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Abstract

The rapid conversion of U.S. dairy farmers from Grade B to Grade A milk production could eliminate Grade B milk for manufacturing as the basis for all U.S. milk prices. This paper suggests that classified pricing and pooling policies under Federal milk marketing orders are direct factors causing this conversion. A policy to lower Class I price differentials in Federal orders while increasing Grade B support prices could maintain a viable manufacturing milk market and thereby maintain the Minnesota-Wisconsin Grade B price as a viable basis for determining all Class I prices. This policy could be followed under existing orders, probably without creating disorderly marketing conditions.

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