.6

 Class I Price Dol. / Cwt. 0.14 -0.26 -0.32 -0.31 -0.35 -0.34 -0.24

 All Milk Price Dol. / Cwt. 0.24 -0.05 -0.09 -0.09 -0.12 -0.11 -0.04

 Cash Receipts Mil. Dol. 7.7 (1.2) (2.6) (2.5) (3.7) (3.8) (1.0)

Indiana (Indianapolis)

 Marketings Mil. Lb. 1.5 0.4 (1.0) (2.2) (3.7) (5.1) (1.7)

 Class I Utilization 1/ Percent (10.4) (10.8) (11.2) (11.7) (12.0) (12.5) (11.5)

 Class I Use Mil. Lb. (1.5) 0.6 0.9 0.8 1.0 0.9 0.5

 Class I Price Dol. / Cwt. 0.28 -0.12 -0.18 -0.17 -0.21 -0.20 -0.10

 All Milk Price Dol. / Cwt. 0.16 -0.13 -0.17 -0.17 -0.20 -0.20 -0.12

 Cash Receipts Mil. Dol. 3.4 (2.5) (3.6) (3.7) (4.6) (4.8) (2.6)

Upper Midwest (Chicago)

Chicago Regional (Chicago)

 Marketings Mil. Lb. 23.4 39.0 53.3 68.5 84.0 99.7 61.3

 Class I Utilization 1/ Percent (0.2) (0.1) (0.1) (0.0) 0.0 0.0 (0.1)

 Class I Use Mil. Lb. (8.8) (3.9) (3.2) (3.1) (2.6) (2.8) (4.1)

 Class I Price Dol. / Cwt. 0.73 0.33 0.27 0.28 0.24 0.25 0.35

 All Milk Price 5/ Dol. / Cwt. 0.28 0.20 0.19 0.21 0.22 0.23 0.22

 Cash Receipts Mil. Dol. 40.1 31.1 32.7 38.6 41.9 46.5 38.5

Upper Midwest (Minneapolis)

 Marketings Mil. Lb. 1.0 (2.1) (5.4) (7.6) (9.8) (11.3) (5.9)

 Class I Utilization 1/ Percent 0.1 0.0 (0.1) (0.1) (0.2) (0.3) (0.1)

 Class I Use Mil. Lb. (4.3) (1.3) (0.9) (0.9) (0.6) (0.7) (1.4)

 Class I Price Dol. / Cwt. 0.58 0.18 0.12 0.13 0.09 0.10 0.20

 All Milk Price 5/ Dol. / Cwt. -0.01 -0.10 -0.11 -0.08 -0.08 -0.07 -0.07

 Cash Receipts Mil. Dol. (0.8) (8.9) (10.0) (8.5) (8.8) (7.9) (7.5)

Central (Kansas City)

Iowa (Des Moines)

 Marketings Mil. Lb. 7.9 12.6 16.6 20.5 24.1 27.4 18.2

 Class I Utilization 1/ Percent 13.1 12.9 12.6 12.4 12.0 11.8 12.5

 Class I Use Mil. Lb. (2.0) (0.6) (0.4) (0.4) (0.3) (0.3) (0.7)

 Class I Price Dol. / Cwt. 0.58 0.18 0.12 0.13 0.09 0.10 0.20

 All Milk Price Dol. / Cwt. 0.61 0.41 0.38 0.39 0.37 0.38 0.42

 Cash Receipts Mil. Dol. 17.8 12.7 12.5 13.5 13.5 14.3 14.1

Nebraska-Western Iowa (Omaha)

 Marketings Mil. Lb. 2.7 4.1 5.4 6.7 7.9 9.1 6.0

 Class I Utilization 1/ Percent 4.7 4.6 4.5 4.4 4.2 4.0 4.4

 Class I Use Mil. Lb. (1.2) (0.1) 0.1 0.1 0.2 0.1 (0.1)

 Class I Price Dol. / Cwt. 0.43 0.03 -0.03 -0.02 -0.06 -0.05 0.05

 All Milk Price Dol. / Cwt. 0.35 0.20 0.20 0.21 0.19 0.20 0.22

 Cash Receipts Mil. Dol. 6.1 3.9 4.0 4.5 4.4 4.8 4.6

Eastern S. Dakota (Sioux Falls)

 Marketings Mil. Lb. (0.0) (0.3) (0.5) (0.8) (1.0) (1.3) (0.7)

 Class I Utilization 1/ Percent (9.3) (9.7) (10.1) (10.5) (10.8) (11.2) (10.3)

 Class I Use Mil. Lb. (0.1) 0.1 0.1 0.1 0.1 0.1 0.0

 Class I Price Dol. / Cwt. 0.28 -0.12 -0.18 -0.17 -0.21 -0.20 -0.10

 All Milk Price Dol. / Cwt. -0.02 -0.26 -0.29 -0.28 -0.30 -0.29 -0.24

 Cash Receipts Mil. Dol. (0.1) (0.6) (0.7) (0.7) (0.8) (0.9) (0.6)
APPENDIX TABLE 8:

Modified Option 1B: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Central Illinois (Peoria)

 Marketings Mil. Lb. (0.1) (0.3) (0.6) (0.8) (1.0) (1.2) (0.7)

 Class I Utilization 1/ Percent (33.6) (33.6) (33.5) (33.5) (33.4) (33.7) (33.6)

 Class I Use Mil. Lb. (0.4) (0.1) (0.1) (0.1) (0.0) (0.1) (0.1)

 Class I Price Dol. / Cwt. 0.57 0.17 0.11 0.12 0.08 0.09 0.19

 All Milk Price Dol. / Cwt. -0.08 -0.30 -0.33 -0.31 -0.32 -0.31 -0.27

 Cash Receipts Mil. Dol. (0.2) (0.6) (0.7) (0.7) (0.8) (0.8) (0.6)

Southern Illinois-Eastern Missouri (Alton)

 Marketings Mil. Lb. 1.9 1.7 1.3 1.0 0.6 0.3 1.1

 Class I Utilization 1/ Percent (8.7) (8.7) (8.7) (8.8) (8.8) (9.0) (8.8)

 Class I Use Mil. Lb. (1.6) 0.2 0.4 0.4 0.5 0.5 0.1

 Class I Price Dol. / Cwt. 0.36 -0.04 -0.10 -0.09 -0.13 -0.12 -0.02

 All Milk Price Dol. / Cwt. 0.20 -0.03 -0.05 -0.04 -0.05 -0.04 -0.00

 Cash Receipts Mil. Dol. 4.3 (0.2) (0.8) (0.6) (1.0) (0.8) 0.2

Southwest Plains (Oklahoma City)

 Marketings Mil. Lb. (3.0) (8.9) (14.5) (19.7) (25.0) (29.9) (16.8)

 Class I Utilization 1/ Percent (2.5) (2.5) (2.5) (2.6) (2.7) (2.8) (2.6)

 Class I Use Mil. Lb. 4.6 7.3 7.5 7.2 7.3 7.1 6.8

 Class I Price Dol. / Cwt. -0.64 -1.04 -1.10 -1.09 -1.13 -1.12 -1.02

 All Milk Price Dol. / Cwt. -0.20 -0.43 -0.46 -0.45 -0.46 -0.46 -0.41

 Cash Receipts Mil. Dol. (6.7) (14.6) (16.3) (16.7) (18.2) (18.7) (15.2)

Eastern Colorado (Denver)

 Marketings Mil. Lb. (3.6) (8.5) (13.4) (18.2) (23.1) (28.0) (15.8)

 Class I Utilization 1/ Percent 3.1 4.0 4.6 5.2 5.9 6.6 4.9

 Class I Use Mil. Lb. 3.4 4.7 4.9 4.8 4.9 4.9 4.6

 Class I Price Dol. / Cwt. -1.00 -1.40 -1.46 -1.45 -1.49 -1.48 -1.38

 All Milk Price Dol. / Cwt. -0.44 -0.63 -0.64 -0.60 -0.60 -0.57 -0.58

 Cash Receipts Mil. Dol. (8.5) (13.2) (14.4) (14.9) (16.1) (16.6) (13.9)

Western Colorado (Grand Junction)

 Marketings Mil. Lb. (0.1) (0.3) (0.6) (0.8) (1.0) (1.1) (0.6)

 Class I Utilization 1/ Percent (34.3) (33.1) (32.0) (31.0) (30.0) (29.3) (31.6)

 Class I Use Mil. Lb. (0.2) 0.0 0.0 0.0 0.0 0.0 (0.0)

 Class I Price Dol. / Cwt. 0.38 -0.02 -0.08 -0.07 -0.11 -0.10 0.00

 All Milk Price Dol. / Cwt. -0.23 -0.42 -0.41 -0.37 -0.37 -0.34 -0.36

 Cash Receipts Mil. Dol. (0.3) (0.6) (0.6) (0.6) (0.7) (0.7) (0.6)

Greater Kansas City (Kansas City)

 Marketings Mil. Lb. (0.7) (1.6) (2.4) (3.2) (3.9) (4.6) (2.7)

 Class I Utilization 1/ Percent (38.2) (37.1) (36.1) (35.1) (33.9) (33.2) (35.6)

 Class I Use Mil. Lb. (0.2) 0.2 0.3 0.3 0.3 0.3 0.2

 Class I Price Dol. / Cwt. 0.16 -0.24 -0.30 -0.29 -0.33 -0.32 -0.22

 All Milk Price Dol. / Cwt. -0.54 -0.72 -0.72 -0.68 -0.67 -0.64 -0.66

 Cash Receipts Mil. Dol. (1.7) (2.4) (2.5) (2.5) (2.7) (2.7) (2.4)

Southwest (Dallas)

Texas (Dallas)

 Marketings Mil. Lb. (13.3) (33.3) (52.7) (70.7) (89.1) (106.2) (60.9)

 Class I Utilization 1/ Percent (5.6) (5.7) (6.0) (6.3) (6.5) (6.9) (6.2)

 Class I Use Mil. Lb. 15.3 21.7 22.2 21.6 22.0 21.6 20.7

 Class I Price Dol. / Cwt. -0.88 -1.28 -1.34 -1.33 -1.37 -1.36 -1.26

 All Milk Price Dol. / Cwt. -0.37 -0.62 -0.65 -0.65 -0.68 -0.68 -0.61

 Cash Receipts Mil. Dol. (25.9) (44.4) (49.8) (52.4) (57.5) (60.5) (48.4)
APPENDIX TABLE 8:

Modified Option 1B: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

New Mexico-West Texas (El Paso)

 Marketings Mil. Lb. 1.9 2.3 2.6 3.2 3.8 4.5 3.1

 Class I Utilization 1/ Percent 17.1 17.8 18.5 19.2 19.8 20.7 18.9

 Class I Use Mil. Lb. 1.5 2.9 3.0 2.9 3.0 2.9 2.7

 Class I Price Dol. / Cwt. -0.42 -0.82 -0.88 -0.87 -0.91 -0.90 -0.80

 All Milk Price Dol. / Cwt. 0.23 0.04 0.04 0.07 0.07 0.10 0.09

 Cash Receipts Mil. Dol. 5.4 1.3 1.4 2.3 2.3 3.2 2.6

Western (Salt Lake City)

Southwestern Idaho-Eastern Oregon (Boise)

 Marketings Mil. Lb. 2.8 4.5 6.2 8.1 10.0 12.2 7.3

 Class I Utilization 1/ Percent 15.2 15.4 15.5 15.7 15.8 16.0 15.6

 Class I Use Mil. Lb. (0.0) 0.3 0.4 0.4 0.4 0.4 0.3

 Class I Price Dol. / Cwt. 0.03 -0.37 -0.43 -0.42 -0.46 -0.45 -0.35

 All Milk Price Dol. / Cwt. 0.26 0.16 0.16 0.18 0.18 0.20 0.19

 Cash Receipts Mil. Dol. 6.7 4.7 4.9 6.0 6.5 7.4 6.0

Great Basin (Salt Lake City)

 Marketings Mil. Lb. (1.9) (4.7) (7.5) (10.1) (12.8) (15.4) (8.8)

 Class I Utilization 1/ Percent (14.6) (14.8) (15.1) (15.3) (15.5) (15.8) (15.2)

 Class I Use Mil. Lb. 0.9 2.6 2.8 2.8 3.0 3.0 2.5

 Class I Price Dol. / Cwt. -0.22 -0.62 -0.68 -0.67 -0.71 -0.70 -0.60

 All Milk Price Dol. / Cwt. -0.21 -0.31 -0.33 -0.31 -0.31 -0.31 -0.29

 Cash Receipts Mil. Dol. (5.5) (8.6) (9.5) (9.7) (10.4) (10.8) (9.1)

Arizona-Las Vegas (Phoenix)

 Marketings Mil. Lb. (3.0) (7.7) (12.4) (17.0) (22.0) (26.8) (14.8)

