I

I .

New York -New ."PI!'IIU' Milk Marketing .. ~-

iii I F R NelS J fA.·: Hl ' !\iI i( :24~ G RA T A U B U R N NY I t ..... ~f!:II __ :PJ~ .. ~

T'a.OJllfiS fl. WilSOII, Administrator

205 East 42nd Street. New York. N. Y. 10017

Now York State Order No. 126

Federal Order No. 2

SUPPLEM ENT

MILK

New Jersey State Order No. 57. )

SUPPLY· CONSUMPTION · RESERVE

NORTHEAST MARKETS

NOVEMBER' 1974

MIL,K

SUPPL Y -CONSUMPTION - RESERVE

NORTHEAST MARKETS

By

Edmund E. Vial Economist, Office of the Market Administrator

New York·New Jersey Milk Marketing Area

Office of the Market Administrator

205 East 42nd Street

New York, N.Y. 10017 November 1974

ACKNOWLEDGEMENTS The author is indebted to Thomas A. Wilson, John F. K. Cassidy, Norman K.

Garber, Arialdo Folio, Anthony Imbriano, Richard Langworthy and Carmen Ross of the Market Administrator's Office of the New York-New Jersey Marketing Area ; to Herbert Kling, Ronald C. Pearce and Lyle A. Newcomb of the New York State Department of Agriculture and Markets; to Robert W. March, Joel Blum and Silvio Capponi of the Dairy Division of the Agricultural Marketing Service, United States Department of Agriculture; to H erbert E. Shep ard of the Market Administrator's Office of the Boston Regional Marketing Area; to Cleo C. Taylor and William Kidd of the Market Administrator's O ffice of the Eastern Ohio-Western Pennsylvania Marketing Area; to Joseph J. Dunn and Philip J. Paonessa of the Market Admin-istrator's Office of the Niagara Frontier Milk Marketing Area for constructive sug-gestions and criticisms. The author is also indebted to Mae Liss and Elaine Moy of the New York-New Jersey Market Administrator's Office for the statistical work and aid in preparation of the manuscript.

ii

FOREWORD The Northeast has the largest concentration of milk consumers of any area of

the country. All the large metropolitan areas have milk orders with prices required to be paid producers for milk used in different ways, established by a public agency.

The reports of the M arket Administrators give detailed information on receipts and utilization of milk and milk products that is necessary in the classification, pool-ing and auditing phases of milk order administration. These data together with sup-plementary information customarily compiled by the Market Administrators make it possible to determine the consumption of Class I products in each marketing area.

The Northeast markets obtain nearly all of their milk from the Northeast. Each one obtains milk from New York producers. In many areas there is an intermingling of producers supplying different markets . Some markets have expanded in relation to others. Developments in one market have repercussions in others.

The volume and utilization of reserve milk is highly variable. Some uses reflect changes in the Northeast consumption of particular products . Other uses reflect the volume remaining after the high priority uses have been filled.

Because of the interrelationships among the Northeast markets, there is need for an overall picture to portray the changes in total milk supply, total milk consumption, total reserve and its uses. These are important factors in establishing milk prices and in appraising their effects.

Jll

THOM AS A. WILSON Market Administrator NEW YORK-NEW JERSEY MILK MARKETING AREA

CONTENTS

1. Abstract

II. Introduction ....... ...... .. ..... .......................................... ...... . .............. ..... . ..................................... .

III. Population ................................................. .............. ....... .. ............ ............. ....... ................... .. ... . Changes in population 1960-73 ...... ..................... ............. .. ................... ....... ....... ..... ............ .

Changes in marketing areas ................................ ..................... ............................................. .

IV. Milk Supply-Receipts From Producers ................... .............. ...... .. ............ .. .................. .... .. ... .

Producer receipts per capita ............................................. ....... ............. ........................... .. .. .

Relative size of markets ........................ .............................. .................. ............................... .

Supply area ............................ . ....... ...... .. ................... .. ..... ....... ...... ....... ............ ....... ............. .

Receipts assigned to Class I ........... .. ..... ...... ............... ............. .. ..... . ............... .............. . ... .... .

V. Milk Consumption ................ ................................. ....... ........ ................... .......................... ..... .

Levels of consumption ............................. ....... ...................................................... ............ .

Decline in milk consumption 1960-73 .................... ...... .. .................................................... .

Increases in consumption of lowfat fluid products ..... ................................... ....................... .

Lowfat products 1966-73 ............................................. .. ................................. .... ......... .. .... . .

Milk solids in fluid milk products consumed .................................................... .................... .

Consumption of fluid milk and selected manufactured products ............. . ................... . ..... . .. .

Butterfat

Solids not fat ............................................................................................ ....... ...... ..... .. ...... . . .

Fluid products vs. selected manufactured products ............................................. ................ .

Page

4

5

5

5

9

9 13

16

17

19

19

19

20 22 23

24

27

29 31

VI. Reserve ............ ............... ...... .... ........ ....... ..... .... ..... ....... .. ..... .. .. ...... .......... ..... ............. ....... ... .... 33

Uses of reserve milk ..... ........ ... .. .. ....... ..... ..... .. ..... .. ... .... ...... ............... ........ .. ... ... ..... ..... ......... 33

Fluid cream consumption ................... ..... ..................... . .................................... ................... 33

Perishable manufactured products ................ ...... .. ...... ...... ........................ ... ........... ............. 33

Nonperishable manufactured products ...... .... ........... .... .... ... ....... ............... ......... .... .......... ... 35

Importance of individual products. ......... ..... ....... ... .... ...... ..... .. ... ....... ........ .... ... ..... ..... .. .... .... 36

Perishable products .............................. .................................................. ..... .. .................... 36

Nonperishable products .......... '" ............. ........ " .... ..... ... .... ... ... .. ..... .... .......... . .. .............. 36

Position of New York. ..... ....... ..... ..... ..... ..... ..... .... ...... ..... ........ .... .... ..... ........ ... ...... .. .......... .... 37

New York vs. Northeast except New York ........................................................................... 37

Production of manufactured products in the Northeast vs. use of reserve milk .. .. .. .... ........ 4l

Nonperishable products ............................................................................................ .......... 41

Ice cream...................................................................... .............................. ............... . ........... 41

Midwestern cream, fluid cream and ice cream..... ... ..... .. ..... .. ...... .... ... ....... ....... ..... ...... ...... ... 43

iv

Page

VII. Interrelationships-Supply, Consumption, Reserve """"" " ,,, ,,, ,,,,, ,,,, ,,, ,,,,,,,,,,,,, ,,,,,,,,, ,,,, ,,,,,,,,,,, 47

Supply ........................................................................... " " """"'" '''''' '''''' '' ' '''' '''''' ''''''''' 4 7 Consumption .................................... ... ..... .................. .. ... ' '' ''' ... .... ... .... ....... "'"'''' ... ...... ....... 47

Reserve .......................................................... .. ............ 00 ..... . .. .. .. ... ·....... . ............ .. ....... ........ 48

Consumption-percent of supply ..... .... ... ... .. .......................... ............. ........... .. ... ........ ........ 48

Reserve-percent of consumption ..... .. ... .... . .. .... .. ..... ............ ................................... .. ...... .. 49

VIII. Appendix ..... ""'" ''''''' ' '''' ...... ..... .. .. .. ... .. ....... .. ..... ....... ........ .. .... ...... ......... .... .... ....... .. ....... ... ........ 51

Method .................. .. .. ...... ................... .................. ................. ........... .. ... .. ............................. 51

Per capita consumption individual products .... .. ........................................................ .. .. ... .. .. 51

Northeast receipts of milk and cream from states outside Northeast "". """ " """"" .. ... .. . "" 51

v

CHARTS Number Page

1 Indexes of population of Northeast milk marketing areas............... ...... . ..... ...... ..... .... ... ... ... .... 7

2 Indexes of receipts of milk from producers Northeast markets ............................. ....... .......... 11

3 Per capita receipts of milk from producers Northeast marketing areas ....... .......... .. .......... ... 13

4 Per capita receipts of milk from producers, high market and low market........................ 14

5 Milk receipts from producers Northeast marketing areas, expressed as a percentage of New York-New Jersey........ ... .. ..... ...... ... ............. ........... .................................... .. ... 15

6

7

Percentage of Class I milk Northeast markets

Per capita consumption of fluid milk Northeast markets .... ........................ ........................ .

18

21

8 Per capita consumption of low fat fluid milk products included in Class I Northeast markets 22

9 Per capita consumption of butterfat in the Northeast in fluid milk products and selected manufactured dairy products.. .. ................ ......................................... ................ .. .. .. 28

10 Per capita consumption of solids not fat in the Northeast in fluid milk products and selected manufactured dairy products .. ................................................ .......................................... 31

11 Per capita consumption of butterfat and solids not fat in selected manufactured dairy products expressed as a percentage of consumption in fluid milk products................. 32

12 Production of perishable and nonperishable manufactured dairy products and fluid cream consumption in the Northeast (milk equivalent) .............................................................. 35

13 Production of perishable and nonperishable manufactured dairy products (milk equivalent) in New York State and in the Northeast except New York ............................................... 39

14 Production of manufactured dairy products (milk equivalent) expressed as a percentage of marketings of milk by producers New York State and the Northeast except New York.. 40

15 Percentage of butterfat and solids not fat in ice cream mix made in New York State from dry milk products, butter and butter sugar ........................................................................ 43

16 Milk equivalent of consumption of fluid cream and ice cream in the Northeast and milk equivalent from Northeast reserve milk... . .............................. ...................................... 46

17 Milk supply, consumption, reserve Northeastern states ........... .. .... .. ........... ... .. ..... .. .... ... .... .. .... 49

18

19

Percentage of milk supply consumed as fluid milk

Volume of reserve milk expressed as a percentage of milk consumption ................. ..

vi

50

50

I. ABSTRACT Magnitude of Northeast Markets

The five marketing areas in the Northeast under Federal regulation plus the two under New York State regulation had a total population of 52 mil-lion in 1973. This represented 25 percent of the total population of the United States. During the 14 year period 1960-73 the combined population of these marketing areas rose 13 .5 percent. There was a wide variation among the marketing areas in the rate of growth. The M iddle Atlantic area in-cluding Philadelphia, Wilmington, Baltimore and Washington had the largest percentage increase while the Eastern Ohio-Western Pennsylvania area including Cleveland, Wheeling, Erie and Pitts·· burgh had the smallest.

Supply The receipts of milk from producers by handlers

regulated under an order is a measure of the milk supply regularly associated with the market. From 1960 to 1965, the receipts of milk from producers under the Federally regulated markets along the Atlantic seaboard plus Niagara Frontier and Rochester increased 11.5 percent. R eceipts at each market rose and the percentage gains were similar. In striking contrast, from 1965 to 1973, total re-ceipts declined 7.9 percent. Even with this overall decline receipts in the Connecticut and Middle At-lantic Orders increased while receipts in New York-New Jersey and Niagara Frontier and R ochester declined sharply.

