Two methods of assigning values to milk components are presented. One method is developed for determining values per point of protein and fat in a cheddar cheese plant. In this method, the value per point of solids is computed from the effect of variation in solids test on the firm s profits. It can be extended to apply to solids not fat instead of protein, and to other manufactured products. The procedure is presented in worksheet form and applied to a cheese plant. In the plant studied, the maximum premium per point of protein per 100 kg of milk is $0.2881 (= $.13 per point per 100 pounds of milk).
This paper was published in Journal of Dairy Science, Vol. 62, No. 11, November 1979, pp. 1705-1712
Ladd, George W. and Dunn, John R., "Estimating Values Of Milk Components To A Dairy Manufacturer" (1978). Economic Staff Paper Series. 102.