The Southeast is a net importer of milk and milk products. Milk must be imported from other regions at certain times of the year. Reverse osmosis (RO) is a new processing technology which could significantly reduce milk transportation costs between regions by removing half the water from raw milk prior to shipment. A network flow algorithm, which incorporates federal milk orders and solves for the least cost procurement pattern, was used to assess the impact of RO on southeast milk marketing orders under alternative raw product pricing scenarios.