The relative size of regulated markets often is measured by producer receipts. A large part of the variation among markets is related direc,tly to the population of the marketing area. In 1973 pro-ducer receipts under the New York-New Jersey Or-der were nearly three times as large as under the Boston Regional Order. On a per capita basis they were 453 and 457 pounds respectively. Using this measure the two markets were about the same. During the 14 year period 1960-73 the Niagara Frontier and Rochester Orders had the largest re-ceipts per capita, 584 pounds, and Connecticut had the smallest, 402 pounds.

D uring the early sixties receipts per capita un-der the Niagara F rontier and Rochester, New

1

York-New Jersey and Boston Orders stabilized at a high level, bu t they declined sharply in the late sixties and early seventies. In contrast per capita receipts under the Connecticut and Middle Atlantic Orders were relatively stable at a low level during the entire period. With the decline in markets with high receipts and the stability in markets with low receipts, the differences among the markets in per capita receipts in the early seventies were unusu-ally small.

These Northeast markets obtain most of their milk from a common supply area, the 11 North-eastern states north of the Potomac River. In De-cember 1972 approximately 90 percent of the total receipts were from this area. The M iddle Atlantic and East Ohio-West Pennsylvania Orders were the only ones with supplies from states outside the Northeast. Nevertheless each of the markets ob-tained milk from New York producers.

There were marked differences among the or-ders in the percentage of producer receipts as-signed to Class 1. For the 14 year period 1960-73 Connecticut had the highest, 77.6 percent. For New York-New Jersey the percentage was 50.9, the lowest of any of the federally regulated mar-kets.

Consumption Milk consumed as fluid milk yields producers a

much higher price than milk used to produce ice cream, cheese, butter or nonfat dry milk. Because of this difference producers have a vital interest in the consumption of fluid milk. For many years fluid milk in consumer packages was the principal product in Class 1. In recent years, however , many people have used fluid skim milk and lowfat milk in place of fluid milk. Buttermilk and flavored drinks also are used interchangeably with milk. All of these products are included in Class I and yield producers the highest price.

Since fluid whole milk, including standardized milk, is the most important product included in Class I, its consumption was calculated separately. During the 14 year period 1960-73 Boston had the highest consumption, 301 pounds per capita per year. Connecticut was second with 280 pounds

2 THE MARKET ADMINISTRATOR'S BULLETIN

and New York-New Jersey third with 266 pounds. The other New York markets, Niagara Frontier and Rochester , were lower. The Middle Atlantic area was lowest.

For the lowfat products for the period 1960-73 , Rochester and Niagara Frontier stand out with the highest per capita consumption, 39 and 30 pounds respectively. For the other markets con-sumption averaged 23 pounds.

During the period 1960-73 there was an unin-terrupted decline in consumption of fluid milk. The decline for a ll markets combined averaged 72 pounds per capita. During the same period each market showed marked increases in consumption of lowfat fluid milk products. The gain averaged 23 pounds per capita. The rise in lowfat products was not large enough to offset the decline in milk. There was a net reduc tion of 49 pounds per capita in the consumption of fluid milk and lowfat fluid milk products. The increase in lowfat products off-set only 32 percent of the decline in fluid milk on a pounds of product basis.

From 1960 to 1973, the average per capita con-sumption of fluid milk and lowfat fluid products fell from 305 to 256 pounds, a decline of 16.4 per-cent. Due to the increased use of lowfat products and the standardization of milk, the butterf at con-tent of these products declined 25.9 percent. The solids not fa t content, however, declined only 14.8 percent.

Since the changes in consumption of the two components of milk in fluid products were so dif-ferent, any meaningful comparison with consump-tion of m anufactured products must be made on a fat and solids not fat basis.

Some manufactured dairy products are produced relatively close to where they are consumed shortly after production. These products include ice cream and other frozen dairy desserts, cottage cheese, soft Italian cheese and yogurt. The production of these products in the Northeast is also a measure of the consumption in the area.

The per capita consumption of butterfat in Class I products in the Northeast rose to a record high in 1945. Since then the trend has been downward , declining from ] 2.5 to 8.0 pounds in 1973. On the other hand the consumption of butterfat in the form of these se lec ted manufactured dairy products rose from 2 .6 to 3.4 pounds.

The per capita consumption of solids not fa t in fluid milk products also reached a peak in 1945 .

Since then the trend has been downward, dec lin-ing from 29. 0 to 22.5 pounds in ] 973. At the same time the consumption of so lids not fat in the se-lec ted manufac tured products rose from 2.8 to 4.7 pound s. The consumption of butter fa t and so lids not fat in the selected manufactured products in C lass II has risen in relation to the consumption in fluid milk products included in Class I.

With the present pricing system the difference between Class I and Class II prices is at tributable a lmost entirely to the skim value in Class I. The butterfat values in Class I and Class II are similar. It makes little difference in returns to producers if butterfat is consumed in a product included in Class I as contrasted with one included in Class II. On the other hand returns to producers are much higher if solids not fat are consumed in a product included in Class I , compared with one in C lass II .

Resen'e M ilk

Handlers purchase more milk from producers than they sell as fluid milk and lowfat fluid milk products included in Class J. The difference be-tween the two is known as reserve milk . It is aJl the milk that did not return to producers the Class I price. It is used in making a variety of dairy prod-ucts and consumed in the form of fluid cream, ice cream, butter, cheese, cottage cheese, condensed milk, evaporated milk, dried milk and yogurt.

Cream consumption declined drastica lly during World War II with the restriction on its sa le, and it never fully recovered. Tn the last decade the wide-spread use of coffee whiteners and cream substi-tutes made from vegetable fat have curtailed its use. Cream consumption in recent yea rs was the lowest on record.

Ice cream and other frozen dairy desserts, cot-tage cheese, soft Italian cheese and yogurt a rc perishable dairy products made from reserve milk . There was a steady upward trend in their produc-,tion that was only temporari ly interrupted during World War II. In recent years their production re-quired about 5.0 billion pounds per year. Produc-tion of these products in the Northeast is also a measure of their consumpt ion in the area.

Butter, hard cheeses, condensed and evaporated milk case goods and dried milk are nonperishable dairy products made from reserve milk. The vol-ume of milk utilized in these prod ucts expands rap-idly when the volume of reserve milk increases and contracts rapidly when the volume of reserve milk

MILK: SUPPL Y-CONSUMPTION-RESERVE 3

declines . In the last decade the vo lume of milk util-ized in the production of nonperishable dairy prod-ucts averaged 3.6 bill ion pou nds per year but fluc -tuated between a low of 3.0 and a high of 3.8 bil-lion pounds. Large quantities of these products consumed in the N ortheast are shipped in to the area from other sections of the country . Northeast prod uction is not a measure of Northeast consump-tion.

fn NewYorkState the p roductio n of the no nper-ishable manufactured products greatly exceeded the production of the perishable products. J n the rest o f the Northeast, the relationship was reversed.

In the seventies the production of manufactured dairy products in New Yo rk State (milk equiva-len t) averaged 38 percent as la rge as the sales of milk by producers. This was abo ut the same rela-tionship as existed in the earl y forties . In the rest of the Northeast, the production of manufactured products (milk equ ivalent) was lower in relation to sales of milk by producers than in New York.

At various times a considerable proportion of the butterfat content of the ice cream made in New York State was derived from milk produced out-side the Northeast. Butter and impo rted butterfat have been used. Significant propor tions of the solids not fat in N ew York ice cream are derived from dry milk products produced outside the Northeast.

At one time large qu antities of midwestern cream were utili zed for both fluid cream and ice

cream in the Northeast . The Northeast use of mid-western cream reached a record high in 1946. Since then it has declined ancl by the late fifties was of m inor importance.

InterreIationships-Supply, Consumption and Reserve

T he total marketings of milk by producers in the Northeast is a measure of the supply for North-eastern markets. Marketings showed a significant upward trend from the mid-twe nties to the mid-si xties. Since 1966 there was a marked decl ine, the largest on record .

Unt il the mid-sixties the long time trend in con-sumption was upward. M any of the mi nor declines in per capita consum ption were offset by the growth of populat ion. Since 1965, however, the trend in total consumption was downward.

The vol ume of reserve milk averaged four bil-lion pounds per year in the late twenties and nearly ten billion in the middle sixties. The volume of reserve mi lk in the early seventies was not far be-low the peak.

In most years the consumption of fluid m il k var ied between 60 and 70 percent of the supply. In recent years consumption as a percentage of supply was rela tive ly low.

In most years the volu me of reserve milk was between 40 and 65 percent as large as the volume of milk consumed as fluid mi lk . I n the last decade the volume of reserve milk was relatively high.

TI. INTRODUCTION In establishing prices to be paid producers for

milk, the Secretary of Agriculture is authorized to " ... fix such prices as he finds will . . . insure a sufficient quantity of ... milk and be in the public interest ... " Supply, consumption and reserve milk are the heart of the price problem.

Public regulation of prices to be paid producers for mil k started in the nineteen thirties. In the earlier years in the Northeast, the regulated mar-kets were primarily the large cities, Boston, New York and Philadelphia. The State of New York regulated prices in Buffa lo and R ochester. Differ-ent formulae were used for determining prices of Class I milk as well as prices of reserve milk. With the markets segregated from each other and dif-ferent pricing formulae , a basis existed for studies of individual markets.

In the fifties public regulation of m ilk prices was extended. By the early sixties the regulated areas extended from New Ham pshire, Lake Cham-plain and Lake Ontario to the Rappahannock River in Northern Vi rginia. J n the late sixties fed-

4

eral regulation was inaugurated in Western Penn-sy lvania with the Eastern Ohio-Western Pennsyl-vania Order. The regulated area includes parts of Ohio, Pennsylvania and West Virginia. It extends from Lake Erie to the Appalachian Mountains in West Virginia .

As a result of technological improvements in the assembly and distri bu tion of m il k and court de-cisions which restricted certain pricing provisions of orders, the Class I and reserve milk prices are now highly coordinated . In fact the same basic formula is used in all orders for adjusting Cl ass I prices. With the similarity in the movement of Class prices, contiguous ma rk ting areas, overlap-ping mi lksheds and inte rmi ngling of prod ucers supplying the various Northeast m arkets, a com-prehens ive an alysis of su pply and reserve must include all the markets in the Northeast.'

'In Ihis anal ysis the North east includes the six New England s lales, New York, New Jersey. Pennsylvania, Delaware, Maryland and the Dist rict of Columbia. The s ta tes outside the Northeas t include all other slates.

III. POPULATION With a product so widely consumed as milk, the

number of people in a market is a measure of its size and the number of potential consumers. The popula tion of the 5 milk markets in the Northeast that are under federal price regulation plus the 2 that are under N ew York State regulation totaled 52 million in 1973 , approximately 25 percent of the total population of the United States.

