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Abstract
Milk prices received by producers and paid by processors vary by region under the current system of Federal milk marketing orders. Yet, the system ensures sufficient milk supplies to consumers and provides economic stability to producers. The system could be modified so that it is more competitive and so that it increases economic efficiency while maintaining market stability and reducing risk. Such a system could reduce overall producer revenues and affect dairy product manufacturing, but it could also redistribute those revenues among regions, provide savings to consumers, reduce Government purchases of dairy products, generate more efficient shipping patterns, and reduce interregional marketing costs. This study focuses on four such modifications at two levels of dairy price supports: (1) removing the pricing practices that discourage reconstituting dairy products for fluid use, (2) establishing a single nationwide milk marketing order, as opposed to the numerous orders of the current system, (3) eliminating the classified pricing system, which increases the price of milk used in fluid (beverage) milk products, and (4) pricing Grade A milk for fluid use from multiple price-basing points rather than from the current single price-basing point in central Wisconsin.