Milk Hauling Charges in the Upper Midwest Marketing Area: 2005
Published : Jul 2006
Authors : USDA, AMS, Dairy Division
This study investigated the milk hauling charges, to the first point of delivery, for the producers associated with the Upper Midwest Marketing Area for May 2005. There were 23,096 producers whose payroll information was received by the Upper Midwest Milk Market in May of 2005. The data for hauling charges and milk production were obtained from handlers who had submitted producer payrolls to the Market Administrator’s office. Comparisons were made between the producer’s milk volume and farm location using averages. For the purposes of this analysis, and unless otherwise specified, the “average” hauling rates and/or charges reflect weighted averages. Major findings and conclusions for the producers evaluated in this study are as follows: 1) The weighted average hauling charge for producers participating on the Upper Midwest Order was 22.69 cents per hundredweight. 2) For the states from which the producer milk was received into this market, California, Idaho, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Montana, Nebraska, North Dakota, Ohio, South Dakota, Utah, Wisconsin, and Wyoming, the average state hauling charge ranged from 0.00 to 72.56 cents per hundredweight. 3) In general, the average hauling rate per hundredweight charged decreased as the farm size and/or milk volume increased. However, hauling distances and competition between handlers were also found to be major factors. 4) Hauling rates, in counties located in the Upper Midwest Marketing Area, were noticeably higher in most counties located outside fluid milkshed areas and in areas located the furthest distance from major Class I fluid markets. The highest average hauling charges were found in counties such as Clearwater, Itasca, Kittson, Nobles and Roseau counties in Minnesota, Douglas county Wisconsin, and Barnes and Cass counties of North Dakota. The average hauling charges for each of those counties exceeded 50 cents per hundredweight. 5) For those counties located in the Upper Midwest Marketing Area the lowest hauling charges were found in the Illinois counties of Boone, De Kalb, Lake, Ogle, and Stephenson, and Winnebago, the Michigan county of Delta, and the Wisconsin counties of Adams, Fond du Lac, Dane, Dodge, Green, Green Lake, Lafayette, Marquette, Ozaukee, Sauk, Sheboygan, and Washington. The average hauling charges for each of these counties was found to be less than 12 cents per hundredweight. 6) The majority of handlers in the Upper Midwest Order charged producers a flat hauling value regardless of the volume of milk being marketed. When handlers charge a flat rate, the actual hauling charge per hundredweight declines as the producer’s milk volume increases. This study found that a specific county’s average hauling charge was greatly influenced by its farm composition regarding farm sizes. 7) The data from this study showed producers from three states supplied approximately 87% of the total milk associated with this order. The Wisconsin producers supplied 56%, Minnesota producers supplied 21% and Idaho producers supplied 10% of the order’s producer milk.

