Butterfat overtakes protein as price leader
April 18, 2022
Multiple component pricing has been the mechanism that has established the value for the supermajority of the nation’s milk since the Federal Milk Marketing Order reforms that went into place in 2000. Since that time, the amount of milk priced via multiple component pricing has steadily grown and has now reached 92% of the nation’s milk supply.
For many years, protein was the consistent component leader in milk checks as it fetched the highest pay price. However, prices and demand for butterfat began to improve as medical, nutrition, and public perception changed on saturated fats in foods such as butter, cheese, eggs, and meat. As this situation unfolded, butterfat and protein have become more like a pair of racehorses constantly battling for the lead in a milk check price component race.
Butterfat is back on top
When looking at March 2022 milk checks, butterfat outpaced protein for the third straight month when looking at Federal Milk Marketing Order monthly pay prices. In March, butterfat fetched $3.09 per pound and protein yielded $2.72.
Prior to this three-month run for butterfat, protein pay prices led the way in milk checks from September 2019 through December 2021. Before that time, butterfat had a 48-month stretch dating back to 2016 when this milk component outperformed protein on a repeated basis.
When it comes to the future, dairy farmers should consider butterfat and protein as equal long-term players in milk checks. These considerations will factor into long-term genetic selection decisions for sires of future calves. Of course, nutrition and feeding strategies can be a more immediate strategy to capture the highest value from milk checks.