The Impact of Component Pricing of Soybeans and Milk

Currently, the price that an individual farmer receives for soybeans is not adjusted for oil and protein content, and the price for milk is adjusted for fat content but not for solids‐not‐fat. This study finds that the potential social surplus gains from a change to component pricing of these commodities is small (no more than one to two percent of current commodity value, before deducting the extra costs of such a pricing system). Substantial transfers would occur between component‐consuming groups, while producers as a group would be affected only slightly.