 Class I Utilization 1/ Percent 0.0 0.0 0.0 0.0 0.0 0.0 0.0

 Class I Use Mil. Lb. 4.0 5.9 6.2 6.1 6.4 6.4 5.8

 Class I Price Dol. / Cwt. -0.79 -1.19 -1.25 -1.24 -1.28 -1.27 -1.17

 All Milk Price Dol. / Cwt. -0.25 -0.42 -0.42 -0.40 -0.42 -0.40 -0.38

 Cash Receipts Mil. Dol. (7.1) (12.6) (13.7) (14.3) (16.0) (16.7) (13.4)

Pacific Northwest (Seattle)

 Marketings Mil. Lb. (0.3) (4.5) (8.1) (11.5) (15.5) (19.3) (9.9)

 Class I Utilization 1/ Percent 0.0 0.0 0.0 0.0 0.0 0.0 0.0

 Class I Use Mil. Lb. 2.5 6.2 6.7 6.6 7.0 6.9 6.0

 Class I Price Dol. / Cwt. -0.27 -0.67 -0.73 -0.72 -0.76 -0.75 -0.65

 All Milk Price Dol. / Cwt. -0.01 -0.14 -0.13 -0.11 -0.13 -0.12 -0.11

 Cash Receipts Mil. Dol. (0.7) (10.9) (10.6) (10.3) (12.9) (12.9) (9.7)

All Federal Order Markets

 Marketings Mil. Lb. 38.7 (30.5) (103.0) (164.9) (233.4) (293.5) (131.1)

 Class I Utilization 1/ Percent 0.0 0.1 0.2 0.2 0.2 0.2 0.1

 Class I Use Mil. Lb. 30.7 115.9 124.6 120.6 126.7 122.0 106.8

 Class I Price Dol. / Cwt. -0.12 -0.52 -0.57 -0.57 -0.61 -0.59 -0.49

 All Milk Price Dol. / Cwt. 0.08 -0.12 -0.14 -0.12 -0.14 -0.13 -0.10

 Cash Receipts 3/ Mil. Dol. 108.3 (122.1) (153.0) (146.0) (177.1) (174.0) (110.7)

 Cash Receipts, Net Transportation Adjustment 4/ Mil. Dol. 90.2 (140.1) (171.0) (164.0) (195.2) (192.0) (128.7)

State of California

 Marketings Mil. Lb. (1.7) 2.1 11.3 23.2 35.1 48.3 19.7

 Class I Utilization 1/ Percent 0.0 (0.0) (0.0) (0.0) (0.0) (0.0) (0.0)

 Class I Use Mil. Lb. 0.2 (0.7) (1.0) (1.8) (2.3) (2.7) (1.4)

 Class I Price Dol. / Cwt. -0.01 0.02 0.04 0.07 0.09 0.10 0.05

 All Milk Price Dol. / Cwt. -0.01 0.03 0.08 0.10 0.09 0.10 0.06

 Cash Receipts Mil. Dol. (4.1) 9.6 26.0 35.3 37.2 43.4 24.6
APPENDIX TABLE 8:

Modified Option 1B: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and Current

Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

United States

 Marketings Mil. Lb. 43.6 (17.5) (76.3) (119.9) (169.2) (207.8) (91.2)

 Class I Utilization 1/ Percent 0.0 0.1 0.1 0.1 0.1 0.1 0.1

 Class I Use Mil. Lb. 26.3 109.4 117.5 111.9 117.1 111.6 99.0

 Class I Price Dol. / Cwt. -0.09 -0.41 -0.45 -0.44 -0.47 -0.45 -0.38

 All Milk Price Dol. / Cwt. 0.05 -0.07 -0.08 -0.06 -0.06 -0.05 -0.05

 Cash Receipts 3/ Mil. Dol. 103.3 (106.1) (117.1) (93.3) (116.9) (102.6) (72.1)

 Cash Receipts, Net Transportation Adjustment 4/ Mil. Dol. 85.2 (124.1) (135.1) (111.3) (135.0) (120.5) (90.1)

1/ Changes in Class I utilization compare the total Class I utilization for the consolidated market with baseline utilizations for the individual

 current markets.

2/ All milk price in New York-New Jersey reflects the termination of a $0.15 per cwt reduction in pool value for the transportation credit.

3/ Cash receipts reflect the termination of the $0.15 per cwt reduction in pool value for the transportation credit in New York-New Jersey.

4/ Cash receipts do not reflect the termination of the $0.15 per cwt reduction in pool value for the transportation credit in New York-New Jersey..

5/ All milk price in Chicago and Minneapolis is reduced by $0.03 per hundredweight to account for funding transportation credits.
Page 53

APPENDIX TABLE 9:

Modified Option 1A: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and

Current Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Northeast (New York City)

New England (Boston)

 Marketings Mil. Lb. 7.3 8.4 8.5 8.8 9.4 9.8 8.7

 Class I Utilization 1/ Percent (3.1) (2.8) (2.7) (2.6) (2.4) (2.3) (2.7)

 Class I Use Mil. Lb. (5.3) (0.5) 0.4 0.4 0.3 0.3 (0.7)

 Class I Price Dol. / Cwt. 0.43 0.04 -0.04 -0.04 -0.03 -0.03 0.06

 All Milk Price Dol. / Cwt. 0.23 0.04 0.00 0.01 0.02 0.02 0.05

 Cash Receipts Mil. Dol. 14.1 3.3 1.5 1.9 2.9 2.7 4.4

New York-New Jersey (New York City)

 Marketings Mil. Lb. 29.6 40.8 47.9 54.8 62.1 68.4 50.6

 Class I Utilization 1/ Percent 4.0 4.1 4.1 4.1 4.1 4.2 4.1

 Class I Use Mil. Lb. (10.3) (0.9) 0.8 0.8 0.6 0.6 (1.4)

 Class I Price Dol. / Cwt. 0.43 0.04 -0.04 -0.04 -0.03 -0.03 0.06

 All Milk Price 2/ Dol. / Cwt. 0.59 0.33 0.27 0.27 0.28 0.27 0.34

 Cash Receipts 3/ Mil. Dol. 92.9 63.8 58.1 59.7 62.2 62.3 66.5

 Cash Receipts, Net Transportation Adjustment 4/ Mil. Dol. 74.8 45.8 40.1 41.6 44.0 44.2 48.4

Middle Atlantic (Philadelphia)

 Marketings Mil. Lb. 1.8 (2.7) (8.1) (13.3) (18.4) (23.6) (10.7)

 Class I Utilization 1/ Percent (1.9) (2.0) (2.1) (2.3) (2.4) (2.6) (2.2)

 Class I Use Mil. Lb. (4.6) 0.8 1.8 1.7 1.6 1.6 0.5

 Class I Price Dol. / Cwt. 0.33 -0.06 -0.14 -0.14 -0.13 -0.13 -0.04

 All Milk Price Dol. / Cwt. 0.05 -0.13 -0.17 -0.17 -0.16 -0.18 -0.13

 Cash Receipts Mil. Dol. 3.5 (9.3) (12.4) (13.6) (14.2) (16.0) (10.3)

Unregulated NY and New England

 Marketings Mil. Lb. (0.5) (1.5) (2.5) (3.4) (4.3) (5.1) (2.9)

 Class I Utilization 1/ Percent (43.7) (43.1) (43.1) (42.7) (42.0) (41.7) (42.7)

 Class I Use Mil. Lb. (0.9) (0.1) 0.1 0.1 0.1 0.1 (0.1)

 Class I Price Dol. / Cwt. 0.43 0.04 -0.04 -0.04 -0.03 -0.03 0.06

 All Milk Price Dol. / Cwt. -0.19 -0.38 -0.41 -0.40 -0.38 -0.38 -0.36

 Cash Receipts Mil. Dol. (1.0) (2.1) (2.4) (2.5) (2.6) (2.7) (2.2)

Appalachian (Charlotte)

Carolina (Charlotte)

 Marketings Mil. Lb. 7.2 9.3 10.4 11.4 12.7 13.7 10.8

 Class I Utilization 1/ Percent (0.2) 0.1 0.3 0.4 0.4 0.5 0.2

 Class I Use Mil. Lb. (4.9) (0.6) 0.3 0.3 0.2 0.2 (0.8)

 Class I Price Dol. / Cwt. 0.44 0.05 -0.03 -0.03 -0.02 -0.02 0.07

 All Milk Price Dol. / Cwt. 0.46 0.14 0.08 0.08 0.09 0.09 0.16

 Cash Receipts Mil. Dol. 14.8 5.7 4.2 4.5 5.1 5.2 6.6

Tennessee Valley (Knoxville)

 Marketings Mil. Lb. 3.2 3.8 3.9 3.9 4.1 4.1 3.8

 Class I Utilization 1/ Percent (0.1) (0.0) (0.0) (0.1) (0.1) (0.1) (0.1)

 Class I Use Mil. Lb. (2.3) (0.3) 0.1 0.1 0.0 0.1 (0.4)

 Class I Price Dol. / Cwt. 0.45 0.06 -0.02 -0.02 -0.01 -0.01 0.08

 All Milk Price Dol. / Cwt. 0.42 0.08 0.01 0.01 0.02 0.01 0.09

 Cash Receipts Mil. Dol. 6.6 1.8 0.8 0.8 0.9 0.9 2.0

Louisville-Lexington-Evansville (Louisville)

 Marketings Mil. Lb. 1.7 1.4 0.8 0.2 (0.4) (1.0) 0.5

 Class I Utilization 1/ Percent (0.8) (1.2) (1.6) (1.9) (2.1) (2.4) (1.7)

 Class I Use Mil. Lb. (2.0) (0.5) (0.2) (0.2) (0.2) (0.2) (0.5)

 Class I Price Dol. / Cwt. 0.51 0.12 0.04 0.04 0.05 0.05 0.14

 All Milk Price Dol. / Cwt. 0.31 -0.05 -0.13 -0.14 -0.14 -0.15 -0.05

 Cash Receipts Mil. Dol. 3.8 (0.3) (1.4) (1.6) (1.7) (1.9) (0.5)
Page 54

APPENDIX TABLE 9:

Modified Option 1A: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and

Current Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Southeast (Atlanta)

 Marketings Mil. Lb. 11.2 12.8 12.7 12.6 12.8 12.8 12.5

 Class I Utilization 1/ Percent (0.3) (0.2) (0.2) (0.2) (0.2) (0.2) (0.2)

 Class I Use Mil. Lb. (9.0) (1.0) 0.5 0.5 0.4 0.4 (1.4)

 Class I Price Dol. / Cwt. 0.44 0.05 -0.03 -0.03 -0.02 -0.02 0.07

 All Milk Price Dol. / Cwt. 0.37 0.06 -0.00 -0.00 0.00 -0.00 0.07

 Cash Receipts Mil. Dol. 22.8 5.3 1.8 1.9 2.5 2.2 6.1

Florida (Tampa)

Upper Florida (Jacksonville)

 Marketings Mil. Lb. 0.3 0.0 (0.4) (0.8) (1.2) (1.6) (0.6)

 Class I Utilization 1/ Percent (8.2) (8.0) (8.5) (8.7) (8.6) (8.6) (8.4)

 Class I Use Mil. Lb. (0.8) (0.2) (0.1) (0.1) (0.1) (0.1) (0.2)

 Class I Price Dol. / Cwt. 0.54 0.15 0.07 0.07 0.08 0.08 0.17

 All Milk Price Dol. / Cwt. 0.17 -0.18 -0.27 -0.27 -0.26 -0.25 -0.18

 Cash Receipts Mil. Dol. 0.6 (0.6) (1.0) (1.1) (1.2) (1.3) (0.8)

Tampa Bay (Tampa)

 Marketings Mil. Lb. 5.8 8.4 10.3 12.2 14.2 16.0 11.1

 Class I Utilization 1/ Percent 4.3 4.4 4.5 4.6 4.6 4.6 4.5

 Class I Use Mil. Lb. (3.5) (1.0) (0.5) (0.5) (0.5) (0.5) (1.1)

 Class I Price Dol. / Cwt. 0.54 0.15 0.07 0.07 0.08 0.08 0.17

 All Milk Price Dol. / Cwt. 0.65 0.29 0.22 0.23 0.23 0.23 0.31

 Cash Receipts Mil. Dol. 12.1 6.7 6.0 6.5 7.1 7.6 7.7

Southeastern Florida (Miami)

 Marketings Mil. Lb. 2.0 1.9 1.6 1.2 0.8 0.4 1.3

 Class I Utilization 1/ Percent (5.3) (5.1) (5.1) (5.1) (5.2) (5.3) (5.2)

 Class I Use Mil. Lb. (2.8) (0.8) (0.4) (0.4) (0.4) (0.4) (0.9)

 Class I Price Dol. / Cwt. 0.54 0.15 0.07 0.07 0.08 0.08 0.17

 All Milk Price Dol. / Cwt. 0.33 -0.01 -0.08 -0.08 -0.08 -0.09 -0.00

 Cash Receipts Mil. Dol. 4.2 0.2 (0.7) (0.8) (0.8) (1.1) 0.2

Mideast (Cleveland)

