CoBank Finds Higher-Component Dairy Herds Earn Larger Milk Checks
A report by CoBank’s Knowledge Exchange examined seven regional Federal Milk Marketing Orders that use Multiple Component Pricing. It found substantial differences in butterfat and protein output between regions and individual farms, with the highest-producing component herds receiving larger milk payments.
At average US production levels, farms in the top 10% for milk components earned an additional $101-$352 per cow each year compared with lower-component herds. At higher production levels, the gap reached $136-$474 per cow.
CoBank lead dairy economist Corey Geiger gave the Upper Midwest FMMO as an example. With annual output of 24,390 pounds per cow, a higher-component herd had a $256.58 advantage per cow over a lower-component herd. At 33,000 pounds, the difference rose to $345.58. The resulting annual revenue difference would be $34,558 for a 100-cow farm and $345,582 for a 1,000-cow operation.
More than four-fifths of milk leaving US farms is now used in manufactured products, including cheese, yogurt, butter and cottage cheese, rather than sold as beverage milk. More than 90% of the national milk supply is priced using butterfat, protein and other solids under multiple-component formulas.
In the Upper Midwest order, average component levels in 2025 were 4.37% butterfat, 3.33% protein and 5.79% other solids. CoBank agricultural commodities economist Abbi Groves said the difference between the 560 highest-component herds and the 560 lowest-component herds showed the scale of the revenue gap available to producers.
Some processors have added whey protein concentrate and whey protein isolate prices to milk-payment formulas, on top of federal order minimums. CoBank said butterfat and protein concentrations in the US milk supply are increasing at the fastest rate in modern dairy history. Geiger said conventional measures such as rolling herd average do not capture the full revenue picture and that component-based measures provide a more direct view of what determines milk payments.
