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Value of Fat and Protein in Producer Milk^{1 ,2,}

Department of Animal Sciences, Washington State University, Pullman 99164
Department of Food Technology, Iowa State University, Ames 50011
Department of Animal Science, Iowa State University, Ames 50011
Institute for Animal Husbandry, Zeist, Netherlands
Department of Economics, Iowa State University, Ames 50011

ABSTRACT

The economic value of solids components of milk should be a function of net returns from products in which the milk solids are used. An empirical procedure is illustrated to estimate the value of fat and protein in milk used to manufacture selected dairy products. Manufacturing costs were evaluated and divided into those that remain constant for a volume of milk regardless of solids content and those costs that change with the solids content of milk. Values of a .1% increase in the protein content in 100 kg of milk used to manufacture hard cheese, nonfat dry milk, and cottage cheese were $.300, $.140, and $.446. Values of .1% increase in fat in 100 kg of milk used to manufacture hard cheese and butter were $.364 and $.240. Values derived in this manner can be incorporated into multiple-component pricing plans by weighting each value by the proportion of the milk supply used for that product.

¹ Scientific paper no. 5372. College of Agriculture Research Center, Washington State University, Pullman. Project No. 0389.

Journal Paper No. J-9480 of the Iowa Agriculture and Home Economics Experiment Station, Ames. Project 1053. This work was done while the first and fourth authors were on sabbatical leaves at Iowa State University.

² The authors wish to acknowledge the financial support of this work by Midland United Dairy Industry Association, Iowa Dairy Industry Committee, Northwest Dairymen's Assoc, and Kraft, Inc. and the information received regarding processing inputs and costs from managers and staffs of several dairy manufacturing plants.