The smallest of these markets was R ochester, New York with a popUlation of about 702,000 while the largest was New York-New Jersey with a population nearly 30 times as great. The pop-ulation of these markets in 1973 , a rranged in order of size from low to high, is summarized in thou-sands as follows:

Market

Rochester

Niagara Frontier

Connecticut

Boston Regional East Ohio-West Pennsylvania Middle Atlantic

New York-New Jersey

Total

Population (000)

702 1,282

3,072

7 ,273

8,359 10,973

20,659

52,320

The New York-New Jersey market often is re-ferred to as the largest in the country. However, little reference is made to the size of the surround-ing markets. T he two New England Orders, Con-necticut and Boston R egional , have a combin"d popula tion about half as large as New York . T he Midd le A tlantic O rder has a population a litt le over half as large as New York. In add ition the markets to the west , i.e ., the Eastern Ohio-West-ern Pennsylvania Order, Niagara Frontier and Rochester have a combined population about half as large as New York-New Jersey . The surrounding markets have a combined populat ion 50 percent larger than ew York-New Jersey.

Changes in Population 1960.732

The Boston R egional and M iddle A tla ntic Or-ders have been in effect for only a few years. In order to com pare the growth of population in these marketing areas with the other Northeast markets the population of each marketing area as defined

5

in 1973 was calculated for each year 1960-73 (table 1, figure 1).

In 1960 the population of the present M iddle Atlantic marketing area was 9,077,000, as con-trasted wi th 10,973,000 in 1973. This was a gain of 20.9 percent, the largest for any of the markets. The combined population of the Boston R egional and Connecticut Orders rose 17.0 percent, and showed the second largest gain. The Eastern Ohio-Western Pennsylvania area gained the least, 4 .5 percent. The percentage gains in popula tion from 1960 to 1973 for the various markets, arranged in order from low to high, are summarized as follows:

Market Percentage gain 1960-73

Eastern Ohio-Western Penn syl va nia 4.5 N iagara Frontier and Rochester 8.4 New York-New Jersey 12.5 Boston Regio nal and Connect icut 17.0 Middle Allantic 20.9 All areas combined 13.5

T he gain for New York-New Jersey of 12 .5 per-cent was just a litt le less than the gain for all mar-kets combined. When the popu la tio n of one mar-ket rises in relation to an adjacent, or nearby mar-ket, there is a tendency for milk producers or milk plants to shift to the market with the most rapid growth.

Changes in Marketing Areas During the period 1960 to 1973, the market-

ing areas under the New York-New Jersey, Con-necticut , Niagara F rontier and R ochester Orders were unchanged. Tn contrast the present B oston R egional, M idd le Atlantic and Eastern O hio-West-ern Pennsylvania Orders resulted from the com-bination of several orders together with expansions of the geographic areas under regulation. Over the years technological developments as well as mar-keting developments affecting the assembly and

2 The method used to es tima te the annual population of mar-keting areas is set forth in the New York-New Jersey Market Admi nistrator's Bulletin , entitled Consumption of Fluid Milk and Lowfat F luid Milk Products in the New York-New Je rsey Milk Marketing Area, September 1973, appendix A, pages 33-3 5. The method of adjusting for the farm popu-lation is also shown.

6 TH E M ARKET ADMI NISTRATOR'S BULLETIN

TABLE I. POPULATION OF NORTHEAST MILK MA RKETING AREAS 1 JULY 1, 1960-73

Boston i iagara East Year New York- and Middle Frontier Ohio- Total New Jersey Connecticu t 2 Atlantic and West Rochester 3 Penn.

Thousands

1960 18,361 8,840 9,077 1,831 8,000 46,109 1961 18,825 8,954 9,256 1,855 8,051 46,941 1962 19,182 9,086 9,409 1,882 8,049 47 ,608 1963 19,360 9,268 9,641 1,899 8,077 48,245

1964 19,508 9,465 9,846 1,913 8,129 48,861 1965 19,720 9,600 10,040 1.929 8.197 49,486 1966 19,882 9,695 10, 194 1,940 8,246 49 ,957 1967 20,023 9,814 10,3 16 1.950 8,272 50,375 1968 20,186 9,894 10,435 1,963 8,3 13 50,791 1969 20,305 9,988 10.528 1,968 8,308 51 ,097 1970 20,514 10,114 10,668 1,984 8,366 51 ,646 1971 20,677 10,230 [0,825 1,994 8,397 52,123 1972 20,730 10,304 10,918 1,995 8,378 52,325 1973 20,659 10,345 10,973 1,984 8,35 9 52,320

Indexes 1960 == 100

1960 100.0 100.0 100.0 100.0 100.0 100.0 1961 102.5 101.3 102.0 101.3 100.6 101.8 1062 104.5 102.8 103.7 102.8 100.6 103 3 1963 105.4 104.8 106.2 103.7 101.0 104.6 1964 106.2 107.1 1085 104 .5 101.6 106.0 1965 107.4 108.6 110.6 105.4 102.5 107.3 1966 108.3 109.7 112.3 106.0 103. 1 108.3 1967 109.1 111 .0 113.6 106.5 103.4 109.3 1968 109.9 11 1.9 115.0 107.2 103.9 110.2 1969 110.6 113.0 116.0 107.5 103.9 1108 1970 111.7 114.4 117.5 108.4 104.6 112.0 1971 112.6 115.7 1 193 108.9 105.0 113.0 1972 11 2.9 116.6 1203 109.0 104.7 113.5 1973 112.5 117.0 1209 108.4 1045 113.5

I Areas as defined in 1973. Exclusive of population on farms where cows were kept. o Boston Regional Order and Connecticut. 3 Orders established by the New York State Department of Agriculture an cl Markets.

distribution of mil k made some of the older mar-keting area boundaries obsolete.

The marketing area of the pre sent Boston Re-gional Order inc ludes the areas formerly regulated under the Boston, Me rrimack Valley, Southeastern New England, Springfield and Worcester Orders plus a geographic extension of the area in M as-sachusetts and an eXtension into Southern New H ampshire and Southeastern Vermont.

The Middle Atlantic Order marke ti ng area in-cludes the marketing areas of the form er Wi lming-ton, Philadelphia, Upper Chesapeake Bay and Washington O rders plus add itional territories in South Jersey, Delaware and Northern Virginia.

The Eastern O hio-Western Pennsylvania mar-keting area includes the marketing areas of the former Northeastern O hio, Youngstown-Warren, Wheeling and Clarksburg Orders. In addition there was an expansion into Western Pennsylvania which included the important cities of E rie and Pitts-burgh together with the geographic area in be-tween.

Thus, for the Boston, Middle A tlantic and East-ern Ohio-Wes tern P ennsylvania O rders, the regu-lated area varied from year to year as orders were consolidated and enlargements made. Annual es-timates were made of the population in the mar-keting areas actually under regulation each year.

MILK: SUPPLY-CONSUMPTIO -RESERVE

POPULATION OF NORTHEAST MILK MARKETING AREAS (Areas as defined in 1973)

%of1960 ----------------~--------------------~------------------~

120

.' .'

.. ' .-......... \ ••••••• Middle Atlantic

.. .. .". ... .,..-' .- .",,' 115 r-__________________ 4-__________ ~~ •• -•• -•• -a.-.--~~~-~-''\------------~ .. . ' .. ~.

.. ... .. .' ..... .'

.'

" " "

"" '\ ~.,., New York-New Jersey 1 10~--------------~~~~--~~~----~--------------~

............ .. " ..... ~ ..... . .............. , .......

••••••••••••• Niagara Fron tier and Rochester .....

105~----~~~~~~----------------~--------=_=_------~ --..... --- '\ ",

--_ .. ..--.". ...... East Ohio-West Pennsylvania

100 ~~ __ ~ __ L-~ __ -L __ ~~ __ _L __ ~~L__L __ ~ __ L_~ __ ~ 1960 1965 1970 1975

FIGURE 1. The population of the Middle Atlantic area increased the most and Eastern Ohio·Western Pennsyl· van ia the least. New York·New Jersey was about midway between the two.

7

These estimates were used to determine per capita mi lk supplies and per capita consumption from the data reported by the Market Administrators for the regulated areas.

percent from 1960 to 1973. The population of the marketing area actually under regulation rose 46.3 percent (table 2).

From J 960 to 1973 the population of the mar-keting area under the Boston Regional Order as defined in 1973 expanded 15.3 percent. However, the population of the combined marketing areas actu ally under regu lation expanded 41.4 percent (table 2).

For the Middle Atlantic Order the population of the marketing area as defined in 1973 rose 20.9

F rom 1960 to 1973 the population of the mar-keting area of the E astern Ohio-Western Pennsyl-vania as defined in 1973 rose 4.5 percent. How-ever, the population of the area actually under reg-ulation rose 153.9 percent (table 2) . Thus the re were marked differences in the growth of popula-tion for the marketing areas a defined in 1973 as contrasted with the change in population for the areas ac tually regulated.

8 THE MARKET ADMINISTRATOR'S BULLETIN

TABLE 2. POPULATION OF BOSTON REGIONAL, MIDDLE ATLANTIC AND EAST OHIO-WEST PENNSYLVANJA MAR KETING AREAS AS DEFINED IN 1973 AND POPULATION OF MARK ETING AREAS IN PREDECESSOR

ORDERS 1960-73

Boston Regional Middle Atlantic East Ohio-West Penn.

Year Area

I Area Area

I Area Area

I Area

defined regu- defined regu- defined regu-1973 lated 1 1973 lated 2 1973 lated 3

Thousands

1960 6,310 5,145 9,077 7,502 8,000 3,292 1961 6,381 5,496 9,256 7,634 8,051 3,541 1962 6,452 5,544 9,409 7,753 8,049 3,861 1963 6,553 5,616 9,641 8,066 8,077 3,875 1964 6,678 5,714 9,846 9,656 8,129 3,903 1965 6,753 5,766 10,040 9,847 8,197 3,944 1966 6,801 5,797 10, 194 9,998 8,246 3,984 1967 6,887 5,906 10,316 10,117 8,272 4,009 1968 6,937 6,578 10,435 10,230 8,313 5,906 1969 6.995 6,629 10,528 10,321 8,308 7,922 1970 7,081 6,827 10,668 10,546 8,366 8,133 1971 7,167 7,076 10,825 10,825 8,397 8,397 1972 7,229 7,229 10,918 10,918 8,378 8,378 1973 7,273 7,273 10,973 10,973 8,359 8,359

Index numbers 1960=100

1960 100.0 100.0 100.0 100.0 100.0 100.0 1961 101.1 1068 102.0 101.8 100.6 107.6 1962 102.3 107.8 103.7 103.3 100.6 117.3 1963 103.9 109.2 106.2 107.5 1Ol.0 117.7 1964 105.8 111.1 108.5 128.7 101.6 118.6 1965 107.0 112.1 110.6 131.3 102.5 119.8 1966 107.8 112.7 112.3 1'33.3 103.1 121.0 1967 109.1 114.8 113 .6 134.9 103.4 121.8 1968 109.9 127.9 115.0 136.4 103.9 179.4 1969 110.9 128.8 116.0 137.6 103.8 240.6 1970 112.2 132.7 117.5 140.6 104.6 247 .1 1971 113.6 137.5 119.3 144.3 105.0 255.1 1972 114.6 140.5 120.3 145.5 104.7 254.5 1973 115.3 141.4 120.9 146.3 104.5 253.9

1 Area regulated under predecessor orders plus expansions of Boston Regional marketing area. 2 Area regulated under predecessor orders plus expansions of Middle Atlantic marketing area. 3 Area regulated under predecessor orders plus expansion of Eastern Ohio-Western Pennsylvania

marketing area.

