The prior four posts were mostly bad news for producers. Commodity prices, Component prices, Class Prices, and formula changes were causing lower milk prices for producers. Increases in component levels can help producer revenues.
This post will cover in detail how the butterfat and protein component levels are growing. All data is based on the most recent available information, and the Charts below are calculated on “12-month moving averages” to reduce volatility.
BUTTERFAT
Table I below lists the butterfat percent in milk for the 11 Milk Marketing Federal Orders. They are listed in order of their butterfat percent. The Northwest is always at the top of the list and the four Orders paid on the “Advanced” formulas are always at the bottom. California has a 4.21% butterfat content and is at the bottom of the list for Orders paid by the” Class and Component formulas.”
The Charts following the Table display the five-years gains in increased Butterfat for the five largest Federal Orders.
The mover in the list is the Southwest Federal Order that has significantly increased butterfat levels. The Southwest Order butterfat levels are shown in detail below in Chart IV.
Chart I shows the consolidated data of the 11 U.S Federal Orders. The growth has been consistent and steady over the whole five years except for the last month. In that month butterfat prices were falling with increased production and adequate inventories. No more gains in butterfat levels are required. This is the beginning of a slowdown in the growth of percent butterfat in milk.
California (Chart II) had steady increases in Butterfat over the five-year span. However, in the final quarter of 2025 there were drops in butterfat percent. The growth in butterfat percent is now flat or slightly negative. California is the largest U.S. butter producer by far.
The Upper Midwest (Chart III) has stopped increasing butterfat percent in early in 2025 (Chart III).
The Southwest Order (Chart IV) had a bumpy ride in increasing the percent butterfat. There have been issues in New Mexico that moved herds to Texas and other changes. Over the last two years, the butterfat percent has seen very significant increases.
The Northeast has a balanced mix of milk Classes and historically maintains steady changes in most all data. Chart V shows that percent of butterfat is maintaining a steady growth.
PROTEIN
Protein is paid for Class III milk and is paid in the seven Federal Orders below. The Southwest Order has reached the top of the list in percent protein, surpassing the Northwest Order (Table II).
Over the five years covered in the post, The U.S. has grown the percentage of protein from 3.18% of milk to 3.34%. As butterfat prices fall, the value of Protein will go up, increasing revenue for producers (Chart – VI).
California protein percent has leveled off in 2025 after many years of steady growth. California de-pools milk Classes that have high prices. Therefore, the data does not represent all of California milk (Chart VII).
The Upper Midwest has continued to increase the amount of Protein in their milk (Chart VIII). Protein is essential in cheese making and nearly 90% of the Upper Midwest’s milk goes to cheese.
In 2024 and 2025, the Southwest has really improved protein percent (Chart IX). With the higher protein prices, this will probably increase more. As the milk volume, butterfat percent and protein percent all increasing, Texas is growing to be a very strong dairy state. Walmart chose Texas for one of their new fluid milk plants.
The Northeast Federal Order (Chart X) really slowed their growth in protein percentage in 2025. The percentage has not declined but is also not growing. The Northeast Federal Order has a very balanced mix of milk Classes.
SUMMARY
The one thing that has kept producer revenue manageable is the increasing component levels. Another element in revenue management is increased milk per cow. The next post will combine the increase in component levels and milk per cow with the component prices. Will this keep revenue at acceptable levels even with the new formulas implemented in June 2025 and falling commodity prices?
