Economic Value of Milk Components for Fluid Milk, Cheese, Butter, and Nonfat Dry Milk and Responses to Selection

The consequences of genetically and mechanically altering milk composition were investigated. A base price plus a component differential method of payment was shown to be equivalent to the sum of the components of milk yield (carrier, fat, and protein) times their relative economic value. Relative economic values of carrier, fat, and protein were derived for fluid milk. Linear programming models were developed to simulate the movement of milk through cheese and through butter and NDM manufacturing processes. These models were used to estimate the cost of moving milk through the respective plants, and these values were equated to the "breakeven" cost of carrier. New economic values for fat and protein were developed on these respective values of carrier in the cheese, and in the butter and NDM processes. Seven selection and marketing alternatives were investigated to determine the expected differences in economic returns by varying the selection criteria and the end products of value.