IV. MILK SUPPLIES-RECEIPTS OF MILK FROM PRODUCERS

The receipts of milk from producers by the han-dlers regulated under an order is a readily avail-able measu re of the milk supply regularly asso-ciated with the market. While handlers under an order can obtain milk from other sources, usu ally from handlers under other orders, the receipts of mi lk from producers is by far the major, most consistent and readily available source of supply for the market.

In 1960 under the New York-New Jersey order, receipts of milk from producers were 10.6 billion pounds. During the early sixties receipts increased each year and reached an all-time high in 1965, when they were 10.5 percent larger than in 1960. Although there were marked differences between the markets in the percentage of receipts assigned to Class I , all the markets shared in the increased marketings by producers (table 3, figure 2) .

The idea is sometimes expressed that when milk production expands, the increased volume tends to flow to the markets with the least stringent pooling requirements. Whil e there were marked differences in the Northeast orders in pooling requirements there was a high degree of similarity in the per-centage gains in producer receipts during the early sixties. F or all markets combined the ga in was 11.5 percent. The Middle Atlantic had the largest gain , 14.8 percent. During this period the area under regulation was increased so that part of this gain was due to the expansion. Connecticut had the smallest gain; New York-New Jersey, Boston, Ni-agara Frontier and Rochester had similar percent-age increases. The volume of receipts in 1960 and 1965 for each of the markets , in million pounds, and the percentage increase are summarized as fo llows:

Percent 1960 1965 increase

New York-New Jersey 10,646 11,764 10.5 Connecticut 1,020 1,102 8.0 Boston 2,95 1 3,320 12.5 Middle Atlantic 3,269 3,754 14.8 Niagara F rontie r and

Rochester 1,121 1,258 12.2 - -Total 19,007 2[ , 198 11.5

9

Similarities of the early sixties gave way to strik-ing dissimi larities in the late sixties and early seventies. Foremost, the combined receipts at all markets declined 7.9 percent from 1965 to 1973; two showed phenomenal increases, two phenom-enal decreases and one no change. With the decline in milk production , receipts at the markets with the largest reserves declined most. The volume of receipts in 1965 and in 1973 for each of the mar-kets, in million pounds, together with the percent-age changes are summarized as follows:

Percent 1965 1973 change

New York-New Jersey 11,764 9,364 -20.4 Connecticut 1,102 1,290 +17.1 Boston 3,320 3,321 0.0 Middle Atlantic 3,754 4,520 +20.4 Niagara Frontier and

Rochester 1,258 1,024 -18.6

Total 21,1 98 19,519 - 7.9

When a market shows a marked increase in re-ceipts from producers at the same time that -total milk production in the area is decl ining, it is an indication of a shifting of su pplies from one mar-ket to another.

Producer Receipts Per Capita T he relative size of regulated markets ofte n is

measured by the volume of producer receipts. A large proportion of the variation between markets is related directly to the population of the market-ing area.

For example in 1973 , producer receipts under the New York-New Jersey Order were nearly th ree times as large as under the Boston R egional Order. H owever, the per capita receipts (based on the population of the respective marketing areas ) were 453 pounds for New York and 457 pounds for Boston ( table 4). On a per capita basis Boston was slightly larger than New York. T he drastic changes in producer receipts since the mid-sixties combined with the changes in population make per capita receipts more significant than to tal receipts.

During the 14-year period 1960-73 receipts un-der the Niagara and Rochester Orders averaged

10 TH E MARKET ADMINISTRATOR'S BUL LETIN

TABLE 3. RECEIPTS OF MILK FROM PRODUCERS NORTH EAST MARKETS 1960-73

Niagara East Total

Year New York- Connecti- Boston Middle Frontier Ohio- Including I Excluding New Jersey cut Regional ' Atlantic 2 and West E. Ohio- E.Ohio-Rochester Penn . W. Penn. W . Penn.

Million pounds

1960 10,646 1,020 2,951 3,269 1,121 19,007 1961 11 ,096 1,062 3,162 3,457 1,184 19,961 1962 11,370 1,040 3,242 3,481 1,226 20,359 1963 11,517 1,061 3,243 3,536 1,243 20,600 1964 11,635 1,110 3,260 3,742 1,255 21,002 1965 11,764 1,102 3,320 3,754 1,258 21,198 1966 11,275 1,093 3,204 3,734 1,155 20,461 1967 10,741 1, 140 3,219 3,837 1,131 20,068 1968 10,086 1, 143 3,447 4,226 1,089 19,991 1969 10,332 1,161 3,569 4,424 993 3,336 23,815 20,479 1970 10,300 1,186 3,617 4,501 ) ,017 3,426 24,047 20,621 1971 10,280 1,383 3,551 4,506 1,039 3,3 59 24, 118 20,759 1972 10,067 1,351 3,529 4,474 1,060 3,315 23 ,796 20,481 1973 9,364 1,290 3,321 4,520 1,024 3,098 22,617 19,519

Indexes 1960 = 100

1960 100.0 100.0 100.0 100.0 100.0 100.0 1961 104.2 104.1 107.2 105.8 105.6 105.0 1962 106.8 102.0 109.9 106.5 109.4 107.1 1963 108.2 104.0 109.9 108.2 110.9 108.4 1964 109.3 108.8 110.5 11 4.5 112.0 ! 10.5 1965 110.5 108.0 112.5 114.8 112.2 111.5 1966 105.9 107.2 108.6 114.2 103.0 107.6 1967 100.9 111.8 109.1 117.4 100.9 105.6 1968 94.7 112.1 116.8 129.3 97.1 105.2 1969 97.1 113.8 J20 .9 135.3 88.6 107.7 1970 96.7 116.3 122.6 137.7 90.7 108.5 1971 96.6 135.6 120.3 137.8 92.7 109.2 1972 94.6 132.5 119.6 136.9 94.6 107.8 1973 88.0 126.5 112.5 138.3 91.3 102.7

I Predecessor orders prior to promulgation of the Boston Regional Order. 2 Predecessor orders prior to promulgation of the Middle Atlantic Order.

584 pounds per capita. This was 41 pounds more than New York-New Jersey which generally is considered to be the market with an unusually large volume of reserve mi lk. Oddly, during this period the per capita receipts under the Boston R egional and predecessor orders were nearly the same as New York-New Jersey. In striking con-trast the Middle Atlantic and Connecticut O rders had a much lower volume of receipts, a little over 400 pounds per capita or about 75 percent as large as ew York-New Jersey and Boston. F or the last five years Eastern Ohio-Western Pennsyl-vania had a somewhat lower level of per capita re-ceipts than Connecticut, the lowest of the markets along the Atlantic seaboard.

A verage receipts for the 14 years 1960-73 are summarized on a per cap ita basis, ranged in de-scending order of magnitude, as follows:

Market

Niagara Frontier a nd Rochester

New York-New Jersey

Boston Regional

M iddle Atlantic

Connecticut

East Ohio-West Pennsylvania (69-73 )

Pounds

584

543

542

415

402

402

From a supply point of view it is not only the average level of per capita receipts that is impor-tant but also the changes that have occu rred. Dur-

MILK: SUPPLY -CONSUMPTION-R ESERV E 11

RECEIPTS OF MILK FROM PRODUCERS NORTHEAST MARKETS

%of 1960----------------,-------------------.-------------------~

140 r---------------~--------------~------------~ .. -------_ .... Middle Atlantic ",-

\. ~' j ...... , I"', ,," I', , ",,

"

l " Connecticut 120r---------------~------~----~·~··~··-··~·~~·~···~--~------~

00 I 0 ,.1 •••• • •• ~

r-- -----,,' ..•. -_...... ... .. _ Boston -" '0. .:........... . ••• ,..,;-;tI'" . .. ~ .. " ~-=-~=:::: ... :;~ " ......... ... .., ~ "

•• ~; -,III' ~ ........................ "

1 00 ~-------------l----....:::::!!--- New York- New Jersey .---------1 :-.., ".,--4--__ L

" /,',,,-,,

Niagara Frontier and Rochester

80L-~ __ -L __ ~ __ L_~ __ _L __ ~_L_~ __ _L __ ~ __ L_~ __ _L ___ 1960 1965 1970 1975

FIGURE 2. In the early sixlfes receipts at all markets increased by about the same amount. This was in marked contrast 10 the late sixlles when the Middle Atlantic and Connecticut receipts showed marked increases while New York·New Jersey and Niagara Frontier and Rochester declined.

ing the early sixties receip ts under the New York-New Jersey Order were re latively stable at a high level. This was in marked contrast to the late six-ties and early seventies, when the re was an almost uninterrupted decline, aggregating 23 percent. R e-ceipts under the Boston Regional Order decl ined 21 percent (table 4, figure 3).

The average level of receipts per capita in the early sixties and in 1973 and the percentage ch ange are summarized as follows :

iagara Fro ntier a nd Rocheste r

N ew Yo rk-N ew Jersey

Bosto n Regio nal

M iddle Atl a ntic

Connecticut

All markets

Per capita receipts

Average 1960-65 197 3

644 516

592 453

576 457

424 412

398 420

54 1 444

Percent change

- 20 -23 - 21 - 3

+ 6 -18

The minor changes in per capita recei pts for the Middle Atlantic and Connecticut markets are in striking contrast to the d rastic declines for the other markets . The markets wi th the highest per capita receipts decl ined the most and those with low receipts declined the least. This is clearly por-trayed by comparing the markets with the highest and lowest receipts each year respective ly (table 5, figure 4 ) . For example, in 1965 the highest and lowest volume of receipts per capita were 597 and 381 pou nds respectively. The high exceeded the low by 216 pounds (table 5) . T his is in marked contrast to 1973 when the high exceeded the low by only 45 pounds.

In the last decade one of the outstanding mar-keting developments was the decreasing difference between the markets in the magnitude of per capi-ta rece ipts. This resulted primarily from a decline in receipts at markets with high receipts. There was no diminution in receipts in the markets with tra-di tionally low receipts per capita.