Michigan Upper Peninsula (Marquette)

 Marketings Mil. Lb. 0.1 0.1 0.0 0.0 (0.0) (0.0) 0.0

 Class I Utilization 1/ Percent (24.9) (25.0) (25.2) (25.4) (25.5) (25.9) (25.3)

 Class I Use Mil. Lb. (0.2) (0.1) (0.1) (0.1) (0.1) (0.1) (0.1)

 Class I Price Dol. / Cwt. 0.87 0.48 0.40 0.40 0.41 0.41 0.50

 All Milk Price Dol. / Cwt. 0.25 -0.04 -0.10 -0.10 -0.10 -0.11 -0.03

 Cash Receipts Mil. Dol. 0.2 (0.0) (0.1) (0.1) (0.1) (0.1) (0.0)

Southern Michigan (Detroit)

 Marketings Mil. Lb. 9.3 11.9 13.5 15.2 17.2 19.1 14.4

 Class I Utilization 1/ Percent 6.3 6.7 7.1 7.4 7.7 8.1 7.2

 Class I Use Mil. Lb. (3.5) 0.2 0.9 0.8 0.7 0.8 (0.0)

 Class I Price Dol. / Cwt. 0.37 -0.02 -0.10 -0.10 -0.09 -0.09 -0.00

 All Milk Price Dol. / Cwt. 0.36 0.11 0.07 0.07 0.09 0.09 0.13

 Cash Receipts Mil. Dol. 17.5 6.8 5.1 5.8 6.9 7.3 8.2

E. Ohio-W. Pennsylvania (Cleveland)

 Marketings Mil. Lb. 7.1 9.4 10.6 11.8 13.0 14.0 11.0

 Class I Utilization 1/ Percent 0.1 0.0 (0.1) (0.1) (0.2) (0.4) (0.1)

 Class I Use Mil. Lb. (3.2) (0.2) 0.3 0.3 0.3 0.3 (0.4)

 Class I Price Dol. / Cwt. 0.42 0.03 -0.05 -0.05 -0.04 -0.04 0.05

 All Milk Price Dol. / Cwt. 0.45 0.16 0.10 0.10 0.10 0.09 0.17

 Cash Receipts Mil. Dol. 16.1 6.7 4.8 5.0 5.5 5.4 7.2
Page 55

APPENDIX TABLE 9:

Modified Option 1A: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and

Current Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Ohio Valley (Columbus)

 Marketings Mil. Lb. 4.7 5.1 4.6 4.1 3.7 3.2 4.2

 Class I Utilization 1/ Percent (2.7) (2.9) (3.1) (3.4) (3.6) (3.9) (3.3)

 Class I Use Mil. Lb. (2.8) 0.1 0.6 0.6 0.5 0.5 (0.1)

 Class I Price Dol. / Cwt. 0.38 -0.01 -0.09 -0.09 -0.08 -0.08 0.01

 All Milk Price Dol. / Cwt. 0.32 0.03 -0.04 -0.04 -0.04 -0.05 0.03

 Cash Receipts Mil. Dol. 10.5 1.7 (0.4) (0.5) (0.5) (0.9) 1.7

Indiana (Indianapolis)

 Marketings Mil. Lb. 2.3 1.9 1.0 0.1 (0.8) (1.8) 0.5

 Class I Utilization 1/ Percent (10.5) (10.9) (11.3) (11.8) (12.1) (12.7) (11.5)

 Class I Use Mil. Lb. (2.7) (0.7) (0.3) (0.3) (0.3) (0.3) (0.7)

 Class I Price Dol. / Cwt. 0.52 0.13 0.05 0.05 0.06 0.06 0.15

 All Milk Price Dol. / Cwt. 0.24 -0.04 -0.11 -0.12 -0.12 -0.14 -0.05

 Cash Receipts Mil. Dol. 5.2 (0.6) (2.1) (2.4) (2.5) (3.0) (0.9)

Upper Midwest (Chicago)

Chicago Regional (Chicago)

 Marketings 5/ Mil. Lb. 3,347.9 1,678.9 1,685.4 1,693.0 1,709.6 1,711.5 1,971.0

 Class I Utilization 1/ Percent (4.3) (2.2) (1.9) (1.9) (1.8) (1.8) (2.3)

 Class I Use Mil. Lb. (9.9) (5.0) (4.0) (4.0) (4.0) (3.9) (5.1)

 Class I Price Dol. / Cwt. 0.82 0.43 0.35 0.35 0.36 0.36 0.45

 All Milk Price 6/ Dol. / Cwt. 0.02 -0.01 -0.03 -0.03 -0.02 -0.03 -0.02

 Cash Receipts 7/ Mil. Dol. 428.3 227.5 235.5 247.8 260.0 264.3 277.2

 Cash Receipts, Net Pooling 8/ Mil. Dol. 31.2 12.8 9.7 10.0 11.2 10.9 14.3

Upper Midwest (Minneapolis)

 Marketings 5/ Mil. Lb. 1,860.7 699.0 467.3 468.2 471.7 471.1 739.7

 Class I Utilization 1/ Percent (4.0) (2.0) (1.9) (2.0) (2.1) (2.2) (2.4)

 Class I Use Mil. Lb. (6.7) (3.8) (3.2) (3.2) (3.2) (3.1) (3.9)

 Class I Price Dol. / Cwt. 0.92 0.53 0.45 0.45 0.46 0.46 0.55

 All Milk Price 6/ Dol. / Cwt. 0.01 -0.03 -0.05 -0.05 -0.04 -0.05 -0.03

 Cash Receipts 7/ Mil. Dol. 234.0 91.3 61.6 64.7 68.2 68.9 98.1

 Cash Receipts, Net Pooling 8/ Mil. Dol. 13.3 1.9 (1.0) (1.2) (0.7) (1.2) 1.9

Central (Kansas City)

Iowa (Des Moines)

 Marketings Mil. Lb. 5.1 7.1 8.4 9.6 10.7 11.6 8.8

 Class I Utilization 1/ Percent 12.9 12.7 12.4 12.2 11.8 11.6 12.3

 Class I Use Mil. Lb. (2.3) (0.9) (0.7) (0.7) (0.7) (0.7) (1.0)

 Class I Price Dol. / Cwt. 0.67 0.28 0.20 0.20 0.21 0.21 0.30

 All Milk Price Dol. / Cwt. 0.39 0.18 0.12 0.12 0.12 0.11 0.17

 Cash Receipts Mil. Dol. 11.4 5.8 4.5 4.6 4.8 4.6 6.0

Nebraska-Western Iowa (Omaha)

 Marketings Mil. Lb. 1.0 0.8 0.4 0.1 (0.3) (0.7) 0.2

 Class I Utilization 1/ Percent 4.5 4.4 4.3 4.1 3.9 3.8 4.2

 Class I Use Mil. Lb. (1.4) (0.3) (0.1) (0.1) (0.2) (0.1) (0.4)

 Class I Price Dol. / Cwt. 0.52 0.13 0.05 0.05 0.06 0.06 0.15

 All Milk Price Dol. / Cwt. 0.13 -0.03 -0.06 -0.06 -0.06 -0.07 -0.02

 Cash Receipts Mil. Dol. 2.3 (0.3) (0.9) (1.0) (1.0) (1.2) (0.4)

Eastern S. Dakota (Sioux Falls)

 Marketings Mil. Lb. 0.1 (0.1) (0.3) (0.6) (0.8) (1.0) (0.5)

 Class I Utilization 1/ Percent (36.8) (35.2) (35.5) (35.9) (36.1) (36.8) (36.1)

 Class I Use Mil. Lb. (0.3) (0.1) (0.1) (0.1) (0.1) (0.1) (0.1)

 Class I Price Dol. / Cwt. 0.67 0.28 0.20 0.20 0.21 0.21 0.30

 All Milk Price Dol. / Cwt. 0.06 -0.19 -0.24 -0.25 -0.25 -0.26 -0.19

 Cash Receipts Mil. Dol. 0.1 (0.4) (0.6) (0.7) (0.7) (0.8) (0.5)
Page 56

APPENDIX TABLE 9:

Modified Option 1A: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and

Current Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Central Illinois (Peoria)

 Marketings Mil. Lb. (0.3) (0.8) (1.3) (1.7) (2.1) (2.6) (1.5)

 Class I Utilization 1/ Percent (33.8) (33.7) (33.7) (33.7) (33.7) (33.9) (33.8)

 Class I Use Mil. Lb. (0.4) (0.1) (0.1) (0.1) (0.1) (0.1) (0.1)

 Class I Price Dol. / Cwt. 0.61 0.22 0.14 0.14 0.15 0.15 0.24

 All Milk Price Dol. / Cwt. -0.35 -0.58 -0.63 -0.62 -0.61 -0.62 -0.57

 Cash Receipts Mil. Dol. (0.7) (1.2) (1.4) (1.5) (1.5) (1.6) (1.3)

Southern Illinois-Eastern Missouri (Alton)

 Marketings Mil. Lb. 0.3 (1.4) (3.4) (5.3) (7.1) (8.9) (4.3)

 Class I Utilization 1/ Percent (8.8) (8.9) (8.9) (9.0) (9.1) (9.3) (9.0)

 Class I Use Mil. Lb. (2.3) (0.5) (0.1) (0.1) (0.2) (0.2) (0.6)

 Class I Price Dol. / Cwt. 0.50 0.11 0.03 0.03 0.04 0.04 0.13

 All Milk Price Dol. / Cwt. 0.04 -0.20 -0.26 -0.26 -0.25 -0.26 -0.20

 Cash Receipts Mil. Dol. 0.8 (4.2) (5.5) (5.8) (6.1) (6.6) (4.6)

Southwest Plains (Oklahoma City)

 Marketings Mil. Lb. 5.6 7.4 8.3 9.2 10.1 10.7 8.6

 Class I Utilization 1/ Percent (2.7) (2.7) (2.7) (2.8) (2.9) (3.1) (2.8)

 Class I Use Mil. Lb. (1.8) 1.0 1.5 1.4 1.3 1.3 0.8

 Class I Price Dol. / Cwt. 0.25 -0.14 -0.22 -0.22 -0.21 -0.21 -0.12

 All Milk Price Dol. / Cwt. 0.38 0.14 0.08 0.07 0.08 0.06 0.13

 Cash Receipts Mil. Dol. 12.5 5.3 3.7 3.7 4.1 3.7 5.5

Eastern Colorado (Denver)

 Marketings Mil. Lb. 4.0 6.3 8.3 10.6 13.1 15.8 9.7

 Class I Utilization 1/ Percent 2.9 3.8 4.4 5.0 5.6 6.4 4.7

 Class I Use Mil. Lb. (0.8) 0.5 0.7 0.7 0.7 0.7 0.4

 Class I Price Dol. / Cwt. 0.24 -0.15 -0.23 -0.23 -0.22 -0.22 -0.13

 All Milk Price Dol. / Cwt. 0.49 0.29 0.26 0.27 0.30 0.31 0.32

 Cash Receipts Mil. Dol. 9.5 6.3 6.2 7.1 8.3 9.2 7.8

Western Colorado (Grand Junction)

 Marketings Mil. Lb. (0.3) (0.6) (1.0) (1.4) (1.7) (2.1) (1.2)

 Class I Utilization 1/ Percent (55.6) (54.4) (53.2) (52.1) (51.0) (50.2) (52.8)

 Class I Use Mil. Lb. (0.2) (0.0) 0.0 0.0 0.0 0.0 (0.0)

 Class I Price Dol. / Cwt. 0.42 0.03 -0.05 -0.05 -0.04 -0.04 0.05

 All Milk Price Dol. / Cwt. -0.50 -0.69 -0.71 -0.70 -0.67 -0.66 -0.66

 Cash Receipts Mil. Dol. (0.7) (1.0) (1.1) (1.2) (1.2) (1.3) (1.1)

Greater Kansas City (Kansas City)

 Marketings Mil. Lb. (0.7) (1.5) (2.4) (3.1) (3.9) (4.6) (2.7)

 Class I Utilization 1/ Percent (38.3) (37.2) (36.3) (35.3) (34.1) (33.5) (35.8)

 Class I Use Mil. Lb. (0.5) (0.1) (0.0) (0.0) (0.0) (0.0) (0.1)

 Class I Price Dol. / Cwt. 0.50 0.11 0.03 0.03 0.04 0.04 0.13

 All Milk Price Dol. / Cwt. -0.51 -0.70 -0.72 -0.70 -0.67 -0.66 -0.66

 Cash Receipts Mil. Dol. (1.6) (2.3) (2.5) (2.6) (2.7) (2.8) (2.4)

Southwest (Dallas)

Texas (Dallas)

 Marketings Mil. Lb. 6.1 3.6 (0.5) (4.6) (8.5) (12.7) (2.8)

 Class I Utilization 1/ Percent (6.0) (6.2) (6.5) (6.9) (7.2) (7.7) (6.7)

