Posted: Thursday, June 02, 2011 2:00 PM
Alex Rubin/Northwest Dairy Association
An operator works on a mik filler line at a dairy processing plant. Federal milk marketing orders are designed to encourage handlers to focus on the efficiency of internal operations.
Formulas determine remuneration based on milk components
By STEVE BROWN
When Jim Zielinski looks at his milk check every month, he sees not only the bottom line but also valuable information that helps him improve his dairy.
Both quantity and quality of milk are considered in calculating the dollar amount. The quality is based on the percentage of butterfat and protein in the previous month's milk production. The check shows him how much the components -- butterfat, protein and other solids -- are worth.
It also indicates the somatic cell count of his milk, an indicator of the health of his cows.
Zielinski grew up near St. Paul, Ore., on Mission Lane Farms, which his parents started in 1944. He milks 500 Holsteins and has looked at a milk check most of his life. He understands it "somewhat," he said, enough to fine-tune his management and improve his product and his bottom line.
Those figures show Zielinski where he can improve his herd's genetics, feed and other management practices.
"Anything you can do to get higher components will increase your paycheck," he said.
Dan McBride, director of milk pricing and market programs at the dairy cooperative Darigold, described the path milk follows once it leaves the dairy and how the dairy farmer is compensated.
Trucks collect milk from most dairies every other day, but some dairies provide as many as five deliveries a day. The milk is weighed, and samples are sent to a certified lab by the next morning.
Component tests can be the primary determinant of how much a dairy is paid for its milk. The other measurement, bulk tank volume, can determine up to about half of a dairy farmer's income from milk in some markets.
The milk shipment's next destination depends on what it will be used for, or its classification:
* Class I -- Packaged milk, including 1 percent, 2 percent, skim, organic and eggnog.
* Class II -- Ice cream, cottage cheese and yogurt.
* Class III -- American-style cheeses, cream cheese and mozzarella.
* Class IV -- Dried milk products, butter, evaporated milk.
"Bottling plants get all the milk they need, and the numbers can fluctuate day to day," McBride said. A faster turnaround time is needed for the most perishable dairy product, maximizing its shelf life. "Cheese plants get as much as they need, and the rest goes to the drying plant."
It's the market demand, not the components, that determines the milk's use, he said.
Milk marketing administrators in several regions of the country oversee the federal milk marketing orders, designed to balance the dairy market. Among other things, an order provides a classified pricing plan, defines terms of trade, enforces payment of minimum prices to producers or cooperatives, verifies weights and component tests and reports market information and statistics.
The milk order does not regulate producers or control production, determine from whom milk is bought or sold, regulate payment practices, control where milk is marketed in U.S., or establish sanitary or quality standards.
The federal order regulates the handler, which is anyone who purchases Grade A milk from dairy farmers or other handlers. "Handlers report to the federal milk marketing administrator how much milk we received and how we used it," McBride said.
According to the Pacific Northwest Milk Marketing Administrator's website: "Being regulated allows the handler to focus more attention on the efficiency of internal operations and not have to worry about whether another handler has a cheaper milk supply. Each fluid handler is also assured a steady supply of milk."
In pooling, the value of the uses of all handlers in a single market area is totaled for all classifications of milk for a specific month. A uniform price, sometimes referred to as a blend price, is a mathematical weighted average.
"The blend price is the same wherever you're at, no matter what your milk goes for," McBride said.
"If my neighbor's milk all goes to cheese and mine goes to liquid milk, everybody's milk is priced the same," Zielinski said. "We all share in the same market."
The incentive to excel, McBride said, is the premiums producers can receive for those all-important component characteristics such as high protein and butterfat.
At the lab
The Darigold corporate laboratory tests raw milk samples for a variety of factors:
* Components -- including butterfat, protein, lactose, ash, solids that are not fat and milk urea nitrogen -- are determined by the absorption of infrared light at wavelengths that correspond to the specific components.
* Somatic cells -- indicators of milk quality and herd stress -- are counted using flow cytometry -- an application of light scattering -- and a photo detector.
* Raw bacteria are also counted with flow cytometry.
* Psychrotrophic bacteria, which grow at refrigeration temperatures and could adversely affect shelf life, are detected by incubating the milk sample at 13 degrees C, followed by an impedance measurement to detect electrical variations.
* Thermoduric bacteria, which can survive pasteurization, are detected by a standard plate count after simulated pasteurization. This test is primarily for organic producers' milk.
Other lab tests measure antibiotic residue, sediment, added water and any specific bacteria.
Producers can access test results daily on the Darigold website.
Pacific Northwest and Arizona Federal Milk Marketing Orders: www.fmmaseattle.com/statistics/UnderstandingFMOs.pdf
Northern Valley Dairy Production Medicine Center: www.dairymed.com