I’ve following table identifies the key factors that determine the value of Montana pool milk. The production and utilization factors result in a pool wide utilization value calculated for butterfat and skim milk produced by pool dairies. Adjustments are made to the skim milk utilization value for the transportation charges incurred for shipments of unprocessed pool milk between pool plants and for surplus milk sales.
Key Factors That Determine the Value of Montana Pool Milk
Production & Utilization Factors
pool wide production and butterfat content
announced minimum prices for skim milk and butterfat for each class
percentage of skim milk and butterfat utilized in each class
the volume of sales of unprocessed pool milk between pool plants and shipment freight rates
volume of milk exported as Class I packaged surplus milk and location of the receiving market (whether the market is contiguous or non-contiguous to Montana)
volume of milk exported as bulk surplus milk, the sale proceeds received relative to the Montana classified value of the milk, and the freight costs of shipping the milk to out-of-state processors
Transportation charges incurred for shipments of unprocessed pool milk between pool plants are deducted from the pool skim milk utilization value.
“Surplus” milk is defined by ARM 32.24.150(43). In brief, surplus milk is milk produced in Montana that is not consumed in Montana, excluding sales of cream to out-of-state markets, inventory, shrink, and dumped milk. Surplus sale factors allow for adjustments to the value of pool milk that reflect market dynamics. Surplus milk may be milk sold to out-of-state markets in packaged form or in bulk. The majority of surplus milk is Class I packaged milk sold to out-of-state markets.
For Class I packaged milk that is surplus milk, pool handlers pay the Montana Class I value minus the surplus sales adjustments established in rule that depend on whether the market is in a state that is contiguous or non-contiguous to Montana.
For bulk surplus milk, the class of utilization is based on how the out-of-state receiving plant utilizes the milk. Most often, bulk surplus milk is classified as a Class III utilization because the receiving plants are cheese plants or powdered milk plants. The surplus adjustment for bulk surplus milk is the actual value received from the sales (market value), less an adjustment for freight charges requested by a pool handler, less the initial Montana utilization value (value based on Montana classified prices). Typically, bulk surplus sales adjustments are negative adjustments to the utilization value, but it is