 Class I Use Mil. Lb. (4.5) 2.2 3.4 3.3 3.1 3.2 1.8

 Class I Price Dol. / Cwt. 0.26 -0.13 -0.21 -0.21 -0.20 -0.20 -0.11

 All Milk Price Dol. / Cwt. 0.17 -0.08 -0.14 -0.14 -0.14 -0.16 -0.08

 Cash Receipts Mil. Dol. 11.9 (4.3) (8.9) (9.9) (10.5) (12.3) (5.7)
Page 57

APPENDIX TABLE 9:

Modified Option 1A: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and

Current Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

New Mexico-West Texas (El Paso)

 Marketings Mil. Lb. 3.2 4.6 5.9 7.3 9.0 10.7 6.8

 Class I Utilization 1/ Percent 16.7 17.4 18.0 18.6 19.1 19.9 18.3

 Class I Use Mil. Lb. (1.2) 0.2 0.5 0.5 0.5 0.5 0.2

 Class I Price Dol. / Cwt. 0.32 -0.07 -0.15 -0.15 -0.14 -0.14 -0.05

 All Milk Price Dol. / Cwt. 0.37 0.19 0.16 0.18 0.21 0.23 0.22

 Cash Receipts Mil. Dol. 8.9 4.9 4.7 5.5 6.5 7.3 6.28

Western (Salt Lake City)

Southwestern Idaho-Eastern Oregon (Boise)

 Marketings Mil. Lb. 3.1 5.0 6.6 8.3 10.1 11.9 7.5

 Class I Utilization 1/ Percent 15.1 15.3 15.5 15.6 15.7 15.9 15.5

 Class I Use Mil. Lb. (0.4) (0.1) (0.0) (0.0) (0.1) (0.0) (0.1)

 Class I Price Dol. / Cwt. 0.52 0.13 0.05 0.05 0.06 0.06 0.15

 All Milk Price Dol. / Cwt. 0.29 0.18 0.15 0.16 0.17 0.17 0.19

 Cash Receipts Mil. Dol. 7.5 5.1 4.8 5.3 6.0 6.4 5.8

Great Basin (Salt Lake City)

 Marketings Mil. Lb. (0.2) (1.5) (3.1) (4.6) (6.2) (7.8) (3.9)

 Class I Utilization 1/ Percent (14.7) (14.9) (15.1) (15.4) (15.6) (15.9) (15.3)

 Class I Use Mil. Lb. (1.7) (0.1) 0.2 0.2 0.2 0.2 (0.2)

 Class I Price Dol. / Cwt. 0.42 0.03 -0.05 -0.05 -0.04 -0.04 0.05

 All Milk Price Dol. / Cwt. -0.02 -0.15 -0.18 -0.19 -0.18 -0.19 -0.15

 Cash Receipts Mil. Dol. (0.6) (4.0) (5.2) (5.6) (5.9) (6.5) (4.6)

Arizona-Las Vegas (Phoenix)

 Marketings Mil. Lb. 1.4 0.8 (0.1) (1.0) (1.8) (2.7) (0.5)

 Class I Utilization 1/ Percent (0.0) 0.0 0.0 0.0 0.0 0.0 0.0

 Class I Use Mil. Lb. (1.2) 0.7 1.1 1.1 1.0 1.1 0.6

 Class I Price Dol. / Cwt. 0.25 -0.14 -0.22 -0.22 -0.21 -0.21 -0.12

 All Milk Price Dol. / Cwt. 0.12 -0.06 -0.09 -0.08 -0.07 -0.08 -0.04

 Cash Receipts Mil. Dol. 3.4 (1.4) (2.4) (2.6) (2.5) (2.9) (1.4)

Pacific Northwest (Seattle)

 Marketings Mil. Lb. 4.3 4.4 4.1 3.8 3.8 3.5 4.0

 Class I Utilization 1/ Percent (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0)

 Class I Use Mil. Lb. (3.9) (0.3) 0.4 0.4 0.4 0.4 (0.4)

 Class I Price Dol. / Cwt. 0.42 0.03 -0.05 -0.05 -0.04 -0.04 0.05

 All Milk Price Dol. / Cwt. 0.14 0.00 -0.01 -0.01 -0.00 -0.01 0.01

 Cash Receipts Mil. Dol. 10.2 0.7 (0.5) (0.6) 0.3 (0.6) 1.6

All Federal Order Markets

 Marketings /5 Mil. Lb. 5,334.3 2,522.9 2,297.7 2,306.6 2,330.6 2,332.2 2,854.1

 Class I Utilization 1/ Percent (2.1) (1.0) (0.9) (0.9) (0.8) (0.8) (1.1)

 Class I Use Mil. Lb. (98.4) (12.8) 3.7 3.6 1.8 2.3 (16.6)

 Class I Price Dol. / Cwt. 0.46 0.07 -0.01 -0.01 -0.00 -0.01 0.08

 All Milk Price Dol. / Cwt. 0.19 0.03 -0.01 -0.01 0.00 -0.01 0.03

 Cash Receipts 9/ Mil. Dol. 961.0 417.0 353.8 370.8 395.7 394.6 482.1

 Cash Receipts, Net Transportation 

 Adjustment and Pooling 10/ Mil. Dol. 325.0 94.8 47.4 49.0 59.9 53.0 104.9

State of California

 Marketings Mil. Lb. (11.8) (20.1) (26.1) (32.2) (37.0) (42.8) (28.4)

 Class I Utilization 1/ Percent 0.0 0.0 0.0 0.0 0.0 0.0 0.0

 Class I Use Mil. Lb. 1.1 1.2 1.3 1.3 1.0 1.1 1.2

 Class I Price Dol. / Cwt. -0.04 -0.04 -0.05 -0.05 -0.04 -0.04 -0.04

 All Milk Price Dol. / Cwt. -0.09 -0.06 -0.05 -0.04 -0.03 -0.04 -0.05

 Cash Receipts Mil. Dol. (28.3) (22.5) (18.2) (19.6) (16.5) (21.1) (21.0)
Page 58

APPENDIX TABLE 9:

Modified Option 1A: Changes in Selected Supply-Demand-Price Estimates From the USDA Model Baseline, by Consolidated and

Current Marketing Areas, 2000-2005 and Six-year Averages.

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

United States

 Marketings Mil. Lb. 129.4 141.8 133.6 125.7 124.4 117.4 128.7

 Class I Utilization 1/ Percent (0.1) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0)

 Class I Use Mil. Lb. (96.5) (11.0) 5.7 5.4 3.2 3.9 (14.9)

 Class I Price Dol. / Cwt. 0.36 0.05 -0.02 -0.02 -0.01 -0.01 0.06

 All Milk Price Dol. / Cwt. 0.17 0.03 0.00 0.00 0.01 0.00 0.04

 Cash Receipts 11/ Mil. Dol. 308.1 83.6 39.5 39.9 55.9 43.8 95.1

 Cash Receipts, Net Transportation Adjustment 12/ Mil. Dol. 290.0 65.5 21.4 21.8 37.7 25.6 77.0

1/ Changes in Class I utilization compare the total Class I utilization for the consolidated market with baseline utilizations for the individual

 current markets.

2/ All milk price in New York-New Jersey reflects the termination of a $0.15 per cwt reduction in pool value for the transportation credit.

3/ Cash receipts reflect the termination of the $0.15 per cwt reduction in pool value for the transportation credit.

4/ Cash receipts do not reflect the termination of the $0.15 per cwt reduction in pool value for the transportation credit.

5/ Chicago Regional and Upper Midwest marketings include additional milk that would be expected to be pooled due to favorable

 price relationships. The amount of additional milk pooled in the Chicago Regional by year: 2000: 3,344.2 mil. lbs.; 2001: 1674.0 mil. lbs.; 

 2002: 1680.6 mil. lbs.; 2003: 1,688.4 mil. lbs.; 2004: 1,704.5 mil. lbs.; and 2005: 1706.2 mil. lbs. The amount of additional milk pooled in the 

 Upper Midwest by year: 2000: 1,858.7 mil. lbs.; 2001: 697.0 mil. lbs.; 2002: 466.0 mil. lbs., 2003: 467.6 mil. lbs.; 2004: 471.5 mil. lbs.;

 and 2005: 471.5 mil. lbs. 

6/ All milk price in Chicago and Minneapolis is reduced by $0.03 per cwt to account for funding transportation credits.

7/ Cash receipts include the income obtained from the additional pooled milk. 

8/ Cash receipts exclude the income from additional pooled milk, and reflect only the milk supply either lost or gained in response to change in all milk price.

9/ Cash receipts reflect the termination of the $0.15 per cwt transportation credit in New York-New Jersey and the additional pooled 

 milk in the consolidated Upper Midwest.

10/ Cash receipts do not reflect the termination of the $0.15 per cwt transportation credit in New York-New Jersey, exclude income

 from additional pooled milk in consolidated Upper Midwest, and reflect only the milk supply either lost or gained in response to change in all milk price. 

11/ Cash receipts reflect the termination of the $0.15 per cwt transportation credit in New York-New Jersey.

12/ Cash receipts do not reflect the termination of the $0.15 per cwt transportation credit in New York-New Jersey.

 
Page 59

APPENDIX TABLE 10:

Change in the Class II, Class III, and Class IV Prices From the USDA Model Baseline, by Option, 

2000-2005, and Six-year Average.

6-year

Change In: Unit 2000 2001 2002 2003 2004 2005 Average

Baseline

 Class II Price Dol./Cwt. 12.21 13.17 13.78 14.43 14.94 15.20 13.95

 Class III Price Dol./Cwt. 11.91 12.87 13.48 14.13 14.64 14.90 13.65

 Class III-A Price Dol./Cwt. 12.52 13.01 13.45 14.11 14.60 14.86 13.76

Final Decision

 Class II Price Dol./Cwt. 0.90 0.47 0.41 0.42 0.41 0.39 0.50

 Class III Price Dol./Cwt. -0.02 0.00 0.01 0.01 0.03 0.04 0.01

 Class IV Price 1/ Dol./Cwt. -0.11 -0.06 0.03 0.04 0.04 0.03 -0.00

Modified Option 1B

 Class II Price Dol./Cwt. 0.98 0.58 0.52 0.53 0.47 0.47 0.59

 Class III Price Dol./Cwt. -0.01 0.02 0.04 0.07 0.09 0.10 0.05

 Class IV Price 1/ Dol./Cwt. -0.02 0.04 0.15 0.15 0.11 0.11 0.09

Modified Option 1A

 Class II Price Dol./Cwt. 0.82 0.43 0.33 0.34 0.34 0.32 0.43

 Class III Price Dol./Cwt. -0.04 -0.04 -0.05 -0.05 -0.04 -0.04 -0.04

 Class IV Price 1/ Dol./Cwt. -0.18 -0.11 -0.04 -0.04 -0.02 -0.04 -0.07

1/ Compared to estimates of the current Class III-A prices.
APPENDIX TABLE 11:

Final Decision: Changes in Price per Gallon From the USDA Model Baseline, by Consolidated and Current

Marketing Areas, 2000-2005 and Six-year Average. 1/

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Northeast (New York City)

New England (Boston) Dol. / Gal. 0.00 -0.04 -0.04 -0.04 -0.04 -0.04 -0.03

New York-New Jersey (New York City) Dol. / Gal. -0.01 -0.05 -0.05 -0.05 -0.05 -0.05 -0.05

Middle Atlantic (Philadelphia) Dol. / Gal. -0.03 -0.07 -0.08 -0.07 -0.07 -0.07 -0.07

Unregulated NY and New England Dol. / Gal. 0.00 -0.04 -0.04 -0.04 -0.04 -0.04 -0.03

Appalachian (Charlotte)

Carolina (Charlotte) Dol. / Gal. -0.00 -0.04 -0.05 -0.04 -0.04 -0.04 -0.04

Tennessee Valley (Knoxville) Dol. / Gal. -0.00 -0.04 -0.04 -0.04 -0.04 -0.04 -0.04

Louisville-Lexington-Evansville (Louisville) Dol. / Gal. 0.03 -0.01 -0.01 -0.01 -0.01 -0.01 -0.00

Southeast (Atlanta) Dol. / Gal. 0.03 -0.01 -0.01 -0.01 -0.01 -0.01 -0.01

Florida (Tampa)

Upper Florida (Jacksonville) Dol. / Gal. 0.06 0.03 0.02 0.02 0.02 0.02 0.03

Tampa Bay (Tampa) Dol. / Gal. 0.07 0.03 0.03 0.03 0.03 0.03 0.04

Southeastern Florida (Miami) Dol. / Gal. 0.09 0.06 0.05 0.05 0.05 0.05 0.06

Mideast (Cleveland)

Michigan Upper Peninsula (Marquette) Dol. / Gal. 0.06 0.02 0.01 0.01 0.02 0.02 0.02

