THE EFFECTS OF MULTIPLE COMPONENT PRICING ON PRODUCERS AND HANDLERS IN THE FEDERAL ORDER NO. 4 MARKETING AREA

The Federal Milk Marketing Order Program was established in the Agricultural Marketing Agreement Act of 1937 to address the specific marketing problems associated with milk marketing. A supply and demand problem is created due to the daily production process of milk as well as its perishability. Fluid milk cannot be stored for long periods of time, therefore, a continual surplus must be produced in order to assure an adequate supply of fluid milk to meet the day-to-day needs of the consumers. In order to accomplish this goal, milk orders were created, the scope and terms of which are spelled out in the Agricultural Marketing Agreement Act (7 CFR 1000-1199). The general provisions included in all orders are a "classified pricing plan, a system of minimum class prices, and a plan for payments of uniform prices to producers and provisions for administering the order. Although an order considers the particular requirement of an individual market, it is closely coordinated among all markets". (USDA,6