Milk pooling and the uniform price

Definition

Pooling is how a Federal Milk Marketing Order shares the different class values of milk among all the farms that supply the order. Handlers pay into the pool at class prices, based on how they used the milk. Producers are paid out of the pool at a single uniform price (also called the blend price), no matter which class their own milk went to.

Each month the pool works like this:

Each pooled handler reports the pounds of milk (and its components) that it used in each class.
The market administrator values that milk at class prices. A handler whose use is worth more than the pool average pays the difference into the producer settlement fund. A handler whose use is worth less draws from the fund.
The order announces a uniform price, or component prices plus a PPD. Every pooled producer must be paid at least this, adjusted for location.

Class utilization is the share of pooled milk in each class:

Class I utilization (%) = Class I pooled lb / total pooled lb × 100

This is the federal order pool’s class mix. It is not the same as a co-op’s production utilization or how full a plant runs.

Two kinds of orders

There are 11 federal orders (as of November 2026).

Skim/butterfat orders pay producers a uniform skim price and a butterfat price, usually shown as one uniform price per cwt at 3.5% fat. These orders have no PPD. They are the four high Class I orders: Appalachian (7 CFR 1005), Florida (1006), Southeast (1007) and Arizona (1131).
Component orders pay producers the Class III butterfat, protein and other solids prices per lb. They add a PPD per cwt that carries the pool’s value above (or below) Class III. These are the other seven: Northeast (1001), Upper Midwest (1030), Central (1032), Mideast (1033), California (1051), Pacific Northwest (1124) and Southwest (1126). Four of them also apply a somatic cell adjustment to producer pay: Upper Midwest, Central, Mideast and Southwest.

Depooling

Class I milk must be pooled. Handlers of Class II, III and IV milk can choose whether to pool it. When a manufacturing class price (usually Class III) is above the pool’s uniform price, a handler gains by depooling: it keeps its milk out of the pool so it doesn’t have to pay in. Depooling shrinks the pool’s volume. In component orders it can also push the PPD further negative. Orders limit how quickly depooled milk can return (repooling limits), and the rules differ by order. As of November 2026, the order texts (each order’s § .13) cap a handler’s pooled producer milk at a share of its prior-month pooled receipts:

Order	Cap on pooled milk vs prior month
Upper Midwest (1030.13(f))	125% (135% in March)
California (1051.13(f))	125% (135% in March)
Central (1032.13(f))	125%
Mideast (1033.13(f))	115% (120% in March)

Milk delivered to pool distributing plants is outside these caps, and the market administrator can waive them for new handlers or significant changes. The Northeast, Pacific Northwest and Southwest orders set no percentage cap; re-entry there is governed by their producer-milk and diversion provisions.

Co-op blend vs federal order uniform price

A co-op is a handler. It receives the federal order pool value for its members’ milk, plus any over-order premiums, and then pays members under its own plan. The co-op’s implied blend (total pay ÷ total member milk) can differ from the federal order uniform price. Premiums, deductions, hauling, balancing costs, retains and any base or quota plan all move it. See co-op base and quota plans.

Formula

Skim/butterfat order (simplified; ignores the reserve and location adjustments):

uniform price ($/cwt at 3.5%) = Σ over classes (class cwt × class price) / total pooled cwt

P_{uniform} = \frac{\sum_{c} Q_c \, P_c}{\sum_{c} Q_c}

Component order (the statistical uniform price, as reported):

statistical uniform price ($/cwt at 3.5%) = Class III price + PPD

P_{SUP} = P_{III} + \mathrm{PPD}

What a producer is paid from the pool in a component order:

pool pay = butterfat lb × butterfat price
         + protein lb × protein price
         + other solids lb × other solids price
         + cwt × PPD  (± location adjustment)

\text{Pay} = L_{bf} P_{bf} + L_{pro} P_{pro} + L_{os} P_{os} + \mathrm{cwt} \times \mathrm{PPD}

How to pull it in DC305

Not applicable. DC305 holds cow records, not pool data, class utilization or pay prices.

Source: each order’s monthly uniform price announcement and pool statistics (market administrator websites and USDA AMS). For the farm’s actual pay, use the co-op or buyer statement.

Typical range

Herd context: US federal order milk; values vary by order and month.

Class I utilization: from about 10–25% in manufacturing-heavy orders to 60–85% in southeastern fluid orders.

Uniform price: follows the class prices, so its range is about the same as Class III and IV (roughly $15–$25/cwt in recent years). High Class I orders run a few dollars above low Class I orders because of their utilization and differentials.

Common mistakes

Expecting the uniform price to equal any class price. It is a weighted blend. In component orders the “uniform price” is a statistical figure at 3.5% fat, and producers are actually paid on their own components.
Confusing class utilization with a co-op’s or plant’s utilization. Class utilization is the class mix of the federal order pool.
Treating the co-op pay price as the federal order uniform price. Co-op pay includes premiums, deductions and plan rules that the federal order doesn’t set.
Ignoring depooling when comparing months. When a pool loses a lot of Class III milk in one month, both its volume and its utilization change.
Comparing uniform prices across orders without the location adjustment.