Southern Michigan (Detroit) Dol. / Gal. 0.04 0.01 0.00 0.00 0.00 0.00 0.01

E. Ohio-W. Pennsylvania (Cleveland) Dol. / Gal. 0.04 0.01 0.00 0.00 0.00 0.00 0.01

Ohio Valley (Columbus) Dol. / Gal. 0.04 0.00 -0.00 -0.00 -0.00 -0.00 0.01

Indiana (Indianapolis) Dol. / Gal. 0.05 0.01 0.01 0.01 0.01 0.01 0.02

Upper Midwest (Chicago)

Chicago Regional (Chicago) Dol. / Gal. 0.09 0.05 0.05 0.05 0.05 0.05 0.06

Upper Midwest (Minneapolis) Dol. / Gal. 0.08 0.04 0.04 0.04 0.04 0.04 0.04

Central (Kansas City)

Iowa (Des Moines) Dol. / Gal. 0.08 0.04 0.04 0.04 0.04 0.04 0.04

Nebraska-Western Iowa (Omaha) Dol. / Gal. 0.06 0.03 0.02 0.02 0.02 0.02 0.03

Eastern S. Dakota (Sioux Falls) Dol. / Gal. 0.05 0.01 0.01 0.01 0.01 0.01 0.02

Central Illinois (Peoria) Dol. / Gal. 0.08 0.04 0.03 0.04 0.04 0.04 0.04

Southern Illinois-Eastern Missouri (Alton) Dol. / Gal. 0.06 0.02 0.02 0.02 0.02 0.02 0.03

Southwest Plains (Oklahoma City) Dol. / Gal. -0.03 -0.06 -0.07 -0.07 -0.07 -0.07 -0.06

Eastern Colorado (Denver) Dol. / Gal. -0.06 -0.10 -0.10 -0.10 -0.10 -0.10 -0.09

Western Colorado (Grand Junction) Dol. / Gal. 0.06 0.02 0.02 0.02 0.02 0.02 0.03

Greater Kansas City (Kansas City) Dol. / Gal. 0.04 0.00 0.00 0.00 0.00 0.00 0.01

Southwest (Dallas)

Texas (Dallas) Dol. / Gal. -0.05 -0.09 -0.09 -0.09 -0.09 -0.09 -0.08

New Mexico-West Texas (El Paso) Dol. / Gal. -0.01 -0.05 -0.05 -0.05 -0.05 -0.05 -0.04

Western (Salt Lake City)

Southwestern Idaho-Eastern Oregon (Boise) Dol. / Gal. 0.03 -0.01 -0.01 -0.01 -0.01 -0.01 -0.00

Great Basin (Salt Lake City) Dol. / Gal. 0.01 -0.03 -0.03 -0.03 -0.03 -0.03 -0.02

Arizona-Las Vegas (Phoenix) Dol. / Gal. -0.04 -0.08 -0.08 -0.08 -0.08 -0.08 -0.07

Pacific Northwest (Seattle) Dol. / Gal. 0.00 -0.03 -0.04 -0.04 -0.04 -0.04 -0.03

All Federal Order Markets Dol. / Gal. 0.02 -0.02 -0.02 -0.02 -0.02 -0.02 -0.02

1/ Assumes no change in processor-retail or wholesale-retail margins.
APPENDIX TABLE 12:

Modified Option 1B: Changes in Price per Gallon From the USDA Model Baseline, by Consolidated and Current

Marketing Areas, 2000-2005 and Six-year Average. 1/

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Northeast (New York City)

New England (Boston) Dol. / Gal. -0.03 -0.06 -0.07 -0.07 -0.07 -0.07 -0.06

New York-New Jersey (New York City) Dol. / Gal. -0.04 -0.07 -0.08 -0.08 -0.08 -0.08 -0.07

Middle Atlantic (Philadelphia) Dol. / Gal. -0.06 -0.10 -0.10 -0.10 -0.10 -0.10 -0.09

Unregulated NY and New England Dol. / Gal. -0.03 -0.06 -0.07 -0.07 -0.07 -0.07 -0.06

Appalachian (Charlotte)

Carolina (Charlotte) Dol. / Gal. -0.03 -0.06 -0.07 -0.07 -0.07 -0.07 -0.06

Tennessee Valley (Knoxville) Dol. / Gal. -0.03 -0.06 -0.07 -0.07 -0.07 -0.07 -0.06

Louisville-Lexington-Evansville (Louisville) Dol. / Gal. 0.00 -0.03 -0.04 -0.04 -0.04 -0.04 -0.03

Southeast (Atlanta) Dol. / Gal. 0.00 -0.03 -0.04 -0.04 -0.04 -0.04 -0.03

Florida (Tampa)

Upper Florida (Jacksonville) Dol. / Gal. 0.03 -0.00 -0.00 -0.00 -0.01 -0.01 0.00

Tampa Bay (Tampa) Dol. / Gal. 0.04 0.01 0.00 0.00 0.00 0.00 0.01

Southeastern Florida (Miami) Dol. / Gal. 0.06 0.03 0.03 0.03 0.02 0.02 0.03

Mideast (Cleveland)

Michigan Upper Peninsula (Marquette) Dol. / Gal. 0.03 -0.01 -0.01 -0.01 -0.01 -0.01 -0.00

Southern Michigan (Detroit) Dol. / Gal. 0.02 -0.02 -0.02 -0.02 -0.03 -0.03 -0.02

E. Ohio-W. Pennsylvania (Cleveland) Dol. / Gal. 0.02 -0.02 -0.02 -0.02 -0.03 -0.03 -0.02

Ohio Valley (Columbus) Dol. / Gal. 0.01 -0.02 -0.03 -0.03 -0.03 -0.03 -0.02

Indiana (Indianapolis) Dol. / Gal. 0.02 -0.01 -0.02 -0.01 -0.02 -0.02 -0.01

Upper Midwest (Chicago)

Chicago Regional (Chicago) Dol. / Gal. 0.06 0.03 0.02 0.02 0.02 0.02 0.03

Upper Midwest (Minneapolis) Dol. / Gal. 0.05 0.02 0.01 0.01 0.01 0.01 0.02

Central (Kansas City)

Iowa (Des Moines) Dol. / Gal. 0.05 0.02 0.01 0.01 0.01 0.01 0.02

Nebraska-Western Iowa (Omaha) Dol. / Gal. 0.04 0.00 -0.00 -0.00 -0.01 -0.00 0.00

Eastern S. Dakota (Sioux Falls) Dol. / Gal. 0.02 -0.01 -0.02 -0.01 -0.02 -0.02 -0.01

Central Illinois (Peoria) Dol. / Gal. 0.05 0.01 0.01 0.01 0.01 0.01 0.02

Southern Illinois-Eastern Missouri (Alton) Dol. / Gal. 0.03 -0.00 -0.01 -0.01 -0.01 -0.01 -0.00

Southwest Plains (Oklahoma City) Dol. / Gal. -0.05 -0.09 -0.09 -0.09 -0.10 -0.10 -0.09

Eastern Colorado (Denver) Dol. / Gal. -0.09 -0.12 -0.13 -0.13 -0.13 -0.13 -0.12

Western Colorado (Grand Junction) Dol. / Gal. 0.03 -0.00 -0.01 -0.01 -0.01 -0.01 0.00

Greater Kansas City (Kansas City) Dol. / Gal. 0.01 -0.02 -0.03 -0.03 -0.03 -0.03 -0.02

Southwest (Dallas)

Texas (Dallas) Dol. / Gal. -0.08 -0.11 -0.12 -0.11 -0.12 -0.12 -0.11

New Mexico-West Texas (El Paso) Dol. / Gal. -0.04 -0.07 -0.08 -0.08 -0.08 -0.08 -0.07

Western (Salt Lake City)

Southwestern Idaho-Eastern Oregon (Boise) Dol. / Gal. 0.00 -0.03 -0.04 -0.04 -0.04 -0.04 -0.03

Great Basin (Salt Lake City) Dol. / Gal. -0.02 -0.05 -0.06 -0.06 -0.06 -0.06 -0.05

Arizona-Las Vegas (Phoenix) Dol. / Gal. -0.07 -0.10 -0.11 -0.11 -0.11 -0.11 -0.10

Pacific Northwest (Seattle) Dol. / Gal. -0.02 -0.06 -0.06 -0.06 -0.07 -0.06 -0.06

All Federal Orders Markets Dol. / Gal. -0.01 -0.04 -0.05 -0.05 -0.05 -0.05 -0.04

1/ Assumes no change in processor-retail or wholesale-retail margins.
Page 62

APPENDIX TABLE 13:

Modified Option 1A: Changes in Price per Gallon From the USDA Model Baseline, by Consolidated and Current

Marketing Areas, 2000-2005 and Six-year Average. 1/

Consolidated Order (Pricing Point) 6-Year

 Current order (Pricing Point) Unit 2000 2001 2002 2003 2004 2005 Average

Northeast (New York City)

New England (Boston) Dol. / Gal. 0.04 0.00 -0.00 -0.00 -0.00 -0.00 0.00

New York-New Jersey (New York City) Dol. / Gal. 0.04 0.00 -0.00 -0.00 -0.00 -0.00 0.00

Middle Atlantic (Philadelphia) Dol. / Gal. 0.03 -0.01 -0.01 -0.01 -0.01 -0.01 -0.00

Unregulated NY and New England Dol. / Gal. 0.04 0.00 -0.00 -0.00 -0.00 -0.00 0.00

Appalachian (Charlotte)

Carolina (Charlotte) Dol. / Gal. 0.04 0.00 -0.00 -0.00 -0.00 -0.00 0.01

Tennessee Valley (Knoxville) Dol. / Gal. 0.04 0.01 -0.00 -0.00 -0.00 -0.00 0.01

Louisville-Lexington-Evansville (Louisville) Dol. / Gal. 0.04 0.01 0.00 0.00 0.00 0.00 0.01

Southeast (Atlanta) Dol. / Gal. 0.04 0.00 -0.00 -0.00 -0.00 -0.00 0.01

Florida (Tampa)

Upper Florida (Jacksonville) Dol. / Gal. 0.05 0.01 0.01 0.01 0.01 0.01 0.01

Tampa Bay (Tampa) Dol. / Gal. 0.05 0.01 0.01 0.01 0.01 0.01 0.01

Southeastern Florida (Miami) Dol. / Gal. 0.05 0.01 0.01 0.01 0.01 0.01 0.01

Mideast (Cleveland)

Michigan Upper Peninsula (Marquette) Dol. / Gal. 0.08 0.04 0.03 0.03 0.04 0.04 0.04

Southern Michigan (Detroit) Dol. / Gal. 0.03 -0.00 -0.01 -0.01 -0.01 -0.01 -0.00

E. Ohio-W. Pennsylvania (Cleveland) Dol. / Gal. 0.04 0.00 -0.00 -0.00 -0.00 -0.00 0.00

Ohio Valley (Columbus) Dol. / Gal. 0.03 -0.00 -0.01 -0.01 -0.01 -0.01 0.00

Indiana (Indianapolis) Dol. / Gal. 0.04 0.01 0.00 0.00 0.01 0.00 0.01

Upper Midwest (Chicago)

Chicago Regional (Chicago) Dol. / Gal. 0.07 0.04 0.03 0.03 0.03 0.03 0.04

Upper Midwest (Minneapolis) Dol. / Gal. 0.08 0.05 0.04 0.04 0.04 0.04 0.05

Central (Kansas City)

Iowa (Des Moines) Dol. / Gal. 0.06 0.02 0.02 0.02 0.02 0.02 0.03

Nebraska-Western Iowa (Omaha) Dol. / Gal. 0.04 0.01 0.00 0.00 0.01 0.00 0.01

Eastern S. Dakota (Sioux Falls) Dol. / Gal. 0.06 0.02 0.02 0.02 0.02 0.02 0.03

Central Illinois (Peoria) Dol. / Gal. 0.05 0.02 0.01 0.01 0.01 0.01 0.02

Southern Illinois-Eastern Missouri (Alton) Dol. / Gal. 0.04 0.01 0.00 0.00 0.00 0.00 0.01

Southwest Plains (Oklahoma City) Dol. / Gal. 0.02 -0.01 -0.02 -0.02 -0.02 -0.02 -0.01

Eastern Colorado (Denver) Dol. / Gal. 0.02 -0.01 -0.02 -0.02 -0.02 -0.02 -0.01

Western Colorado (Grand Junction) Dol. / Gal. 0.04 0.00 -0.00 -0.00 -0.00 -0.00 0.00

Greater Kansas City (Kansas City) Dol. / Gal. 0.04 0.01 0.00 0.00 0.00 0.00 0.01

Southwest (Dallas)

Texas (Dallas) Dol. / Gal. 0.02 -0.01 -0.02 -0.02 -0.02 -0.02 -0.01

New Mexico-West Texas (El Paso) Dol. / Gal. 0.03 -0.01 -0.01 -0.01 -0.01 -0.01 -0.00

Western (Salt Lake City)

Southwestern Idaho-Eastern Oregon (Boise) Dol. / Gal. 0.04 0.01 0.00 0.00 0.01 0.00 0.01

Great Basin (Salt Lake City) Dol. / Gal. 0.04 0.00 -0.00 -0.00 -0.00 -0.00 0.00

Arizona-Las Vegas (Phoenix) Dol. / Gal. 0.02 -0.01 -0.02 -0.02 -0.02 -0.02 -0.01

Pacific Northwest (Seattle) Dol. / Gal. 0.04 0.00 -0.00 -0.00 -0.00 -0.00 0.00

All Federal Order Markets Dol. / Gal. 0.04 0.01 -0.00 -0.00 -0.00 -0.00 0.01

1/ Assumes no change in processor-retail or wholesale-retail margins.
APPENDIX TABLE 14:

Change in U.S. Fluid Milk Expenditures and Consumption and Manufactured Product Expenditures and Consumption From

the USDA Model Baseline, by Option, 2000-2005, and Six-year Average.

