June 14, 1999

A report from the Food and Agricultural Policy Research Institute (FAPRI) finds lower all-milk prices under USDA's final rule for reforming the nation's milk marketing order system. The greatest milk price decline occurs if Class I premiums remain unchanged.

Under each of three scenarios, the decline in all-milk prices is $0.03 per hundredweight or less. State level results show a larger impact. Aggregate milk production under each scenario declines slightly below baseline levels each year. Averaged over the 2000-2006 period, the largest production decline of 139 million pounds occurs if Class I premiums remain unchanged.

The report was the result of a team of economists brought together to analyze the final rule. The team included economists from Cornell University, the University of Wisconsin, Texas A&M University, USDA, International Dairy Foods Association, National Milk Producers Federation and FAPRI.

"This assembled group wrestled with each of the assumptions needed to analyze the final rule. In a few instances, consensus was difficult to reach. This dissension should come as no surprise, given the changes represented by certain features of the final rule," FAPRI said in an introduction to the report.