Part of the blame for the inaccurate consumer impression of milk and dairy products comes back to how we test milk and how we price milk. Component pricing can help change some images. If milk were tested and priced on a protein or SNF basis, it would be one big step toward dimin- ishing the fat image of milk and dairy products and enhancing the nutrition image of milk and dairy products. In the process, we could see some pluses on the demand side that we don't see very often. The primary case for component pricing comes down to what proponents of component pricing call equity.
Equity recognizes two facts.
First, some herds produce more protein than other herds, all other things being equal, but there are no pricing rewards nor penalties in it because skim milk is skim milk under present pricing arrangements. Second, the processors making products such as cheese and nonfat dry milk enjoy higher product yields per cwt. of milk from higher protein milk, specifically milk that carries higher casein to fat ratios in cheese manufacture, and they are not necessarily having to pay for it. The absence of component pricing, or the absence of a pricing plan that explicitly recognizes the yield capacity of milk, in the manufactured dairy products industry is a major vacuum. Professor Ernstrom of Utah State University has been involved in a valuable project directed at pricing milk based on yield capacity in the cheese industry. While the procedure fits very well for milk used for cheese, it is less relevant for other manu- factured dairy products where yield differences are more difficult to demonstrate, and it is not pertinent to the Class I market.