6-year

Change In: Unit 2000 2001 2002 2003 2004 2005 Average

Final Decision

 Fluid product expenditures mil dol 84.7 (96.4) (124.6) (117.2) (113.6) (108.7) (79.3)

 Fluid products consumed mil lbs (40.9) 48.7 60.8 55.7 52.7 49.5 37.8

 Manufactured product expenditures mil dol 111.1 65.7 71.0 76.2 84.1 86.8 82.5

 Manufactured products consumed mil lbs 123.5 6.8 (39.7) (60.7) (77.6) (89.9) (23.0)

Modified Option 1B

 Fluid product expenditures mil dol (50.5) (221.7) (244.5) (239.1) (255.5) (248.0) (209.9)

 Fluid products consumed mil lbs 26.3 109.4 117.5 111.9 117.1 111.6 99.0

 Manufactured product expenditures mil dol 135.8 97.6 109.4 127.8 120.5 127.5 119.8

 Manufactured products consumed mil lbs 17.3 (126.9) (193.8) (231.9) (286.3) (319.5) (190.2)

Modified Option 1A

 Fluid product expenditures mil dol 194.4 24.8 (9.8) (9.6) (5.2) (6.8) 31.3

 Fluid products consumed mil lbs (96.5) (11.0) 5.7 5.4 3.2 3.9 (14.9)

 Manufactured product expenditures mil dol 95.6 40.7 31.2 31.5 42.9 32.4 45.7

 Manufactured products consumed mil lbs 225.9 152.8 127.9 120.3 121.2 113.6 143.6
Page 64

APPENDIX TABLE 15:

International 1/ and Domestic, Baseline Prices For Butter, Cheese,

and Nonfat Dry Milk, 2000-2005 and Six-year Average.

Fiscal Butter Price, Baseline Nonfat Dry Milk Price, Baseline Cheese, Baseline

Year Unit International Domestic International Domestic Domestic

2000 dol / lb $0.84 $1.35 $0.66 $1.03 $1.34

2001 dol / lb $0.85 $1.29 $0.70 $1.11 $1.44

2002 dol / lb $0.85 $1.22 $0.73 $1.20 $1.50

2003 dol / lb $0.86 $1.22 $0.75 $1.31 $1.56

2004 dol / lb $0.86 $1.22 $0.77 $1.37 $1.61

2005 dol / lb $0.87 $1.20 $0.78 $1.41 $1.64

6-Year Ave. dol / lb $0.86 $1.25 $0.73 $1.24 $1.52

1/ International prices are quoted on board ship at northern European ports.
APPENDIX TABLE 16:

 Summary of Impacts of Class I Pricing Options on All Federal Order Markets; 

 Six-year Average. 1/

Final Modified Modified

Change In: Unit Baseline Decision Option 1B Option 1A

Class I differential dol / cwt 2.56 -0.29 -0.69 0.04

All milk price dol / cwt 15.23 -0.02 -0.10 0.03

Class I price dol / cwt 16.22 -0.19 -0.49 0.08

Class II price dol / cwt 13.95 0.50 0.59 0.43

Class III price dol / cwt 13.65 0.01 0.05 -0.04

Class IV price dol / cwt 13.76 -0.00 0.09 -0.07

Milk marketings 2/ mil lbs 111,182.0 8.0 (131.1) 149.0

Class I use mil lbs 46,955.7 42.1 106.8 (16.6)

Manufacturing use mil lbs 64,226.3 (34.1) (237.9) 165.6

Cash receipts 3/ mil dol 16,944.5 (2.8) (128.7) 104.9

Fluid expenditures mil dol 7,617.8 (80.4) (215.6) 36.4

Manufacturing expenditures mil dol 9,326.7 77.6 86.9 68.5

1/ Options include the effects of the Class II, III, and IV pricing formulas.

2/ Changes in the Final Decision and Modified Option 1A marketings do not include the additional milk 

 from the Upper Midwest and Chicago Regional that is expected to be pooled under these options.

3/ Cash receipts do not reflect the termination of the $0.15 per cwt transportation credit in

 New York-New Jersey and exclude the income from additional pooled milk in the 

 consolidated Upper Midwest for the Final Decision and Modified Option 1A. 
APPENDIX TABLE 17:

 Summary of Impacts of Class I Pricing Options on the United States; Six-year Average. 1/ 

Final Modified Modified

Change In: Unit Baseline Decision Option 1B Option 1A

All milk price dol / cwt 14.73 0.00 -0.05 0.04

Class I price dol / cwt 16.26 -0.15 -0.38 0.06

Milk marketings mil lbs 165,142.2 14.8 (91.2) 128.7

Class I use mil lbs 58,782.2 37.8 99.0 (14.9)

Manufacturing use mil lbs 106,360.0 (23.0) (190.2) 143.6

Cash receipts 2/ mil dol 24,347.9 3.2 (90.1) 77.0

Fluid expenditures mil dol 9,562.0 (79.3) (209.9) 31.3

Manufacturing expenditures mil dol 14,785.9 82.5 119.8 45.7

1/ Options include the effects of the Class II, III, and IV pricing formulas.

2/ Cash receipts do not reflect the termination of the $0.15 per cwt transportation credit in

 New York-New Jersey for the Final Decision and Modified Options 1B and 1A.
Page 67

APPENDIX MAPS




Page 72

Appendix A

FMMO Reform Final Rule: Impact on Food and Nutrition Service Programs

The following table includes estimated retail price impacts of the Federal Milk Marketing

Order (FMMO) Reform Final Rule provided by the Agricultural Marketing Service,

USDA, in February, 1999:

Table 1: Change in Retail Price of Fluid Milk under Federal Order Options ($/gal.)

Option FY00 FY01 FY02 FY03 FY04 FY05 6-Year Average

Option 1A 0.04 0.01 0.00 0.00 0.00 0.00 0.01

Option 1B -0.01 -0.04 -0.05 -0.05 -0.05 -0.05 -0.04

Final Decision 0.02 -0.02 -0.02 -0.02 -0.02 -0.02 -0.02

Note: Price changes in 2002-2005 under Option 1A are rounded to zero for the purpose of this table, but are actually slightly less than

zero.

All of these impacts are quite small. The effect on FNS programs over the implementation

period of fiscal years 2000 to 2005 ranges from a savings of $340 million under Option 1B

to a cost of $58 million under Option 1A. FNS estimates that the largest negative impact

for a single year under any option would be a cost of $53 million under Option 1A in

FY00. FNS estimates that the largest positive impact for a single year under any option

would be a savings of $72 million under Option 1B in FY04. Considering the magnitude

of the FNS budget for these three programs, the impact of the Reform is negligible over

six years.

The four FNS programs considered in this analysis were the Food Stamp Program (FSP),

Women, Infants, and Children Program (WIC), National School Lunch Program (NSLP),

and the School Breakfast Program (SBP).

Table 2: Total Impact FY00-05

FNS Program Option 1A Option 1B Final Decision

FSP1

$32,269,326 -$188,506,389 -$73,109,489

WIC

Average Annual Participation Impact2

-3,683 19,704 7,488

Cost to Maintain Participation3

$12,085,550 -$68,548,210 -$26,416,499

NSLP and SBP4

$13,976,535 -$83,129,231 -$32,333,088

Total Dollar Cost $58,331,411 -$340,183,830 -$131,859,077

1Costs/savings to be borne by participants if the FMMO Reform does not trigger an increase in the FSP benefit level.

2The potential six-year average change in participation in the absence of a change in appropriation.

3The amount that the projected WIC appropriation would have to change in order to maintain participation at current projected levels.

4Costs/Savings to be absorbed by schools/institutions or passed on to students in the paid category, at the discretion of the institutions, if

the CPI does not increase to reflect the price impact of the FMMO Reform. Since FNS’ January 1998 FMMO impact analysis, baseline

assumptions of the amount of milk purchased by NSLP/SBP have been revised downward based upon new data from the recently released

School Food Purchasing Study.
Page 73

I. Food Stamp Program

Background

The per participant Food Stamp benefit for each fiscal year is tied to the cost of the Thrifty

Food Plan, a nutritious low-cost model diet plan, in June of the prior fiscal year. The cost

of the Thrifty Food Plan is not usually very sensitive to a modest price change in most of

the many items, which constitute the package. However, fluid milk accounts for

approximately 10 percent of the cost of the Thrifty Food Plan for the FSP reference

household of four. Since, for the FSP maximum allotment, the TFP is rounded down to

the nearest dollar, a modest change in the price of milk could cause an increase in the TFP

that would translate into a one dollar increase in the maximum FSP allotment. On

average, a $0.04 per gallon increase or decrease in the national average retail price for

fluid milk would cause the TFP to be rounded up or down, respectively, to the next dollar.

If the FSP allotment were forced up or down to the next dollar in June of fiscal year 2000

as a result of the Reform, costs would increase or decrease nationally for fiscal year 2001.

In the absence of an increase or decrease in the cost of the TFP, the national FSP

allotment will not change to account for the adjustment in the price of milk. In that case,

the cost burden or savings will be borne by participants during that period.

Impact

FNS has estimated that the impact on costs/savings to the Federal government would

equal approximately $60 million for each year and for each dollar increase/decrease in the

TFP attributable to a Reform related increase/decrease in the price of fluid milk. The

projected $0.04 increase in the retail price of milk in fiscal year 2000 under Option 1A has

a fifty percent chance of increasing the TFP to the next dollar, triggering an increase in the

Food Stamp benefit and a $60 million cost to the Federal Government in the following

fiscal year. In year 2001, retail price decreases of $0.04 expected under Option 1B are as

likely to push the TFP down to the next dollar as they are to leave the TFP dollar level

unchanged. In fiscal years 2002 to 2005 the decrease of $0.05 is slightly more likely than

not to push the TFP down to the next dollar. Table 2 reflects the instance in which the

TFP does not change for those years and options.

If the TFP does not increase in years that the Reform increases milk prices, the cost

burden will be borne by participants during those years. FNS estimates that the burden

over six years is equal to $32 million under Option 1A. In like manner, if the TFP is not

forced down when the Reform causes price decreases, the savings will accrue to the

participant. FNS estimates that these savings are equal to $188 million under Option 1B

and $73 million under the final decision. These estimates are derived by multiplying the

TFP level of 3.1 gallons of fluid milk per person per month by the projected number of

FSP participants and the retail price change.
Page 74

II. WIC Program

Background

The WIC Program is a discretionary program with prescribed maximum food benefits set

by WIC regulations. FNS estimates that the purchase of fluid milk constitutes

approximately 30 percent of the funds spent on food nationally. As retail milk prices

change, the food package cost per participant changes in the same direction. Since the

WIC appropriation is a discretionary grant, not an entitlement, as the WIC food package

cost per participant increases, State WIC programs must reduce participation or take other

steps to absorb the increased cost. Although States cannot decrease WIC benefit package

prescriptions for the purpose of offsetting the increase of the price of milk, States may

elect to authorize only lower cost brands of foods for purchase in order to partially offset

participation decreases.

Impact

Over six years, in order to maintain participation at 7.5 million participants per month,

FNS estimates that the WIC program would need a total of $12 million under Option 1A.

Under this option, the bulk of the cost, $11 million, would accrue in FY00. Current

appropriations law requires that WIC be fully operated before the FMNP may be

operated. Therefore, it is possible, though quite unlikely, that the $11 million cost in FY00

under Option 1A could jeopardize the operation of the Farmer’s Market Nutrition

Program (FMNP). Under Option 1B, FNS estimates that WIC would need $69 million

less and $26 million less under the final decision to support 7.5 million participants per

month over six years.
Page 75

III. NSLP and SBP

Background

The amount of reimbursement to the institution, that is, the school administering the

NSLP and SBP, is fixed by authorizing legislation. The NSLP and the SBP are indexed by

the food-away-from-home Consumer Price Index for urban consumers. Since this index is

not highly responsive to modest changes in the price of a single item, slight retail milk

price increases should not impact the reimbursement rates paid to the schools

administering the programs. Therefore, the institution will absorb the increases in the

retail price of milk due to the Reform that they are not able to pass on to children in the

reduced price and paid meal categories. None of the increased cost can be shifted to

students receiving free meals. States are prohibited from serving reduced price lunches

and breakfasts at rates higher than $0.40 and $0.30, respectively. Historically, States

charge the maximum amount. However, schools may charge as much as they like to

students receiving NSLP and SBP meals at the paid reimbursement rate. Therefore, if the

institution chooses to shift the full cost to the consumer, children in the paid categories

would disproportionately bear the burden or reap the savings. However, children

receiving meals under the reduced-price category may also pay slightly altered prices

under the Reform.

