Milk prices reported in the media can be confusing and misleading information for farmers, the dairy industry and the public. The basis of measurement and reporting varies widely within many countries, much less when currency is taken into account.

The price of milk is generally reported as value per volume or weight of milk. For example: cents per liter (cpl); dollars per quintal ($/cwt); or euro for 100 kilograms. The main problem with these price bases is that the actual payments for milk are typically for the fat, protein and other solids components – very few dairy processors pay for water! You need to know the composition of the milk and this composition changes from farm to farm and from country to country. There is no standard composition when it comes to comparing local and international prices. Here are some of the factors to consider when making comparisons.

Badge: This is an obvious problem, but you should consider choosing between: the current daily rate; the annual average conversion rate; the weighted average conversion rate. In the latter case, the currency exchange rate should be weighted according to the timing of payments to farmers.

Composition of fats and proteins:It is normal for farmers to be paid based on the fat and protein composition of the milk. This can have a dramatic effect on the price of milk when expressed in cpl. So, for example, the cpl milk price for a high milk component Jersey cow can be more than 50% higher than that for a Fresian/Holstein cow.

The typical composition of cow’s milk in the world’s leading dairy exporters is: Europe: 4.2% fat, 3.4% protein; USA 3.7% fat, 3.0% protein; New Zealand: 4.7% fat, 3.7% protein; Australia 4.1% fat, 3.3% protein.

To add to the confusion, USDA milk prices reported in $/cwt are based on a fat composition of 3.5% and Eurostat milk prices are based on 3.7% fat.

There is no standard for the price of milk in Australia and New Zealand and the safest measure of local price is when it is expressed as $/kg milk solids ($/kg MS). Milk solids are defined as the sum of the measures of fat and protein in milk.

Measurement of mass or volume: In addition to the fat and protein composition of the milk, you also need to know whether the test measurement is expressed as mass/mass (eg, kg/kg) or mass/volume (eg, kg/litre). ). The typical density of milk is close to 1.03 grams/litre so an error here can affect the milk price calculation by 3%.

True or raw protein: Crude protein is an estimate of the protein composition of milk based on nitrogen measurements (typically by Kjeldahl nitrogen test). The protein content of milk is calculated from an international standard factor of nitrogen x 6.38.

True protein is an estimate of actual milk protein based on a calibrated near-infrared measurement. The difference between crude and true protein is equivalent to what is called “non-protein nitrogen” (NPN).

Measurement of true protein is estimated to give a result 0.1 – 0.2% lower than crude protein. This can affect the milk price calculation by up to 5%.

In the US and Australia, the protein content of milk is generally reported as true protein, while in the EU and New Zealand, crude protein is more often used.

Calculation example: Here is an example of how you can convert a reported milk price from one country to another by taking the above factors into account:

A US farmer is paid $11.50/cwt for milk with a composition of 3.7% fat and 3.0% true protein on a mass/mass basis.

A New Zealand farmer wants to know what this equates to in $NZ/kg DM with milk solids being equal to fat + crude protein. Assuming an exchange rate of NZ$1.00 = US$0.70 and crude protein = true protein + 0.15%, the calculation is as follows:

US$11.50 per cwt = NZ$16.43 per cwt

Milk composition = 3.7% fat + (3.0 + 0.15)% crude protein = 6.85% milk solids mass/mass

1 cwt of milk / 220.4 = 45.4 kilograms

NZ$16.43/cwt/45.4/0.0685 = NZ$5.28/kg MS CP (crude protein)

For an Australian farmer, there is no need to adjust for crude protein: milk solids = 3.7% + 3.0% = 6.7%. Assuming an exchange rate of AU$1.00 = US$0.87:

US$11.50 per cwt = AU$13.22 per cwt

AU 13.22 / cwt / 45.4 / 0.065 = AU 4.35 / kg MS TP (true protein)

A UK farmer wants to know how much this is in cents per liter in his typical milk composition of 4.2% fat and 3.4% crude protein (~3.25% true protein). This question is a bit more difficult because we don’t know the value of the individual fat and protein components. The best we can do is assume that the value of milk solids is the same. That will give a reasonably close approximation if the ratio of fat to protein is similar in both cases. So assuming: $US 1.00 = 63 English pence

$US 11.50 / cwt = 724.5 pence / cwt (7.25 English pounds / cwt)

724.5 pence/cwt/45.4 = 16.0 pence/kilogram

16.0 pence/kilogram x 1.03 = 16.4 pence/litre

However, this is the price with a composition of 3.7% fat and 3.0% true protein. To obtain an estimate of the European farmer’s component price, apply the relative proportion of total milk solids:

16.4 pence/litre x (4.2 + 3.25) / (3.7 + 3.0) = 18.2 pence per litre.

On the European continent they think in euros / 100 kg of milk. We’ll take a short cut here and convert from pence per liter to euro/100kg assuming the same milk composition as the UK farmer. With an exchange rate of 1.00 euro = 92 English pence:

18.2 pence per liter = 19.8 euros / 100 liters

19.8 euros / 100 liters / 1.03 = 19.2 euros / 100 kg