Are Component Levels Growing?

Component levels are growing in every Federal Order.  Butterfat levels are growing twice as fast as protein levels.  Data in this post are based on 12-Month moving averages to reduce annual volatility.  Higher component levels translate to higher revenue per cwt. of milk.

BUTERFAT

Table I shows the current butterfat levels for every Federal Order.  All 11 Federal Orders are paid for butterfat.  The four Orders paid on the advanced system have the lowest butterfat levels averaging 3.94%.  The Northwest continues to hold the top spot with butterfat levels of 4.39%.  The other seven Orders paid on the Class and Component system range from 4.17% to 4.28%.  All Orders combined are averaging 4.21% butterfat.

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Table I – Current Butterfat Percent

The increase in butterfat per cwt. has a consistent increase as shown in Chart I. That indicates the trend will likely continue.

Chart I – Increase in Butterfat Content over Five Years
Chart I – Increase in Butterfat Content over Five Years

Some of the Federal Orders are increasing butterfat levels faster than others.  Table II compares the four largest Federal Order’s growth in percent butterfat.  All four are increasing butterfat levels significantly.  The Southwest was the only Order above 4% in 2019.  Now all Class and Component Federal Orders average over 4% butterfat.  The Southwest Order has a smaller increase over the last five-years but remains as one of the highest butterfat levels of any Order.

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Table II – Increases in Butterfat Levels for the largest Orders

The Florida and Appalachian Federal Orders have the lowest butterfat levels and are increasing butterfat slower than average at just .25% over five-years.

Below are four charts plotting the gains of the four largest Federal Orders.  Most have very consistent gains.  The Southwest is unique in seeing very little improvement in 2023 but is currently quickly catching up.  The Southwest Order milk per cow numbers covered in the prior post had a similar Profile.

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Chart II – Butterfat Levels for the California Federal Order
Chart III – Butterfat Levels for the Upper Midwest Federal Order
Chart III – Butterfat Levels for the Upper Midwest Federal Order
Chart IV – Butterfat Levels for the Southwest Federal Order
Chart IV – Butterfat Levels for the Southwest Federal Order
Chart V – Butterfat Levels for the Northeast Federal Order
Chart V – Butterfat Levels for the Northeast Federal Order

PROTEIN

Gains in protein levels (Table III) are much smaller than the butterfat gains, increasing over five years at .14% overall compared to .31% for butterfat.  However, the overall gains have been steady as shown in Chart VI.

Only Class III milk for cheese pays specifically for protein.  The gains of the largest Federal Orders below are all steady except for the Southwest which is again showing issues in 2023 with significant gains in 2024.

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Table III -Increases in Butterfat Levels for the largest Orders
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Chart VI - Protein Levels for All Federal Orders
Chart VII - Protein Levels for the California Federal Order
Chart VII - Protein Levels for the California Federal Order
Chart VIII - Protein Levels for the Upper Midwest Federal Order
Chart VIII - Protein Levels for the Upper Midwest Federal Order
Chart IX - Protein Levels for the Southwest Federal Order
Chart IX - Protein Levels for the Southwest Federal Order
Chart X - Protein Levels for the Northeast Federal Order
Chart X - Protein Levels for the Northeast Federal Order

SUMMARY

What’s important for increasing producer revenue?  Clearly, butterfat levels are the biggest target for increasing producer revenue.  With changes soon to be implemented in the formulas for pricing producer milk, producer revenue will decrease, and producers will need to make changes to just break even. (See the prior post for details on the changing USDA pricing formulas.)

Increasing butterfat should be one of the highest priorities for producers.  Increasing butterfat, protein, and milk per cow all contribute to increased revenue.

For Federal Orders like the Upper Midwest, where most of the milk goes to cheese, more protein is necessary to match the increases in butterfat.  Cheesemakers should be assisting producers in increasing both butterfat and protein in the Upper Midwest.

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Demand for producer milk is primarily dependent on the consumption of cheese, …

Demand for producer milk is primarily dependent on the consumption of cheese, …

Component levels are growing in every Federal Order.  Butterfat levels are growing …

Milk per cow is increasing and with that, producer revenue per cow …