How Would a Dairy Compact Affect Missouri Dairy Farmers?
It depends on the level of the compact premium. This study assumed an annual average compact premium of $2 per cwt. If realized, Missouri dairy farmers would receive a net increase in milk price equal to $0.88 per cwt relative to the baseline. Missouri dairy farmers would respond by producing more milk (2.1 percent increase). How Would a Compact Affect Missouri Consumers? A dairy compact would increase the cost of raw milk to fluid processors. Fluid retailers would charge more for milk. Assuming a $2 compact premium, Missouri consumers would pay 15 cents to 31 cents more per gallon for bottled milk. Consumers would respond to the higher milk prices by reducing milk consumption 1.7 percent. A family of four drinking four gallons of milk per week would spend $0.41-$0.84 more per week due to the Dairy Compact (consumption would decline slightly due to higher fluid prices). In the course of a year, Missouri consumers would spend $13.4 – $26.8 million more on fluid milk purchases relative t