12

Year

1960 1961 1962 1963 1964 1965 1966

.1967 1968 1969 1970 1971 1972 1973

60-73 69-73

THE MARKET ADMINISTRATOR'S BULLETIN

TABLE 4. PER CAPITA RECEIPTS OF MILK FROM PRODUCERS NORTH EAST MARK ETS 1960-73

Niagara All marke ts

New York- Connecti- Boston M iddle East Ohio- Frontier Including I Excluding New Jersey cut Regional' A tlantic 2 West Penn. and Rochester E. Ohio- E. Ohio-W. Penn. W. Penn.

Pounds

580 403 573 436 612 538 589 413 575 453 638 549 593 395 585 449 651 550 595 391 578 438 655 547 596 398 571 387 656 531 597 387 576 381 652 529 567 377 553 374 596 505 536 389 545 379 580 490 500 387 524 413 555 477 509 388 538 429 421 505 475 485 502 391 530 427 421 513 471 481 497 452 502 416 400 521 464 476 486 439 488 410 396 531 455 466 453 420 457 412 371 516 432 444

Averages

543 402 542 415 584 505 489 418 503 419 402 517 459 470

1 Predecessor orders prior to promulgation of the Boston Regional Order. 2 Predecessor orders prior to promulgation of the M iddle Atlantic Order.

TABLE 5. PER CAPITA RECEIPTS OF MILK FROM PRO DUCERS, MARKETS WITH HIGHEST AN D LOWEST RECEIPTS 1960-73

(BASED ON FEDERALLY REG ULATED MARKETS)

Year I High Low I Difference I High Market l ow Market Pounds

1960 580 403 177 New York Connecticut 1961 589 413 176 N ew York Connecticut 1962 593 395 198 N ew York Connecticut 1963 595 391 204 N ew Y ork Connecticut 1964 596 387 209 N ew York M idd le A tl antic 1965 597 381 216 N ew Y ork Midd le Atlantic 1966 567 374 193 New York Middle Atlantic 1967 545 379 166 Boston Middle Atlantic 1968 524 387 137 Boston C onnecticut 1969 538 388 150 Boston Connecticut 1970 530 391 139 Boston C onnecticut 1971 502 416 86 Boston M iddle Atlantic 1972 488 410 78 Boston M iddle Atlantic 1973 457 412 45 Boston Middle Atlantic

MILK: SUPPLY-CONSUM PTrON-RESERVE 13

PER CAPITA RECEIPTS OF MILK FROM PRODUCERS NORTHEAST MARKETS

Pounds-------------------.------------------~------------------~ ............... -_ ......... . .... . .... . ...

•••••• \ Niagara Frontier and Rochester ..... ("

~- ....... 570 --_......... ..._-- --'. '. '. '. ". '. Boston ~ '. ....... . ...•. , .. ,.... ...

,,,~.... . ..... .. ... ..~........ ... ......... ~-,. ..... . ', .......

--", New York-New Jersey 470~----------------~----------------~------~~----~

Connecticut ~ •••• : ......

Middle Atlantic """, ... --- ... "" ••••••• " -,-. .... -. "., ..... .. - ~~ : -------;' / ... ft//I!.. .••.........•.....•

370L-~ __ -L __ ~ __ L-__ L-~_·_~-L __ ~ __ L-__ L-~ __ -L __ ~ __ ~~ 1960 1965 1970 1975

FIGURE 3. During the early sixties receipts for Niagara Frontier and Rochester. New York-New Jersey and Boston Regional Orders were stable at a high level and then declined sharply in the late sixties and early seventies. In contrast receipls under the Connecticut and Middle Atlantic Orders were relatively stable at a low level.

Relative Size T he New York-New Jersey market is the largest;

the other Northeast markets surround its milkshed. Some of the most significant changes in size as measured by producer receipts can be portrayed by expressing producer receipts under each orde r as a percentage of New York-New Jersey (table 6, figure 5).

In 1960 producer receipts under the New Eng-land orders totaled 4.0 billion pounds as contrasted with 10.6 bill ion for New York- ew Jersey. The New England receipts were 37.3 percent as large as New York. This relationship remained practi-cally unchanged through 1965. H owever , from 1965 to 1973, New England receipts rose in re-lation to New York and in 1973 reached an all-time high of 49.3 percent.

The relationship between Middle Atlantic and

New York-New Jersey producer receipts showed the same type of change. In 1960, the receipts of milk from producers under the orders that were combined to form the Middle Atlantic Order to-taled 3.3 billion pounds . They were 30.7 percent as large as New York. D uring the late sixties and early seventies, the receipts under the Middle At-lantic Order expanded almost without interruption while New York-New Jersey receipts declined. By 1973 Middle Atlantic receipts were 48 .3 percent as large as New York.

In 1973 the receipts of milk from producers under the Eastern Ohio-Western Pennsylvania , Ni-agara Frontier and Rochester Orders totaled 4.1 bil-lion pounds. They were 44.0 percent as large as New York. The markets surrounding the New York-New Jersey milkshed had receipts 40 per-cent larger than New York-New Jersey.

14 THE MARKET ADMINISTRATOR'S BULLETIN

PER CAPITA RECEIPTS OF MILK FROM PRODUCERS HIGH MARKET AND LOW MARKET

(Based on federallv regulated markets) Pounds------------------~._------~~~------~,_------------------_,

595r-~~~----~~------------1_------------1

520 ~---------------+----------~-----+~--------------~

445~----------------4------------------;----------------~

370 ~~ __ ~ __ ~ __ ~ __ ~~ __ ~ __ ~ __ ~ __ +_~~~--~--~~ 1960 1965 1970 1975

FIG URE 4. The high market was stable during the early sixties and then declined drast ically. The low market was relatively stable throughout the entire period.

The principal changes in producer receipts in the smaller markets expressed as a percentage of

New York-New Jersey are summarized for the three yea rs 1960, 1965 and 1973 as follows :

1960 1965

New England 37.3 37.6 Middle Atlantic 30.7 319 Niagara and Rochester 10.5 10.7 East Ohio-West Pa. 32.3 3

The general tendency since 1965 was for receipts at the markets tha t surround the New York-New Je rsey milkshed to expand in relation to New York.

3 D ata for 1969, first year order in effec t.

1973

49.3 48.3 10.9 33 .1

Ch ange percentage points 1960-65 1965-73

+0.3 + 11.7 +1.2 + 16.4 +0.2 + 0.2

+ 0.8

MILK: SUPPL Y -CONSUMPTION-RESERVE

TABLE 6. RECEIPTS OF MILK FROM PRODUCERS NORTHEAST MARKETS EXPRESSED AS A PERCENTAGE OF NEW YORK-NEW JERSEY RECEIPTS

1960-73 ,

Total Niagara Year New York- Connecti- Boston New Middle E.Ohio- Frontier New Jersey cut Regional' England Atlantic 2 W. Penn. and

Rochester

:Percent

1960 100.0 9.6 27.7 37.3 30.7 10.5 1961 100.0 9.6 28 .5 38.1 31.2 10.7 1962 100.0 9.1 28 .5 37.6 30.6 10.8 1963 100.0 9.2 28.2 37.4 30.7 10.8 1964 100.0 9.5 28.0 37 .5 32.2 10.8 1965 100.0 9.4 28.2 37.6 31.9 10.7 1966 100.0 9.7 28.4 38.1 33.1 10.2 1967 . 100.0 10.6 30.0 40.6 35.7 10.5 1968 100.0 11.3 34.2 45.5 41.9 10.8 1969 100.0 11.2 34.5 45.7 42.8 32.3 9.6 1970 100.0 11.5 . 35.1 46.6 43.7 33 .3 9.9 1971 100.0 13.5 34.5 48 .0 43 .8 32.7 10.1 1972 100.0 13.4 35.1 48.5 44.4 32.9 10.5 1973 100.0 13.8 35.5 49 .3 48 .3 33.1 10.9

, Predecessor orders prior to promulgation of the Boston Regional Order. 2 Predecessor orders prior to promulgat ion of the Middle Atlantic Order.

MILK RECEIPTS FROM PRODUCERS NORTHEAST MARKETS

% of N Y N J ew ork- ew ersey

50 -Boston and Connecticut ...... ~ " /, - -,'-... _ .. -_ .... -.......... ----... t-~............ J

il.... . .....

../ / East Ohio-West Penn ., ;/ Niagara Frontier and Rochester

40

" .,.~ " 30

... ---- ~- ... t ~----------~~ Middle Atlantic

20 1960

I I I I I

1965 I I I I I I

1970 I

1975

FIGURE 5. Since the middle sixties receipts under the New England and Middle Atlantic Orders rose in relation to New York.

15

16 THE M ARKET ADMINISTRATOR'S BULLETIN

Supply Area The Northeast markets obtain supplies from a

more or less common supply area, the 11 North-east states north of the Potomac River. Each mar-ket competes with New York-New Jersey. New York handlers do not obtain milk from New Eng-land producers but New England handlers obtain relatively large quantities from New York produ-cers. In certain areas in eastern New York there is an intermingling of producers supplying the Bos-ton Regional, Connecticut and New York-New Jer-sey Orders. In eastern Pennsylvania there is an in-termingling of producers supplying the Middle At-lantic and New York-New Jersey markets. In west-ern Pennsylvania and western New York there is an intermingling of producers supplying the East-ern Ohio-Western Pennsylvania and New York-New Jersey markets. In western New York there

is also an intermingling of producers supplying the Niagara Frontier, Rochester and New York-New Jersey markets (table 7).

The Boston Regional, Connecticut, New York-New Jersey , Niagara Frontier and Rochester Or-ders obtain their entire producer receipts from the 11 Northeastern States. In December 1972 the Middle Atlantic Order had 86 percent of its re-ceipts from the Northeast and 14 percent from Virginia and West Virginia . During the same month Eastern Oh io-Western Pennsylvania produ-cer receipts were 42 percent from the Northeast with the balance primarily from midwestern states.

For all markets combined practically 90 per-cent of the receipts were from the Northeast. Each of the markets had receipts from New York pro-ducers (table 7).

TABLE 7. VOLUME OF MILK RECEIVED FROM PRODUCERS NORTHEAST REGULATED MARKETS, CLASSIFIED BY STATE OF RESIDENCE OF

PRODUCER AND MARKET SERVED DECEMBER 1972

State

Northeast Maine N.H. Vt. Mass. R.I. Conn. N.Y. Pa. N.I. Dei. Md.

Total

Other States V a. W.Va. Ohio M ic h. Ind. Wis.

Total

G rand Total

Market

New York- I Boston I connecti- I Middle I Rochester I Niagara I E. OhiO- [ Total New Jersey cut AtlantIC FrontIer W. Penn.

