Diversions and the Role they play in Determining Order 7 Milk Price
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The Southeast Order has been milk deficit for over ten years and because of this milk has to be brought in from other orders to meet processor’s demand. Transportation credits provide processors with help to cover transportation costs to bring outside milk into the order. To help keep Class I utilization and support milk prices, relative to orders in the North, Order 7 has low diversion limits. As milk produced within Order 7 has been on a downward trend, milk brought into the order has not increased as consistently. In 2000 milk pooled from farms within the order made up an average of 66% out of the total amount pooled compared to a 2012 average of 43%. The results showed that only Class II diverted pounds had a stastically significant impact on Order 7’s uniform price.