Practical Exercise 7
Calculation of milk payment
based on fat and two axis pricing
policy of Dairy Cooperative Society (DCS)
Objective: Improve skill of the students in calculating price
of milk.
As discussed in the Chapter 5, there are three approaches to fix price of milk and
these are:
1. Pricing on pro-rata fat basis: Price of milk is fixed in proportion to the fat content
of milk considering the minimum SNF content. This method is good for buffalo
milk.
2. Pricing on two axis basis: Price of milk is fixed in proportion to two main constituents
of milk i.e. fat & SNF.
3. Pricing on equivalent fat unit basis: The SNF units are converted into equivalent
fat units in proportion to the relative market prices of fat and SNF.
Pricing of milk on fat basis
There are two important information to be known in calculating price of milk on fat
basis. One is price of fat fixed by the Cooperative Society and another, fat percentage
Milk Production 21
(Practical Manual for Class XI)
Calculation of milk payment
based on fat and two axis pricing
policy of Dairy Cooperative Society (DCS)
Objective: Improve skill of the students in calculating price
of milk.
As discussed in the Chapter 5, there are three approaches to fix price of milk and
these are:
1. Pricing on pro-rata fat basis: Price of milk is fixed in proportion to the fat content
of milk considering the minimum SNF content. This method is good for buffalo
milk.
2. Pricing on two axis basis: Price of milk is fixed in proportion to two main constituents
of milk i.e. fat & SNF.
3. Pricing on equivalent fat unit basis: The SNF units are converted into equivalent
fat units in proportion to the relative market prices of fat and SNF.
Pricing of milk on fat basis
There are two important information to be known in calculating price of milk on fat
basis. One is price of fat fixed by the Cooperative Society and another, fat percentage
Milk Production 21
(Practical Manual for Class XI)