0.1

555.3 178.3 26.8

0.7 761.2

761.2

20.6 23 .8

132.5 30.6

5.0 4.5

55.7

272.7

272.7

0.8 10.0 13.9

0.2 45.5 44.1

114.5

114.5

Million pounds

0.6 187.9

20.4 10.4

116.0 335.3

49.0 6.7

55.7

391.0

27.8

27. 8

27.8

20.6 24.6

142.6 44 .5

5.2 50.0

58.7 7.5 749.7 95.3 461.5

47.2 10.4

3.2 119.9 58.7 106.0 1,676.2

49 .0 6.7 13 .4

134.6 134 .6 0.5 0.5 3.3 3.3 1.5 J.5

146.6 202. 3

58.7 252.6 1,878 .5

MILK: SUPPLY-CO SUMPTION -RESERVE 17

Receipts Assigned to Class I

With the drastic decline in receipts of milk from producers as shown in the preceding section, one would think there wou ld be comparable increases in the percentage of Class I mil k.

The first point that stands out in comparing the markets on the basis of pe rce ntage of Class I is the marked differences together with the fact that the markets with the high percentages conti nued at a relatively high level throughout the entire period 1960-73, and , conversely, the markets with a rel-atively low percentage were always low (table 8, figure 6).

For the 14-year period 1960-73, the Connecti-cu t C lass I percentage ave raged 77 .6, the highest for any of the orders. The correspond ing percen t-age for ew York-New Jersey was 50.9; this was the lowest of the federall y regu lated markets. T he New York State Orders of Rochester and Niagara Frontier had lower Class T percentages tha n New York-New Jersey.

I t is interes ting to note that even though the East Ohio-West Pennsylvania and Middle Atlan tic Or-ders are widely separated geographica lly, they had approximately the same percentage of Class I milk . This was in stri king cOntras t to the relati onship among the contiguous markets where there were marked d ifferences .

For ew York-New Jersey the lowest percent-age was 48.7 in 1962 and the highest was 54.1 in 1969. T he tot al range fro m high to low was only 5.4 percentage points. T he Boston percentage was always higher than New York, b ut the range be-tween high and low of 6.3 percentage points was sim ilar to New York .

The average percentage of Class I milk for the period 1960-73 for the ind iv idual marke ts and the range fro m high to low are summarized as follows, with the markets arranged in decreasing order of the magnitude of the C lass 1 percentage:

Percentage of Class I

Av . Difler-Mark et 60-73 High Low ence

Connecticut 77.6 81.7 73.1 8.6

M iddle Atlantic 70.2 77.6 63.5 14.1

Boston 60.5 63.5 57.2 6.3 New York-New Jersey 50.9 54.1 48.7 5.4

Rochester 50.5 56.2 45.3 10.9

Niagara Frontier 45 .7 52.4 40 .8 11.6

6 markets combined 57.4 59.8 55.1 4.7

The Middle Atlantic Order and the combined predecessor orders stand out as showing the most va riation in Class I percentage. In the early sixties it averaged 70.3 percent, increased to a peak of 77.6 in 1966 and declined to 63.5 in 1972.

For the six markets combined , the percentage of C lass I was very st able, fluctuating between 59 .8 and 55 .1.

Except for the New York State Ord rs, Niagara Frontier and Roc hester , there was li tt le tendency in any of the federally regulated marke ts for the percentage of Class I to increase or decrease con-sisten tly . This can be shown by comparing the Class I percentage for the early years with the most recent.

Percent Class I

Market 60-61 avo 72-73 avo Change

Connecticut 78.2 74.8 -3.4 M idd le Atlantic 71.0 64.0 -7.0 Bos ton 61.9 61.3 -0.6 New Yo rk-New Jersey 50.4 52.0 +1.6 R ochester 47.8 55.8 +8 .0 Niaga ra Frontier 46.4 49.4 +3 .0 6 markets combined 57.0 57.8 +0.8

The Connecticut and M iddle Atlantic Orders had a lower percentage of Class I in recent years than in the ea rly sixties. Boston and New Y ork showed little net change. On the o ther hand Rochester and iaga ra had distinctly higher per-centages o f Class I in recent years than in the early sixties.

T he relatively wide range in the percentage of Class 1 for the M iddle A tlantic Order and the large decline in the percentage of Class I from the early si xties to the early seventies was probably due to the changes in the type of pooling. For the earl ier years the data for the Midd le A tlan tic Or-der a re a combination of the data for the Philadel-phia, Wil mi ngton , Wash ington and Upper Chesa-peake Bay Orders. In the early sixties the Wilming-ton and Philadelphia Orders were ind ividu al han-dIer pool orders. Such pools generally have a high-er average of percentage of Class I than nearby market pools . Fu rthe rmore, the combined receipts fo r P hilade lphia and Wilmington were larger than for Washington and Upper Chesapeake B ay which had marketwide pools . I t was not unlil June 1, 1967 tha t the Delaware Valley Order, which was a com bination of Philadelph ia and Wilmington, had a marketwide pool.

18 THE MARKET ADMI ISTRATOR'S BULLETIN

TABLE 8. PERCENTAGE OF PRODUCER RECEIPTS ASSIGNED TO CLASS I NORT H EAST MARKETS 1960-73

All

New York- Connecti- Boston Middle Niagara E . Ohio-markets

Year New Jersey cut Regional Atlantic Rochester Frontier w. Penn. except E . Ohio-w. Penn.

1960 51.7 79.4 63.5 71.8 48.7 48.5 58.3 1961 49.1 77.0 60.3 70.1 46.8 44.2 55.8

1962 48.7 77 .3 60.3 68.9 45.3 42.5 55.1 1963 49.1 80.9 60.4 71.5 46 .2 41.9 56.0 1964 49.1 795 59.7 759 46.4 408 56.7 1965 48 .7 79.1 60.1 76.5 47 .1 41.0 56.6 1966 50.2 81.7 61.2 77.6 51.1 44.0 58.3 1967 49.8 78.8 60.8 75.9 49.6 43.4 57.9 1968 53.5 78.8 62.3 71.5 50.7 43.8 59.8

1969 54.1 76.4 60.2 67.1 50.7 47 .1 68.4 59.0 1970 52.9 75.4 58.9 65.0 56.2 52.4 65.2 57.9 1971 51.6 73.1 57.2 63.6 56.0 51.4 64.4 56.7

1972 50.7 73.8 59.6 63.5 55.7 49.5 64.8 56.6

1973 53.4 75.8 63.0 64.5 56.0 49.4 66.3 59.0

Average

60-73 50.9 77.6 60.5 70.2 50.5 45.7 57.4 69-73 52.5 74.9 598 64.7 54.9 50.0 65.8 57.8

PERCENTAGE OF CLASS I MILK NORTHEAST MARKETS

Percent - - - --- - --- ...---- --- --- - -r------ -----_

_ ---...-"'Connecticut 75r-----------~~-~---~------... ~~~~----~~~~=_----~~~-------1

/"" Middle Atlantic '" .

,-..:..~ .. -..:

55 1-1 - - - ------+----.-",New York-New Jersey . . .'

... __ !~ _______ ~~,. .... _C. ........ . ........ ,,' .... .. ",," ' ..... :,................................. .. " ............ ,, _______ J' t ----------_ ' Niagara Frontier

---=---~~ --...... ~ ....

FIGURE 6. Connecticut had the highest percentage 01 Class I and Niagara Frontier the lowest. New York-New Jersey was relatively low.

v. MILK CONSUMPTION Milk consumed as fluid milk yields producers a

much higher price than milk used to produce icc cream, cheese or butter. For example under the New York-New Jersey Order in 1973, the price paid producers for milk consumed as fluid m ilk (Class I) averaged $8.33 per hundredweight as contrasted with $6.10 for mil k utilized in manu-factu red products (Class II ) . Because of the dif-ference of $2.23 per hundredweight, producers have a vital in terest in the consumption of flu id milk and lowfat fluid milk products which yield the higher price , the products included in Class l.

For many years fluid milk in consumer pack-ages was the principal product included in Class I. In recent years, however, many people have used fluid skim milk and lowfat mil k in place of fl uid mil k. Buttermilk and flavored drinks also are used interchangeably with mi lk. A ll of these products are included in Class I and yield producers the highest Class price.

Levels of Consumption Since fl uid whole milk, including standardized

milk, is by far the most important product included in Class I, its consum pt ion is shown separately.

There was a wide diffe rence among markets in level of consumption during the 14-year period 1960-73. Boston had the highest consumption, 30 1 pou nds per capita per year. Connecticut was sec-ond wi th 280 pounds and New York-New Jersey third with 266 pounds. The other New York mar-kets, Niagara Frontier and R ochester, were lower. The M iddle Atlantic was lowest, 215 pounds.

The average consumption of milk and lowfat fluid milk products for the 14-year period 1960-73 is summarized for the individual markets in pounds per capita per year, arranged in descending order of magnitude of milk consu mption as fo llows:

Lowfat Market Mi lk products Total

Boston 301 25 326 Connecticut 280 24 304 N ew York-New Jersey 266 19 285 N iagara Frontier 258 30 288 Rochester 253 39 292 M iddle Atlantic 215 26 241 Average (weighted) 260 22 282

19

For the lowfat products R ochester and Niagara Frontier stand out with the highest consumption for the period 1960-73, 39 and 30 pounds respec-tively. For the other markets consumption aver-aged close to 23 pounds per capita per year.

Decline in Milk Consumption 1960-73

Even though there were marked differences among markets in the average level of milk con-sumption , there were str ik ing similarities in the de-clines during the period 1960-73 (table 9, figure 7).

The weighted average consumption for the 6 markets in 1960 and 1973 was 291 and 219 pounds respectively. This was a decline of 72 pounds. The smallest decrease was for the Middle At lantic Order, 52 pou nds, while the largest was for R ochester, 84 pounds. The reduction for New York-New Jersey was 77 pounds.

A ll markets decl ined in unison. There was no tendency for the relative position of the markets as to level of consum ption to cbange. T he only ex-ception was in 1968 when Rochester exceeded N i-agara Frontier in per capita consumption . In all other years Rochester was slightl y less though al-ways considerably higher than the Middle Atlantic market.

The per capita consumption for each of the mar-kets in 1960 and 1973 and the decline in pounds and percent are summarized as fo llows. The mar-kets are arranged in ascending order of the mag-nitude of the decline.

Market 1960 1973 Decline 60-73

Ibs. percent

Middle Atlantic 235 183 52 22 Bos ton 333 257 76 23 New York-New Jersey 300 223 77 26 Connecticut 311 234 77 25 Niagara Frontier 290 207 83 29 Rochester 290 206 84 29 Average (weighted) 291 219 72 25

T he percentage declines in consu mption were relatively uniform . For all markets combined, the decrease was 25 percent.

