Amendments to the USDA – Agriculture Marketing Service (AMS) pricing formulas are finalized and must now be approved by each Federal Order. If the Federal Order does not approve the changes, steps will be taken to terminate the Order.
In the past, changes were made primarily to “make allowances.” The current changes impact many other parts of the formulas, making comparisons to past index data impossible. Protein and “other solids” levels are increasing, but the butterfat component level is not being changed in the formulas. The percent of nonfat solids is also being increased. The reasoning behind these changes in the index formulas is confusing.
This post will analyze the economic impact of these formula changes on the published Class III index prices and on the actual price changes as they impact dairy producer’s revenue. The changes to the pricing formulas include the following:
John Geuss
November 22, 2024
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