How are milk prices determined in the U.S.?
Milk prices for a majority of the milk produced in the U.S. occurs in an environment in which the minimum milk prices paid to farmers are determined by formula and based on recent movements in wholesale commodity markets. The Understanding Dairy Markets website (http://future.aae.wisc.edu) has a collection of software and publications that provide background information for these alternative pricing systems. For example, contained in this website is a spreadsheet model that shows how classified prices are determined under the Federal Milk Marketing Order system can be found here.A supporting document that describes this system in words can be found here.