20 THE MARKET ADMINISTRATOR'S BULLETIN

TABLE 9. PER CAPITA CONSUMPTION OF WHOLE MILK AND LOWFAT FLUID MILK PRODUCTS IN NORTHEAST MARKETS 1960-73

Year New York- Connecti- Boston New Jersey cut Regional

Whole milk

1960 300 311 333 1961 290 310 328 1962 285 303 327 1963 287 301 327 1964 286 300 321 1965 283 297 318 1966 276 294 313 1967 268 284 304 1968 261 278 300 1969 252 264 288 1970 245 254 276 1971 239 247 267 1972 231 242 261 1973 223 234 257

Lowfat fluid products

1960 11 1961 11 1962 12 1963 13 1964 14 1965 16 1966 18 1967 20 1968 21 1969 23 1970 22 1971 24 1972 27 1973 30

Increases in Consumption of Lowfat Fluid Products

16 13 16 14 16 15 16 15 17 16 17 17 19 19 22 21 25 26 32 31 34 35 35 39 37 43 41 43

Middle Atlantic

235 229 227 230 231 228 225 216 216 205 196 195 190 183

18 18 19 20 20 21 22 23 28 30 30 33 38 45

In s triking contrast to the declines in milk con-sumption were the marked increases in consump-tion of lowfat fluid milk products. Each market showed an increase, (tables 9 and 10, figure 8). However , in no case was the increase in lowfat fluid products large enough to offset the decli ne in milk consumption (pounds of product basis). Thus there was a decline in per capita consumption of milk and lowfat fluid milk products combined. For the 6 markets combined the gain in consumption of low-fat products was 23 pounds as contrasted with 72

All markets

Rochester Niagara E.Ohio-

Including I xcluding F rontier W. Penn. E. Ohio- E. Ohio-W.Penn. W .Penn.

Pounds

290 290 291 275 281 284 270 276 280 271 275 281 270 277 278 268 277 275 265 274 270 263 266 261 255 253 257 243 246 238 245 246 228 235 223 236 238 220 229 210 229 233 215 222 207 223 226 206 207 201 216 219

31 20 14 32 20 14 32 20 15 33 21 15 34 21 16 33 20 18 34 22 19 35 26 22 38 31 24 42 37 55 32 28 45 40 56 32 28 49 46 60 35 30 52 49 62 39 34 53 56 63 42 37

pounds decline in fluid milk. The gain in lowfat produc ts offset only 32 percent of the loss in milk.

For the Niagara Frontier market the increase in consumption of lowfat products of 36 pounds was 43 percent as large as the decline in milk consump-tion. For New York-New Jersey, however, the gain in lowfat was only 19 pounds and it offset only 25 percent of the decline in milk.

The gain in consumption of lowfat products from 1960 to 1973 and the declines in milk consumption together with the net change for both products are summarized in pounds per capita as follows. The markets are arranged in order of descending mag-

Pounds

MILK: SUPPLY -CONSUMPTION-RESERVE

TABLE 10. PER CAPITA CONSUMPTION OF CLASS I FLUID MILK PRODUCTS IN NORTIlEAST MARKETS 1960-73

. I All markets Year New York- Connecti- Boston Middle Rochester Niagara E. OhIO- I I I d' IE I d' New Jersey cut Region al Atlantic Frontier W Penn nc u mg xc u mg . ' 1 E. Ohio- E. Ohio-

W. Penn. W. Penn.

Pounds

Total fluid products, milk and lowfat products combined

1960 311 327 346 253 321 310 305 1961 301 326 342 248 307 301 298 1962 297 319 342 246 302 296 295 1963 300 317 342 250 304 296 296 1964 300 317 337 251 304 298 294 1965 299 314 335 249 301 297 293 1966 294 313 332 247 299 296 289 1967 288 306 325 239 298 292 283 1968 282 303 326 244 293 284 281 1969 275 296 319 235 285 283 293 277 274 1970 267 288 31 j 226 273 275 279 268 266 1971 263 282 306 228 269 275 270 264 263 1972 258 279 304 228 267 271 269 262 260 1973 253 275 300 228 259 263 264 258 256

PER CAPITA CONSUMPTION OF FLUID MILK NORTHEAST MARKETS

.. ~~ .. ~--- ... -.. ---........................ '--.. Niagara Frontier t ....

Boston

160L-~ __ ~ __ L-~ __ -L __ ~~ __ -L __ ~ __ ~-L __ ~ __ L-~ __ ~ 1960 1965 1970 1975

21

FIGURE 7. There were marked differences among markets in per capita consumption. Boston was the highest and Middle Allan tic the lowest. Consumption declined in each market.

22 THE MARKET ADMINISTRATOR'S BULLETIN

PER CAPITA CONSUMPTION OF LOWFAT FLUID MILK PRODUCTS NORTHEAST MARKETS

Pounds--------------------.---------------------,---------------------,

60

50

40 Roc hester \

30 --_ ............. -..... -----_ .....

20 _____ - .. ---------

10

1960 1965 1970 1975

FIGURE 8. Consumption in each markel increased. From 1960 10 1966 the increases were relatively small and, excepl for Rochester, much the same in each market. Since 1966 the Increases were greater and more varied.

nitude of the 'gain in consumption of lowfat prod-ucts.

Percentage Change in consumption 1960-73 of

decline Milk in milk

Lowfat and recovered Market prod ucts M ilk Lowfal in lowfat

:pounds Niagara

F rontie r + 36 - 83 -47 43 Boston +30 -76 -46 39 Middle

Atlantic +27 - 52 -25 52 Connecticut +25 -77 -52 32 Rochester +22 -84 -62 26 New York-

New Jersey + 19 -77 -58 25 Average

(weighted) +23 - 72 - 49 32

Increase in Lowfat Fluid Products 1966-73 In 1966 there was a great deal of similarity in

per capita consumption of lowfat fluid milk prod-ucts in the Northeast markets. Except for Rochester the other markets ranged betwee n a low of 18 pounds per capita for New York-New Jersey to 22

pounds for the Middle Atlantic market. However, the gains from 1966 to 1973 showed a great deal of variation. R ochester and New York-New Jer-sey increased the leas t, 56 and 67 percent respec-tively , while consumption in al l the other markets more than doubled .

The actual consumption of lowfat products in 1966 and 1973 and the percentage changes are summarized in pounds per capita with the markets arranged in order of the magnitude of consumption ]J1 1966 as follows :

Market Consumption Ibs. Increase 1966-73

1966 1973 Ibs. percent New York-New J e rsey 18 30 12 67 Connecticut 19 41 22 116 Boston 19 43 24 126 Middle Atlantic 22 45 23 105 Niagara Frontier 22 56 34 155 Rochester 34 53 19 56 Weighted average 19 37 18 95

It is imposs ible to explain the wide variations in percentage ga ins du ring this period. One cannot

MlLK: SUPPLY-CONSUMPTION-RESERVE 23

help but wonder whether or not the differences in promotional activities in the various markets are reflected more in the consumption of lowfat prod-ucts than in milk.

Milk Solids in Fluid Milk Products Consumed The pounds of milk and lowfat products in Class

I are the measure of consumption of most interest to producers. Under present methods of pricing, it makes little difference in producer returns wheth-er consumers drink whole milk or skim milk.

Consumers and nutri tionists, however, have a vital interest in the nutrients in the milk container customarily purchased by consumers. T hree fac-tors have affected the percentage of butterfat and solids not fat in Class I products: (1) changes in the proportions of the different flu id milk products consumed (2) changes in the average test of milk produced and (3) the standardization of milk.

In earlier years fluid whole milk was practically the only fluid product readily available to consum-ers. However, in the last 15 years lowfat products have become generally available and widely used. These products include lowfat milk , skim milk, skim milk products with added solids, buttermilk and fl avored mi lk drinks. In these Northeast mar-kets in 1960 , the consumpt ion of flu id milk and these lowfat products aggregated 305 pounds per capita. The lowfat products were 4.6 percent of the total, as contrasted with 14.5 percent in 1973. The relative importance of these products has in-creased rapid ly in recent years (table 11 ).

The solids not fat content of milk fl uctuates wi th the bu tterfat content but not as much. Studies have shown that for each percentage point variation in butterfat conten t there is a concomitant variation in the solids not fat content of 0.434 percentage points .·

During the period 1960-73 the average butter-fat test of producer milk in the Northeast regulated markets was remarkably stable fluc tuating between a low of 3.64 and a high of 3.69 percent butterfat. During the same period the solids not fat content of Northeast producer mi lk was even more stable, averaging about 8.60 percent. During the last decade and a half there was no significant change in the average test of milk produced. Therefore,

4 Estimating the Solids Not Fat Content of Milk, Marketing Research Report No. 65, Agricultural Marketing Service, United States Department of Agriculture, Louis F. Herr-mann, Elsie D. Anderson and Frank Bele, May 1954.

TABLE II. CONSUMPTION OF MILK AND LOW FAT FLUID MILK PRODUCTS

EXPRESSED AS A PERCE TAGE OF TOTAL CONSUMPTION OF FLUID MILK PRODUCTS

IN THE ORTHEAST 1960-73

Lowfat Year Milk fluid Total

products

Percent

1960 95.4 4.6 100.0 1961 95.3 4.7 100.0 1962 94.9 5.1 100.0

1963 94.9 5.1 100.0 1964 94.6 5.4 100.0 1965 93.9 6.1 100.0 1966 93.4 6.6 100.0 1967 92.2 7.8 100.0 1968 91.5 8.5 100.0 1969 89 .8 10.2 100.0 1970 89.5 10.5 100.0 1971 88.6 11.4 100.0

1972 86.9 13.1 100.0 1973 85.5 14.5 100.0

this factor had no effect in changing the nutrient con tent of the milk consumed (table 12).

In some of the Northeast markets the standard-ization of milk was a common practice for many years but in New York State only since 1966. When it was legalized , it was adopted widely by the industry and the average test of fluid milk in con-sumer packages was reduced to nearly the legal minimum of 3.4 percent. The reduction occurred even though there was practically no change in the average butterfat test of milk received from pro-ducers.

When milk is standardized by the removal of bu tterfat or the add ition of skim milk, the per-centage of solids not fat is enhanced . The lowfat products that are fortified with added solids have a higher solids not fat content than the original milk. For all Northeast markets the solids not fat content of fluid milk and lowfat fluid milk products rose from 8.66 to 8.77 percent concurrently with the decl ine in the butterfat content from 3.53 to 3.12 percent. These changes occurred at the same time that there was practically no change in the test of m il k received from producers (table 12).

