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Federal Milk Marketing Order Provisions: Effects on Producer Prices and Intermarket Price Relationships

George W. Ladd
American Journal of Agricultural Economics
Vol. 51, No. 3 (Aug., 1969), pp. 625-641
Stable URL: http://www.jstor.org/stable/1237914
Page Count: 17
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Federal Milk Marketing Order Provisions: Effects on Producer Prices and Intermarket Price Relationships
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Abstract

Federal milk marketing orders contain formulas that determine prices received by farmers for milk delivered to bottlers. Different orders contain various combinations of provisions. Cross-section data were used to test the hypothesis that order prices are related to the provisions contained in orders. The hypothesis was accepted. Some 78 percent of the variance in prices is explained by two economic variables: distance of order market from Eau Claire, Wisconsin, and class I utilization ratio. Inclusion of dummy variables to allow for effects of order provisions increased the proportion of explained variance to 94 percent. Covariance analysis found no significant changes between years in the effects of order provisions on prices. Many possible combinations of provisions are not used in any order. Many of these combinations would provide unacceptable prices if they were used.

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