Background
A January 2011 examination of ERS's monthly milk
cost-of-production (COP) estimates raised questions about the
continued validity of the estimates, given recent volatility in the
price of dairy feed. Questions about the calculation of the monthly
State-level estimates, and the timing, availability, and
representativeness of the data used were raised within ERS.
As a result, publication of the series was suspended until ERS
initiated an expert review process and received comments and
recommendations on the monthly milk COP estimation
procedures.
On the basis of reviewers' comments, ERS took the following
actions:
- Discontinue the estimation of monthly State-level milk COP
estimates. The lack of monthly State-level input price data
compromises the ability to provide accurate monthly estimates.
- Continue publishing annual national and regional milk COP
estimates. Annual national estimates of milk COP have been
mandated in successive farm bill legislation since 1973.
- Publish annual State-level milk COP estimates based on NASS's
annual State-level input price data. These estimates
reflect differences in input market conditions across States.
- Publish annually updated milk COP estimates by size of
operation based on information drawn from ARMS data and NASS's
annual State-level input price data. Expert reviewers noted
the importance of having data that show milk cost differences by
size of operation.
- Publish monthly milk COP estimates for the nation using the
most recent national ARMS milk COP per hundredweight and NASS's
monthly, national input price indices. In the absence
of monthly State-level prices, this is the only valid monthly
series that can be estimated.
The estimates for items 2-4 are updated biannually, with
preliminary estimates released in May of the subsequent year and
final estimates released in October. For example, 2010
preliminary estimates were available in May 2011 and final
estimates in October 2011. National monthly milk COP
estimates (item 5) are updated during the last week of each
subsequent month.
Monthly milk COP estimates by State, published prior to the
expert review, are available from January 2003 through
December 2010 
. Note:
These estimates are presented as a historical record
only and should not be used for analytical purposes. We
recommend that national monthly and annual State-level or
size-based milk COP estimates starting in 2005 be used as the basis
for milk cost of production calculations.