Milk Hauling Charges in the Upper Midwest Marketing Area: May 2002-2004
Published : Dec 2005
Authors : USDA, AMS, Dairy Division
This study investigated the milk hauling charges, to the first point of delivery, for the producers on the Upper Midwest Marketing Area for the month of May in the years 2002 through 2004. There were, on average, 23,247 producers reported as participating in the Upper Midwest Milk Market. The data for hauling charges and milk production were obtained from handlers who had submitted producer payrolls to the Market Administrator’s office. Pricing agreements for these producers included flat fee payments and some where the hauling cost is paid directly by the producer and thus not reported by the handler. 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 $.1993, $.1990, and $.2131 dollars per hundredweight for 2002, 2003, and 2004, respectively. 2) For the states from which the producer milk was received into this market, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Montana, Nebraska, North Dakota, Ohio, Oregon, South Dakota, Utah, and Wisconsin, average state hauling charges ranged from $.1215 to $1.3358 dollars per hundredweight for 2004. 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) For those states which have some or all of their territory within the Upper Midwest Marketing Area, Illinois, Iowa, Minnesota, North Dakota, South Dakota, Wisconsin, and the Upper Peninsula of Michigan, hauling rates tended to increase from the southeast to the northwest with Illinois having the lowest average hauling rate, $0.1215 per cwt., and North Dakota having the highest average hauling rate, $0.6319 per cwt. 5) 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. 6) The data from this study showed producers from three states supplied approximately 90% of the total milk on this order.

