MAILBOX MILK PRICES*

The "mailbox price" is defined as the net price received by dairy farmers for milk, including all payments received for milk sold and deducting costs associated with marketing the milk. All payments for milk sold include, where applicable: over-order premiums; quality, component, breed, and volume premiums; payouts from state-run over-order pricing pools; payments from superpool organizations or marketing agencies in common; payouts from programs offering seasonal production bonuses; and monthly distributions of cooperative earnings. All payments will be shown for the month in which received. Annual distributions of cooperative profits/earnings—13^th checks—will not be included but may be listed in a footnote when paid; the breakdown between cash patronage dividends and certificates of equity will be shown. Also, equity repayments will not be included.

Costs associated with marketing milk include, where applicable: hauling charges, cooperative dues, assessments, equity deductions/capital retains, and reblends; the Federal milk order deduction for marketing services; Federally-mandated assessments such as the National Promotion Program and budget deficit reduction; and advertising/promotion assessments above the national program level. Other deductions, such as loan, insurance or feed mill assignments will not be included.

The information reported in this section is intended to be representative of the entire market by including data for the major cooperatives and handlers with non-member supplies operating in the market. For some markets for which the milk supply area covers a wide geographic region, the pay prices reported may be limited to those areas from which the majority of pooled milk is received. This was done because the pay prices in the outlying areas may be aligned more closely with another order’s pay prices. For all markets, the mailbox price is reported at the market average butterfat test; there is no adjustment to 3.5 percent.

Since the mailbox price data series represents actual prices that dairy farmers receive for milk, it should reflect more accurately regional milk price variations and also should be more useful in evaluating milk supply response to milk price changes.

*Developed by USDA Market Information Branch, Dairy Division, Agricultural Marketing Service, Washington, D.C.