Milk Hauling Rates Jump in Upper Midwest
Milk hauling rates jumped by more than a third in 2018 compared to 2017, shows a study just released by the Upper Midwest Federal Milk Marketing Order. The study looked at hauling charges for May 2018, and compared them to year-earlier rates.
Still, milk hauling charges in the Upper Midwest are still well below those of other regions. The weighted average hauling charge in the Upper Midwest was about 28¢/cwt, up from 20¢/cwt in 2017. That meant total hauling charges jumped more than $3 million per month last year for the 11,417 dairy farmers included in the study. (Note: Part of this 40% increase was also due to larger milk volume in May, up 15% in milk pooled on the Upper Midwest Order.)
“North Dakota has the highest average hauling charge (64¢ weighted average),” says Corey Freije, a dairy economist with Upper Midwest Order. “This result is from a low number of farms, the longest distance from high demand areas, and less handler competition.
‘Wisconsin, in contrast, has a low average hauling charge (24¢ weighted average) with a high number of farms and close proximity to high-demand areas,” he says.
Freije says the majority of milk handlers in the Upper Midwest charge a flat hauling fee, regardless of the amount of milk being shipped each month. “In each of these cases, where the handler charges a flat rate, the hauling charge per hundredweight declines as the producer’s milk volume increases,” he says.
This makes a huge difference in hauling charges. The smallest producers, those shipping less than 50,000 lb of milk/month, are paying 75¢/cwt. Those farmers shipping 5 million lb are paying just 16¢/cwt.
Read the complete study here.