Wherever you go in the world we hear millk price expressed in different units or currencies - no wonder there is so much confusion when comparing milk price within a country let alone between countries. Here is a short roundup of the pricing systems used within the major global dairy trading nations.
New Zealand - $/kg Milksolids where Milk Solids = (Fat + Crude Protein) is truly a NZ-ism, $/kgMS while not perfect is the best method for expressing a comparative milk price because it has the least amount of error caused by different butterfat and protein %.
Australia - Unfortunately we have the very imprecise cents/litre ingrained into our vernacular. I have to confess that I can be as guilty as the next person. In my defence however I have an unspoken standard litre in mind when I quote a cents/litre price (4.0% Butterfat and 3.2% Protein). What we should have done here in Australia is adopt $/kg Milksolids when we moved from paying purely on $/kg of butterfat to compositional milk payments in the early 1980s. It does concern me that I'm old enough to remember when milk was paid for on a $/kg butterfat basis, and I do recall quoting milk price in this archaic denomination as recently as 5-6 years ago. One thing the influx of New Zealand dairy farmers imported with them to Australia is the term $/kgMS. In this case however there is a subtle but not insignificant difference where in Australia Milk Solids = (Butterfat + True Protein)
USA - $ per hundred weight. ($/cwt). Note that a US short hundred weight (100lb) shouldn't be confused with a British Long hundred weight (112lb). $/cwt is no more a useful comparative milk price measurement than cents per litre. In each case the real price paid is a function of the milk components.
European Union - euro/100 kg. The Europeans express their milk price in kilogram. By definition 1.0 litre of water = exactly 1.0kg (at standard temperature and pressure). However 1.0 litre of milk = 1.027-1.033kg (ie milk weighs slightly heavier than water). Therefore 1.0 kg of milk = 0.968-0.974 litres. As with cents/litre and $/cwt, euro/100kg fails the comparison test
United Kingdom - pence/litre. So just when you thought you'd seen every variation, the English use pence per litre. Very similar to cents/litre, $/cwt and euro/100 kg in that it there is no consideration of the protein and butterfat %.
Why $/kgMS is best but not perfect - $/kg Milksolids is as simple as dividing the net milk income by the total Milksolids (where milk solids = kg fat + kg Protein). The error in this pricing system arises because variations in the price ratio of butterfat to protein. In most of the important western dairying regions of the world protein is valued at the farm gate somewhere between 2-3 times the value of butterfat.
Let's consider a very simple pricing formula where we have $3.00/kg butterfat, $7.50/kg Protein and 2.5 cents/litre volumes charge therefore when the protein to fat ratio is high eg 3.6% butterfat and 3.3% protein versus 5.3% butterfat and 3.6% protein:
|3.6% Butterfat & 3.3% Protein||$4.79||33.1||92%|
|5.3% Butterfat & 3.6% Protein||$4.54||40.4||68%|
So as you can see while there is an error in $/kgMS it is - of what you would find with cents/litre, $/cwt, pence/litre, euro/100 kg.
Converting cents per litre to $/kgMS - When your NZ expat neighbour starts quoting their milk price in $/kgMS how do you convert cents per litre quickly into $/kgMS or vice versa. Let's say your milk is testing somewhere around 4.0% butterfat and 3.2% protein. In one litre of your average milk there is 40 grams of butterfat and 32 grams of protein or 72 grams of Milksolids. Therefore to produce 1 kg (1000grams of Milksolids) requires 1000/72 = 13.89 litres. That's your number. Multiply your cents per litre price (say 30 cents/litre) by 13.89 (rounded up to 14) and waa laa $4.20 kg/MS. What you need to do in this case is learn your 14 times tables from about 20 to 45 and it will become a bit of a party trick. If you have a Jersey herd with an average of 5.0% butterfat and 3.7% protein then your conversion factor will be 1000/87=11.49. The more you do this calculation for your own average components the more you'll soon find yourself talking with a modicum of confidence in $/kgMS - and you'll be all the better for it!!
I hear you say this is all well and good but what I want to do is an exact comparison. What you need to do is go to the world famous Xcheque milk price calculator. Further development and instruction is promised for this calculator so bookmark the page and keep an eye out for updates.