California Federal Order Would Have Impact on Milk Prices Nationally
USDA’s economic analysis suggests California dairy farmers could see about a half a dollar per hundredweight added to their milk checks if a Federal Order is implemented.
Higher prices in the Golden State mean more milk production, and that in turn will impact milk prices across the country. But the impact might not be what you would normally expect.
The irony is that cheese production in California would likely decrease because component prices would drive the cost of cheese making up. In turn, that would create opportunity for farmers in states like Idaho and Wisconsin that produce lots of cheese at competitive prices.
On a net basis, USDA calculates dairy farmers across the country could accrue up to $740 million more annually, though it acknowledges the real impact would be something less than that. As the base cost of cheese production increases, some plants which now pay over-order premiums to bid for milk would be less compelled to do so.
USDA’s Projected All-Milk Price Change
Region Price Change ¢/cwt
Southeast - 5
Upper Midwest +47
Idaho, Utah, Nevada +43