Impact

FNS has estimated that the cost to NSLP and SBP participants and institutions due to

Reform related fluid milk retail price increases during the demonstration six year

implementation period of the Reform will total $14 million under Option 1A. However,

the NSLP and SBP participants and institutions will save $83 million under Option 1B and

$32 million under the final decision.
Table 3: Annual Summary, Final Decision

FNS Program 2000 2001 2002 2003 2004 2005 Total

Per Gallon Retail Price Impact $0.02 -$0.02 -$0.02 -$0.02 -$0.02 -$0.02

FSP1

$12,663,025 -$14,424,749 -$18,870,191 -$17,848,442 -$17,623,678 -$17,005,455 -$73,109,489

WIC 

Average Annual Participation Impact 2

-8,693 9,580 12,122 11,168 10,710 10,039 7,488

Cost to Maintain Participation 3

$4,747,846 -$5,314,519 -$6,879,708 -$6,485,862 -$6,365,208 -$6,119,048 -$26,416,499

NSLP and SBP4

$5,488,684 -$6,249,364 -$8,208,964 -$7,908,703 -$7,840,460 -$7,614,282 -$32,333,088

Total Dollar Cost $22,899,556 -$25,988,632 -$33,958,863 -$32,243,007 -$31,829,346 -$30,738,785 -$131,859,077

1Costs/savings to be borne by participants if the FMMO Reform does not trigger an increase in the FSP benefit level.

2

The potential change in participation in the absence of a change in appropriation. The total is the six-year average participation loss.

3

The amount that the projected WIC appropriation would have to change in order to maintain participation at current projected levels.

4Costs/Savings to be absorbed by schools/institutions or passed on to students in the paid category, at the discretion of the institutions, 

if the CPI does not increase to reflect the price impact of the FMMO Reform. Since FNS’ January 1998 FMMO impact analysis, 

baseline assumptions of the amount of milk purchased by NSLP/SBP have been revised downward based upon new data from the 

recently released School Food Purchasing Study. 
Table 4: Annual Summary, Option 1B

FNS Program FY00 FY01 FY02 FY03 FY04 FY05 Total

Per Gallon Retail Price Impact -$0.01 -$0.04 -$0.05 -$0.05 -$0.05 -$0.05

FSP1

-$6,799,712 -$30,103,537 -$35,376,270 -$37,932,501 -$39,779,246 -$38,515,123 -$188,506,389

WIC 

Average Annual Participation Impact 2

4,676 20,020 22,758 23,774 24,216 22,776 19,704

Cost to Maintain Participation 3

-$2,549,469 -$11,091,065 -$12,897,507 -$13,784,115 -$14,367,214 -$13,858,840 -$68,548,210

NSLP and SBP4

-$2,947,279 -$13,042,026 -$15,389,485 -$16,808,015 -$17,697,077 -$17,245,349 -$83,129,231

Total Dollar Cost -$12,296,459 -$54,236,629 -$63,663,262 -$68,524,630 -$71,843,537 -$69,619,312 -$340,183,830

1Costs/savings to be borne by participants if the FMMO Reform does not trigger an increase in the FSP benefit level.

2

The potential change in participation in the absence of a change in appropriation. The total is the six-year average participation loss.

3

The amount that the projected WIC appropriation would have to change in order to maintain participation at current projected levels.

4Costs/Savings to be absorbed by schools/institutions or passed on to students in the paid category, at the discretion of the institutions, 

if the CPI does not increase to reflect the price impact of the FMMO Reform. Since FNS’ January 1998 FMMO impact analysis, 

baseline assumptions of the amount of milk purchased by NSLP/SBP have been revised downward based upon new data from the 

recently released School Food Purchasing Study. 
Table 5: Annual Summary, Option 1A

FNS Program FY00 FY01 FY02 FY03 FY04 FY05 Total

Per Gallon Retail Price Impact $0.04 $0.01 $0.00 $0.00 $0.00 $0.00

FSP1

$29,141,827 $4,479,183 -$572,210 -$554,087 -$18,695 -$206,691 $32,269,326

WIC 

Average Annual Participation Impact 2

-19,976 -2,970 367 346 11 122 -3,683

Cost to Maintain Participation 3

$10,926,371 $1,650,268 -$208,617 -$201,347 -$6,752 -$74,373 $12,085,550

NSLP and SBP4

$12,631,285 $1,940,557 -$248,925 -$245,518 -$8,317 -$92,547 $13,976,535

Total Dollar Cost $52,699,483 $8,070,008 -$1,029,752 -$1,000,952 -$33,765 -$373,612 $58,331,411

1Costs/savings to be borne by participants if the FMMO Reform does not trigger an increase in the FSP benefit level.

2

The potential change in participation in the absence of a change in appropriation. The total is the six-year average participation loss.

3

The amount that the projected WIC appropriation would have to change in order to maintain participation at current projected levels.

4Costs/Savings to be absorbed by schools/institutions or passed on to students in the paid category, at the discretion of the institutions, 

if the CPI does not increase to reflect the price impact of the FMMO Reform. Since FNS’ January 1998 FMMO impact analysis, 

baseline assumptions of the amount of milk purchased by NSLP/SBP have been revised downward based upon new data from the 

recently released School Food Purchasing Study. 
Page 79

Appendix B

USDA Regional Dairy Model Used in Federal Milk Marketing Order Analysis

Introduction

The Interagency Dairy Analysis Team, composed of analysts from the Economic Research

Service (ERS), the Office of the Chief Economist, and the Agricultural Marketing Service (AMS)

developed an analytic framework for analyzing the final Federal Milk Marketing Order (FMMO)

amendments from a national, annual, time-series dairy model that was estimated and maintained

by ERS. 

Because of the regional structure of the FMMO program and the specific provisions of the

program, a very specific analytical tool was needed that would allow for analysis on an order-byorder basis, as well as incorporating other areas of the country not covered by the FMMO system. 

In addition to the regional analysis, other characteristics of the analytical framework include the

ability to consolidate FMMO’s, the ability to estimate changes in the end use of milk, as well as

the flexibility to evaluate changes in minimum pricing under FMMO’s.

The model’s parameters were not directly estimated. The parameterization of the model was

drawn from the national dairy sector model developed by ERS, which incorporated the level of

product detail necessary to analyze the regional and national effects of FMMO reform (Table 1). 

The national model is estimated as a system of equations using a full information (three stage

least squares) technique. All data used in estimation of the national model are available in

National Agricultural Statical Service (NASS) publications, the ERS Dairy Yearbook, AMS

statistical publications, and the Economic Report of the President. The estimation data set

contained data from 1955 to 1994. For the purpose of analyzing the proposed FMMO

amendments, the national model was expanded to a 36-region model which incorporated the

32 FMMO’s in place at the time (includes the Tennessee Valley Order terminated on 

October 1, 1997), California, and three other non-Federally regulated areas of the country. 

Supply response parameters for the 36 model regions were adapted from previous regional

studies of the dairy industry. Per capita demand equations are estimated and regional price

differences, as well as regional population levels, are used to project changes in Class I and Class 

II use. Product market -- cheese, butter, and nonfat dry milk -- equilibrium is determined at the

national level and the quantities of milk in cheese production and butter-nonfat dry milk

production are allocated to each region based on the change at the national level. 

One of the more unique aspects of the model is the development of a framework which captures

FMMO pricing policy. The model is capable of estimating producer and handler prices at the

36 points in the model under both the current number and a reduced number of FMMO’s. The 

method used to estimate prices under FMMO consolidation is the same as that currently used to
Page 80

establish point (plant) prices within existing FMMO pools. 

The following is a discussion of how the specific basic regional model structure and parameters

were developed from the existing national model. The model is composed of five sections: 1)

milk supply; 2) dairy product supply; 3) dairy product demand; 4) market equilibrium conditions;

and 5) regional market utilization and pricing.

Regional Model Structure 

Milk Supply

In the national model, the milk supply section consists of two estimating equations: a milk per

cow equation and a milk cow inventory equation. An identity, the product of milk per cow and

milk cow inventory, determines milk production. Milk marketings are in direct relationship to

milk production. Milk per cow is estimated using the year-over-year change in milk per cow as

the dependent variable. Under this specification the intercept relates to the annual change in milk

per cow. The two other independent variables in the milk per cow equations are feed costs and

farm milk price -- indicators of the changes in profitability. The milk cow inventory equation,

which also is fit as a year-over-year change equation, includes as explanatory variables: the

percentage change in milk per cow, the milk/feed price ratio, and the previous year’s net return

per cow. 

Parameterizing the supply response in the regional dairy model was accomplished by altering the

national parameters to reflect regional differences in the structure of dairy farming (Table 1,

Box 1). In the areas with larger than average herd size, the contemporaneous supply response is

assumed to be smaller than the average dairy farm with respect to profitability. Profitability in

large operations is based on high volume production; therefore, producers do not alter production

greatly in the short term as costs or prices change. In addition, the annual trend in milk per cow is

assumed to be greater in these areas. Regional milk cow inventory equations also assume that the

short-term responses to changes in profitability are less in the areas with larger dairy farms. The

coefficient on lagged profitability is assumed to be greater in the areas with larger dairy farms,

implying that response to profitability is leading to the continued expansion. The profitability in

each of these 36 regions is estimated by using the appropriate all milk price and the ERS regional

cost of production data (Table 2). The regional estimates of cost of production are available on

the Internet at: http://www.econ.ag.gov/Briefing/fbe/car/milk2.htm. 

Milk cow inventory numbers and milk per cow are reported by state. Tracking milk movement

between states and marketing areas is problematic, and beyond the scope of a time series model. 

To estimate milk marketings for each FMMO, milk cow inventory for each FMMO is estimated

using total number of milk cows in states affiliated with that FMMO, e.g., the state totals for New

York and New Jersey are used to project milk cow inventory for the New York-New Jersey

FMMO. Milk per cow is the weighted average for the indicated states.
Page 81

Dairy Product Supply

The model assumes, because of the price discrimination that occurs under the FMMO system, the

demands for Class I and Class II in each region are satisfied first. The supplies of cheese, nonfat

dry milk, and butter are functions of the amount of milk marketed less the milk used in Class I

and Class II products, and the relative profitability of producing each product. Cheese supply is

further disaggregated into American cheese and other cheese types. The year-over-year change in

cheese production is a function of the relative value of producing cheese versus producing nonfat

dry milk and butter, as well as the year-over-year change in manufacturing milk supply. The

year-over-year change in butter production and nonfat dry milk production is determined by the

change in the residual milk supply on a butterfat and a nonfat solids basis, respectively. The

residual milk supply is estimated by accounting for the butterfat and nonfat solids used in cheese

production and subtracting them from the manufacturing milk supply (total milk marketings less

milk used in Class I and II on a butterfat and nonfat solids basis). 

Dairy Product Demand

The model contains demand equations for whole fluid milk, lowfat fluid milk, soft manufactured

products (Class II), American cheese, other cheese, butter, and nonfat dry milk. The model

assumes demand elasticities do not vary regionally. In general, individual product demands are

functions of own price, prices of substitutes, income (personal consumption expenditures), and in

some equations, trend variables (Table 1). The demand equations are estimated on a per capita

basis using a log-log functional form. 

In estimating each regional Class I and Class II demands, differences in prices and population by

region are utilized. Margin mark-up equations are used to estimate the CPI for fluid milk and

other dairy products on an order-by-order basis. Projections of regional per capita Class I and

Class II use are based on the estimated regional CPI and national per capita income. These

regional per capita projections are then multiplied by projections of population levels for each

model region to estimate Class I and Class II demands for the 36 areas included in the model. 

Milk used in Class I and Class II products in a model region are then projected using the yearover-year changes in the aggregate demand for Class I and Class II products. This approach

enables the model to estimate the change in Class I and Class II utilization caused by a change in

the Class I and Class II prices. Product demands for cheese, nonfat dry milk, and butter are

estimated on a national basis because of the national nature of these product markets.

Market Equilibrium Conditions

The model reaches equilibrium by solving for wholesale prices that equate supply and demand in

the manufactured product markets (cheese, butter, and nonfat dry milk). The manufactured

product markets, the Class I and Class II markets and regional farm level raw milk supply are
Page 82

linked through price equations that relate the changes in wholesale product prices to changes in

prices for milk used in Class I and Class II. A Basic Formula Price (BFP) is calculated from the

model’s estimates of wholesale cheese, butter, and nonfat dry milk prices; and this calculated BFP

is used to predict Class I and Class II prices. Changes in Class I and Class II prices affect

demand for Class I and Class II products and the amount of milk available for cheese, butter, and

nonfat dry milk production.