F rom 1960 to 1973, the changes in the average per capita consumption of fluid milk and lowfat fluid milk products together with their butterfat

24 THE M ARKET ADMINISTRATOR'S BULLETIN

TABLE 12. BUTTERFAT AND SOLIDS NOT FAT CONTENT OF ALL MILK IN NORTHEASTERN MARKET POOLS 1 AND WEIGHTED AVERAGE TEST OF MILK AND LOW FAT FLUID MILK PRODUCTS CONSUMED IN THE

NORTHEAST MARKETING AREAS 1960-73

Class I Class I All milk in milk and lowfat milk and 'lowfat

Year market pools fluid milk products exceeds all milk

Butter- I Solids Butter- I Solids Butter-, Solids

fat not fat fat I not fat fat not fat

Percent Percentage points

1960 3.69 8.61 3.53 8.66 -0.16 0.05 1961 3.68 8.61 3.51 8.66 -0.17 0.05 1962 3.67 8.60 3.50 8.66 -0.17 0.06 1963 3.67 8.60 3.49 8.66 -0.18 0.06 1964 3.67 8.60 3.47 8.67 -0.20 0.07 1965 3.67 8.60 3.45 8.67 -0.22 om 1966 3.67 8.60 3.41 8.67 -0.26 0.07 1967 3.66 8.60 3.30 8.67 -0.36 0.07 1968 3.65 8.59 3.24 8.67 -0.41 0.08 1969 3.64 8.59 3.26 8.72 -0.38 0.13 1970 3.66 8.60 3.23 8.73 -0.43 0.13 1971 3.66 8.60 3.20 8.74 -0.46 0.14 1972 3.67 8.60 3.16 8.76 -0.51 0.16 1973 3.64 8.59 3.12 8.77 -0.52 0.18

l Northeastern markets include New York-New Jersey, Connecticut, Boston Regional, Middle Atlantic, Rochester and Niagara Frontier.

and solids not fat content can be summarized as follows:

1960 1973 Percent change Milk and lowfat

products (lbs.) 305 256 -16.1 Butterfat

content (Ibs.) 10.8 8.0 -25.9 Solids not fat

content (lbs.) 26.4 22.5 -14.8 Total milk

solids (Ibs.) 37.2 30.5 -18.0

From 1960 to 1973, the consumption of fluid products measured in pounds declined 16.1 per-cent. The decline in the butterfat content of these products was much greater, 25.9 percent. The solids not fat consumption declined the least, somewhat less than the pounds of product con-sumed .

Consumption of Fluid Milk and Selected Manufactured Products

Nutritionists in recommending the use of milk in the diet say that the milk may be whole milk, lowfat milk, skim milk, buttermilk, milk drinks, evaporated milk or nonfat dry milk. Then they state that a certain amount of cheese or ice cream

may be substituted for milk. The consumption data on fluid milk and lowfat flu id mi lk products pres-ented above include all the products included in Class I and they yield producers the highest price. The manufactured products, i.e., evaporated milk, nonfat dry milk, ice cream and cheese, are in-cluded in Class II and yield producers a lower price.

During the 24-year period 1950-73 the New York- New Jersey Class J price averaged $2 .28 per hundredweight higher than the Class II price. Be-cause of this price difference milk producers and milk distributors have a vital interest in the con-sumption of the fluid milk products included in Class I compared to the consumption of the manufactured products included in Class II that the nutritionists say can be used in place of milk. Are consumers shifting from Class I products to Class II products or vice versa?

Furthermore, because of the divergent changes in the consumption of butterfat and solids not fat in the Class I products, it is essential not only to portray the difference between the Class J and Class n prices but also the difference between the butterfat and skim values in the two classes.

THE MARKET ADMINISTRATOR'S BULLETIN

TABLE 13. CLASS I AND CLASS II PRICES NEW YORK-NEW JERSEY ORDER SUBDIVlDED INTO BUTTERFAT AND SKiM VALUES PER

H UNDREDWEIGHT OF 3.5 PERCENT MILK 1947-73

I Class I \ Class II I I Class 1 exceeds Class II

Year - -pr-ic-e-I'--F-a-t2--C-I-s-k- i-m-2-1--p-ric-e- '--F-a-t2--I-S-ki-'m-2- Price I Fat \ Skim

1947 4.91 1948 5.66 1949 5.26 1950 5.00 1951 5.64 1952 5.50 1953 5.23 1954 5.13 1955 5.20 1956 5.29 1957 ' 5.64 1958 5.59 1959 5.64

1960 5.55 1961 5.32 1962 5.30 1963 5.22 1964 5.26 1965 5.28 1966 5.70 1967 6.0 1 1968 6.42 1969 6.80

1970 7.05 1971 7.20 1972 7.40 1973 8.33

3.04 3.24 2.65 2.67 3.00 3. 13 2.85 2.61 2.52 2.58 2.63 2.56 2.63

2.59 2.65 2.55 2 .55 2 .58 2.62 2.90 2.91 2.93 2.98

2.98 2.95 2.92 2.99

1.87 2.42 2.61 2.33 2.64 2.37 2. 38 2 .52 2.68 2 .71 3.01 3.03 3.01

2.96 2.67 2.75 2.67 2.68 2.66 2.80 3.10 3.49 3.82

4.07 4.25 4.48 5.34

2 .81 3.37 3.68 3.22 2 .93 2.88 2.99 3.06 2 .94 2.96

2.94 3.10 3.05 3.08 3.16 3.24 3.83 3.91 4.13 4 .25

4.54 4.78 5.05 6.10

Dollars

2.60 2.92 3.06 2.78 2.5 3 2.43 2.50 2.54 2.47 2.53

2.50 2.58 2.47 2.47 2.51 2.54 2.84 2.84 2.85 2.89

2.90 2.87 2.84 2.92

0.21 0.45 0.62 0.44 0.40 0.45 0.49 0.52 0.47 0.43

0.44 0.52 0.58 0.61 0.65 0.70 0 .99 1.07 1.28 1.36

1.64 1.91 2.21 3.18

2.19 2.27 1.82 2.01 2.20 2.32 2.30 2.58 2.65 2.68

2.61 2.22 2.25 2.14 2.10 2.04 1.87 2.10 2 .29 2.55

2.51 2.42 2.35 2.23

I January 1950 to June 1968 Class III price, July 1968 to December 1973 Class II price.

0.07 0.08 0 .07 0.07 0 .08 0.09 0.08 0.09 0.09 0.10

0.09 0.07 0.08 0.08 0.07 0.08 0.06 0.07 0.08 0.09

0.08 0.08 0.08 0.07

2. 12 2. 19 1.75 1.94 2.12 2 .23 2.22 2.49 2.56 2.58

2.52 2.15 2.17 2.06 2.03 1.96 1.81 2.03 2.21 2.46

2.43 2.34 2.27 2.16

2 Based on butterfat differential of Chicago butter X 0:12, J947-68 ; based on butterfat differential in Order 2 applicable to all classes and uniform price, 1969-73 . This table for New York-New Jersey is comparable with the average for 24 markets given in Agri-cultmal Economic Report No. 226, Prices and Consumption of Dairy Products With P rice Supports And Milk Orders, Dairy Division, Agricultural Marketing Service, United States Department of Agriculture, June 1972, Table 11.

25

The average rel ationships for the period 1950-73 in dollars per hundredweight of 3.5 milk are summarized as follows:

prices. On the other hand the Class I sk im value exceeded the Class II skim value by $2 .20. Thus it is clear th at nearly all the difference between the two class prices was attributable to the difference in the skim values.

Cl ass I Class 11

Class I exceeds Class II

Price Fat value Sk im value

$5 .86 3.58

2.28

$2.76 2.68

0.08

$3 .10 0.90

2.20

Thus while the Class I price exceeded Class II by $2.28, only $0.08 of this d ifference was due to the difference in the fat value in the two class

It makes little difference in returns to producers whether butterfat is consumed in products that are included in Class lor Class n. On the other hand, producer returns are much higher if solids not fat is consumed in products included in Class I rather than in Class II . It is the high skim value in the

26 THE MARKET ADMIN ISTRATOR'S BULLETIN

Class r price that results in the blend or uniform price exceeding the price of manufacturing milk by a significant amount.

These price relationships together with the con-sumption relationship are so important in affecting producer returns that the New York-New Jersey Class I and Class II prices, both subdivided into butterfat and skim values, together with the differ-ence between them are shown on an annual basis for the years 1950-73 (table 13). Throughout the entire period , the Class I fat value never exceeded the Class II fat value by more than $0.10 per hundredweight of milk or less than $0 .06. In not a single year did it make much difference in pro-ducer returns if consumers consumed Class I but-

terfat or Class II butterfat. On the other hand, in not a single year did the skim value in Class I ex-ceed the skim value in Class II by less than $1.75 per hundredweight of 3.5 milk or more than $2.58. The Class I skim value always exceeded the Class II skim value by a wide margin. The abo ve rela-tionships are based on New York-New Jersey prices. The same type of relationships prevail in the other Northeast markets.

Thus, in comparing consumption of fluid milk products in Class I with the consumption of manu-factured products in Class II that the nutritionists say can be used in place of milk, it is essential to make the comparison on both a butterfat and solids not fat basis.

TABLE 14. PER CAPITA CONSUMPTION OF BUTTERFAT IN THE NORTHEAST IN THE FORM OF FLUID MILK AND LOW FAT FLUID MILK PRODUCTS AND IN SELECTED MANUFACTURED DAIRY PRODUCTS 1

1924-73

Fluid milk Selected manufactured products 3 Mfd. prod. Year and lowfat

I I I I percent fluid Ice Cottage Italian

products 2 Cream 4 Cheese 0 Cheese 6 Yogurt Total of fluid

Pounds 'Percent

1924 9.4 1925 9.5 1926 9.5 1927 10.0 1928 10.0 1929 10.0 1.5 0 .0 1.5 15.0

1930 10.0 1.4 0.0 1.4 14.0 1931 9.8 1.3 0.0 1.3 13 .3 1932 9.7 0.9 0.0 0.9 9.3 1933 9.5 0.9 0.0 0.9 9.5 1934 9.2 1.1 0.0 1.1 12.0 1935 9.2 1.1 0.0 1.1 12.0 1936 9.5 1.4 0.0 1.4 14.7 1937 9.7 1.6 0.0 1.6 16.5 1938 9.6 1.6 0.0 1.6 16.7 1939 9.4 1.6 0.0 1.6 17.0

1940 9.5 1.7 0.1 0.0 1.8 18.9 1941 9.9 2.0 0. 1 0.1 2.2 22.2 1942 10.6 2.2 0.1 0.1 2.4 22.6 1943 11.4 1.9 01 0. 1 2.1 18.4 1944 11.9 2. 1 0.1 0.1 2.3 19.3 1945 12.5 2.4 0.1 0.1 2.6 20.8 1946 12.2 3.1 0.0 0.1 3.2 26.2 1947 11.8 2.7 0.0 0 .1 2.8 23.7 1948 11.2 2.4 0.0 0 .1 2.5 22.3 1949 11.1 2.4 0.1 0.1 2.6 23.4

" I

MILK: SUPPLY -CONSUMPTION-RESERVE 27

TABLE 14. (Cont'd.) PER CAPITA CONSUMPTION OF BUTTERFAT IN THE NORTHEAST IN THE FORM OF FLUID MILK AND LOWFAT FLUID MILK PRODUCTS AND IN SELECTED MANUFACTURED DAIRY PRODUCTS 1

1924-73

Fluid milk Selected manufactured products 3 Mfd. prod. Year and lowfat

I I percent fluid Ice Cottage Italian Yogurt Total of fluid products 2 Cream 4 Cheese 0 Cheese 0

Pounds 'Percent

1950 11.0 2.3 0.1 0.1