A new milk pricing system, slated to go into effect Oct. 1, has been delayed as dairy producers in states opposed to the new system convinced a federal judge to delay implementation.

Although the new system has raised controversy, an economist at the University of Wisconsin said milk prices – both the minimum price dairy farmers receive from milk plants and the price consumers pay at the grocery store – would change very little under the proposed change.

Furthermore, he said, Wisconsin farmers actually get a price higher than the minimum because dairy cooperatives and bargaining organizations such as the National Farmers Organization negotiate their real price directly with milk plants.

“On average, over the course of a year, a Wisconsin farmer”s minimum price would have been about 5 cents more per hundred pounds of milk during 1999, if the new pricing formula had been in effect,” explained Robert A. Cropp, a UW-Extension specialist in dairy marketing. “Minimum prices in the east and the south would have been slightly lower. New York producers would have received 21 cents less. But the national average would have been only about 4 cents less.”

Cropp was one of nine university economists invited to analyze the effect of the proposed change in the pricing formula. Their analysis was used during debate and discussion of the measure.

For Wisconsin producers, the differences in minimum price under the old and new formulas would have varied month by month. The minimum price paid for class one milk — milk for drinking – would have been higher in January, April, May, July, August and September. For milk used in cheese making – 80 percent of Wisconsin”s milk production — prices would have been a few cents lower in every month except February.

“It”s important to remember that dairy farmer cooperatives negotiate prices with the milk plants and these prices are higher than the formula price,” Cropp said. He said farmers earn premiums for quality, for higher butterfat content, and for providing other services for the milk plant.

The proposed new federal order makes some needed changes in the way the milk check is calculated, Cropp added. One is the method for figuring prices for butterfat, protein and other solids.

Under the old component pricing system, the values of protein and butterfat were determined from cheese and butter price. The value of the other solids was the what was left after the value of protein and butterfat were subtracted from the Basic Formula Price (BFP).

“Some months, farmers got a check that indicated that they had received nothing for their other solids and they thought they were being cheated. In fact, the prices for butterfat and protein were high enough that there was nothing left for other solids,” Cropp said.

The new system is what Cropp calls “true component pricing.” Under this system each component value — protein, butterfat and other solids — will be determined independently from dairy product prices.

Another change affects the method for measuring protein in milk, Cropp said. The old protein test measured the nitrogen level in the milk and assumed that all nitrogen came from protein. In fact, some nitrogen in milk may come from other sources. A new test will measure true protein more accurately.

“The component pricing formulas have been changed to reflect cheese yield from true protein. So farmers will see a higher protein price per pound that offsets the slightly lower protein test,” he explained.

The new federal order governing milk prices was to go into effect Oct. 1. However, a federal district judge in Vermont issued a temporary stay just before that date. The status of the revision, an implementation date and the nature of the final decision on the measure are uncertain.