Regional Market Utilization and Pricing

The national dairy sector model is estimated using annual change and this format is utilized in the

regional estimates. Regional marketings are estimated by applying the relevant regional supply

response percentage change to the 1997 marketings level to estimate marketings for 1998. The

1999 marketings estimate is the relevant change applied to the 1998 estimate, and so on. The

same approach is used to predict class utilizations. Class I, Class II, and Class III utilizations are

computed using the relevant changes in demand for these milk classes. 

Class III-A is treated as a residual milk quantity on a nonfat solids basis, like the end product,

nonfat dry milk. 

The all milk price for each of the 36 regions is derived by multiplying the applicable class

utilization rates by projected class prices. For this calculation, the Class I price includes Class I

over-order charges and Class III and Class III-A prices under the 32 FMMO’s are replaced by the

model-generated projections of national prices paid for milk used in cheese and butter-nonfat dry

milk production. The model’s all milk price differs from the NASS all milk price in that the

NASS price includes the value of Grade B milk and also over-order charges on milk in Class II,

Class III, and Class III-A. 

For analyzing FMMO consolidation, a method had to be developed to compare the price impacts

in the 36 separate areas before and after FMMO consolidation. The method selected involved the

development of estimates of milk utilization by class and an all milk price for each of the 36 areas

after considering the effects of consolidation. 

The model is capable of combining the 32 FMMO’s into a fewer number of FMMO’s. In such

analyses, marketings and class utilizations are aggregated and new FMMO all milk prices are

calculated at the new base pricing points. All milk prices at various other locations are then

“zoned” from these new base pricing points. Zoned all milk prices are estimated by subtracting

the differences between the Class I differentials at specific locations and the Class I differentials

at the new base pricing points from the consolidated FMMO’s all milk prices. The new all milk

prices are input as data in the supply response functions and the model iterated until an

equilibrium is achieved in the product markets.
Page 83

Summary

This model was developed to answer some very specific questions about policy changes in the

dairy sector; and in particular, changes in FMMO’s. The main focus of this model development

was to define an analytical structure which would reflect the major economic structure of

FMMO’s, the classified pricing system, and provide relative rankings of policy options. Because

of the regional and product specific detail required for this analysis, and the resulting large data

requirements, direct estimation of parameters of the model was not possible. Parameters from an

existing national model were used and were adjusted as needed to reflect known regional

differences in the dairy industry. All of the results from the analyses of options are reported as

changes from the model baseline projections that are consistent with USDA’s official baseline for

dairy.
Page 84

Table 1. National Dairy Model Parameters 1/

Milk and Product Supply 2/

Year-over-year percentage change milk per cow (t,order) = B (1,order) + B (2,order) 

* Feedcost (t,order) +B (3,order) * Milk price (t,order).

Year-over-year percentage change milk cow inventory (t, order) = B (4,order) + B (5,order) 

* Percentage change in milk per cow (t,order) + B (6,order) * Milk feed price ratio (t,order) 

+ B (7,order) * Net returns per cow (t-1,order). 

Box 1. Derived Regional Supply Response Parameters */

 Region

Parameter

Northeast Southeast Upper 

Midwest

West California New 

Mexico

Florida

1 0.02 0.02 0.02 0.027 0.027 0.027 0.023

2 -0.0228833 -0.0228833 -0.020803 -0.0187227 -0.0187227 -0.016642 -0.022883

3 0.0001505 0.0001505 0.0001368 0.0001231 0.0001231 0.0001094 0.0001505

4 -0.085 -0.085 -0.082 -0.048 -0.058 -0.05 -0.05

5 -0.1549471 -0.1549471 -0.140861 -0.1267749 -0.1267749 -0.112688 -0.154947

6 0.0003353 0.0003353 0.0003049 0.0002744 0.0002744 0.0002439 0.0003353

7 0.0000404 0.0000404 0.0000445 0.0000494 0.0000494 0.0000556 0.0000404

*/ This matrix presents the different regional supply response parameters. The coefficient B (4,

Middle Atlantic) would be the cell in row 4 and under the column labeled Northeast. Table 2,

relates the regional parameter to the order or non order areas.

Milk per cow (t,order) = Milk per cow (t-1,order) * Year-over-year percentage change in milk per

cow (t,order).

Milk cow inventory (t,order) = Milk cow inventory (t-1,order) * Year-over-year percentage

change milk cow inventory (t, order).

Milk production (t,order) = Milk per cow (t,order) * Milk cow inventory (t,order).

Milk production change (t,order) = Milk production (t,order) - Milk production (t-1,order).
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Milk marketings (t,order) = Milk marketings (t-1,order ) + Milk production change (t,order).

Cheese Production

Year-over-year percentage change American cheese production (t) = 0.023383 + 0.000697 

* Year-over-year change in [(Cheese price (t) * 9.8 + Butter price (t) *0.27) / (4.48 * Butter 

price (t) + Nonfat dry milk price (t) * 8.13)] + 1.912463 * Year-over-year change in

manufacturing milk supply (butterfat basis).

American cheese production (t) = American cheese production (t-1) * Year-over-year percentage

change American cheese production (t).

Year-over-year percentage change other cheese production (t) = 0.054725 + 0.002532 * Year

-over-year change in [(Cheese price (t) * 9.8 + Butter price (t) * 0.27) / (4.48 * Butter price (t) 

+ Nonfat dry milk price (t) * 8.13)] + 0.418018 * Year-over-year change in manufacturing milk

supply (butterfat basis).

Other cheese production (t) = Other cheese production (t-1) * Year-over-year percentage change

other cheese production (t).

Butter-Nonfat Dry Milk Production

Manufacturing milk supply (butterfat basis) (t) = Milk marketings (t) - Whole milk 

consumption (t) * 3.25 / 3.67 - Lowfat milk consumption (t) * 1.5/3.67 - Class II 

consumption (t). 

Manufacturing milk supply (nonfat basis) (t) = Milk marketings (t) - Whole milk consumption

(t) 

- Lowfat milk consumption (t) - Class II consumption (t) * 1.5. 

Residual milk supply (butterfat basis) (t) = Manufacturing milk supply (butterfat basis) (t) 

- American cheese production (t) * 9.23 - Other cheese production (t) * 7.49.

Residual milk supply (nonfat basis) (t) = Manufacturing milk supply (nonfat basis) (t) -

American cheese production (t) * 9.8 - Other cheese production (t) * 9.8.

Butter production (t) = Butter production (t-1) * Percentage change in residual milk supply

(butterfat basis) (t).

Nonfat dry milk production (t) = Nonfat dry milk production (t-1) * Percentage change in

residual milk supply (nonfat solids basis).
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Demand

Per capita butter consumption (t) = EXP (1.363159 - 0.08428 * log (Butter wholesale price (t) 

/ Margarine CPI (t)) - 0.1236 * log (Trend (t)) + 0.0006888 * log (Personal consumption

expenditures (t))).

Per capita nonfat dry milk consumption (t) = EXP (-6.37521 - 0.33 * log (Wholesale nonfat dry

milk price (t)) - 2.70841 * log (Trend (t)) + 3.461008 * log (Personal consumption expenditures

(t))).

Per capita whole milk consumption (t,order) = EXP (11.57707 - 0.15 * log (CPI Fluid milk

(t,order)) - 0.056854 * log (Trend (t)) + 0.056854 * log (CPI Non-alcoholic beverages (t)) 

+ 0.186456 * log (Personal consumption expenditures (t))).

Per capita lowfat milk consumption (t,order) = EXP (6.612045 - 0.15 * log (CPI Fluid milk

(t,order)) + 1.04798 * log (Trend (t)) + 0.105101 * log (CPI Non-alcoholic beverages (t)) + 0.15

* log (Personal consumption expenditures (t))).

Per capita soft product consumption (Class II) (t,order) = EXP (2.36 - 0.51 * log (CPI other

dairy products (t,order)) - 0.0169 * log (Trend (t)) + 0.1497 * log (Personal consumption

expenditures (t))).

Per capita American cheese consumption (t) = EXP (-0.29364 * log (Wholesale cheese price (t))

+ 0.494838 * log (Personal consumption expenditures (t))).

Per capita other cheese consumption (t) = EXP (-0.43662 - 0.68685 * log (Wholesale cheese

price (t)) + 1.34883 * log (Personal consumption expenditures away from home (t)) + 0.164924 

* log (Personal consumption expenditures (t))).

Price Formulas

CPI fluid milk (t,order) = 0.024999 + 0.063537 * Effective Class I price (t,order) - 0.00027 

* Trend (t).

Other dairy products CPI (t) = Other dairy products CPI (t-1) * (0.40 * Class II price(t)).
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Class I price (t,order) = Class I differential (order) + BFP (t). 

Effective Class I price (t,order) = Class I price (t,order) + Class I over-order price (t,order).

Class II price (t) = $0.30 + BFP (t).

Protein price (t) = (( Wholesale cheese price (t) - 0.1702) * 1.405) +

(((Wholesale cheese price (t) - 0.1702) * 1.582) - Butterfat price (t)) * 1.28.

Butterfat price (t) = (Butter price (t) - 0.114) / 0.82.

Other solids price (t) = ((Nonfat dry milk price (t) * 0.20) - 0.137) / 0.968.

Nonfat solids price (t) = ((Nonfat dry milk price (t) ) - 0.137) / 1.02.

Skim price (t) = Protein price (t) * 3.1 + Other solids price (t) * 5.9.

Cheese milk price (3.67% butterfat) (t) = Skim price (t) * 0.9633 + 

Butterfat price(t) * 3.67.

BFP (3.5% butterfat) (t) = Skim price (t) * 0.965 + Butterfat price (t) * 3.5.

Butter-nonfat dry milk price (3.67% butterfat) (t) = (Nonfat solids price (t) * 9) * 0.9633

+ Butterfat price (t) *3.67. 

All-milk price (t,order) = Class I utilization (t,order) *Effective Class I price (t,order) + Class II

utilization (t,order) * Class II price (t) + Cheese milk utilization (t,order) * Cheese milk price (t) 

+ Butter and nonfat dry milk milk utilization (t,order) * Butter and nonfat dry milk price (t).

Equilibrium Conditions

Butter, nonfat dry milk, and cheese prices at the wholesale level are solved within the model so

that supply and demand of the manufactured products equate.

Cost of Production

Net returns (t,order) = All-milk price (t,order) + Other income (t,order) - Feed costs (t,order) -

Other costs (t,order).

Other income (t,order) = ERS Dairy COP other income (t,order). 
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Feed costs (t,order) = ERS Dairy COP feed cost (t,order).

Other costs (t,order) = ERS Dairy COP other costs (t,order).

The regional estimates of cost of production are available on the Internet at

http://www.econ.ag.gov/Briefing/fbe/car/milk2.htm

1/ Parameters presented in this table are drawn from the National Dairy Sector Model. Derived

regional supply responses are presented in Box 1. Other than changes in regional supply

responses, the order parameters are the same as the national parameters. All price, cost, and

income data used are real, using the CPI (All Urban Consumers) as the deflator.

2/ Supply responses are only altered on a regional basis, these regions reflecting ERS Cost of

production regions. Table 2 presents the regional responses used for each order area. 
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Table 2. Regional Supply Responses Used in Order Milk Production Equations 1/

Order Regional Supply Response ERS Cost of

Production 

New England Northeast Northeast

New York-New Jersey Northeast Northeast

Middle Atlantic Northeast Northeast

Unregulated N.Y. and New England Northeast Northeast

Carolina Southeast Southeast

Tennessee Valley Southeast Southeast

Louisville-Lexington-Evansville Southeast Southeast

Southeast Southeast Southeast

Tampa Bay Florida Southeast

Upper Florida Florida Southeast

Southeastern Florida Florida Southeast

Michigan Upper Peninsula Upper Midwest Upper Midwest

Southern Michigan Upper Midwest Upper Midwest

E. Ohio-W. Pennsylvania Upper Midwest Corn Belt

Ohio Valley Upper Midwest Corn Belt

Indiana Upper Midwest Corn Belt

Chicago Regional Upper Midwest Upper Midwest

Upper Midwest Upper Midwest Upper Midwest

Iowa Upper Midwest Corn Belt

Nebraska-Western Iowa Upper Midwest Corn Belt

Eastern S. Dakota Upper Midwest Corn Belt

Central Illinois Upper Midwest Corn Belt

Southern Illinois-Eastern Missouri Upper Midwest Corn Belt

Southwest Plains Upper Midwest Corn Belt

Eastern Colorado West Pacific

Western Colorado West Pacific

Greater Kansas City Upper Midwest Corn Belt

Texas Southeast Southern Plains

New Mexico-West Texas New Mexico Pacific

Southwestern Idaho-Eastern Oregon West Pacific

Great Basin West Pacific

Central Arizona West Pacific

Pacific Northwest West Pacific

California California Pacific

East U.S., non-Order Northeast Northeast

West U.S., non-Order West Pacific