possible to have a positive bulk surplus sales adjustment depending on the market value of milk and requested adjustment for freight charges.
The price an individual dairy is paid for the milk it sells in a month is based on whether the milk produced is within that dairy's quota right and the extent to which production exceeds quota. Quota milk production is priced $1.50/cwt higher than excess production. For each dairy, payment is based on the actual butterfat content of the dairy's monthly milk production.
The following table provides a schematic of the sequence for determining prices to be paid to individual dairies for milk produced in quota and milk produced in excess of quota. The quota price shown for milk in the Montana minimum price charts is for milk with 3.5% butterfat content. The quota price is determined by calculating the statewide pool's value of skim milk and butterfat (utilization of skim milk and butterfat multiplied by minimum prices for the associated class of milk); making adjustments to the pool skim milk value for transportation charges for shipments of unprocessed pool milk between pool plants and surplus sales adjustments; making adjustments to the pool skim milk value that maintain a stable balance in the producers' settlement fund; and applying calculations that create a $1.50/cwt differential between the quota milk price and excess milk price.
Skim Milk Portion of Milk Butterfat Portion of Milk
Classification by Utilization for Skim Milk & Butterfat: I, II, III
Pool wide Skim Milk Utilization Value (Classified announced prices multiplied by weight of Class I, II, III utilization) Adjustments to Skim Milk Utilization Value: - Transportation Charges for Intrapool Shipments +\ / - Surplus Sales Adjustments + / - Settlement Fund Adjustments = Adjusted Pool wide Skim Milk Utilization Value
Adjustments to create Quota / Excess Price Differential ($1.50/cwt)
Skim Milk & Butterfat Quota / Excess Unit Prices ($/lb.)
Blend Price to be Paid to an Individual Dairy Based Upon Actual Butterfat Content