What Is The Formula To Convert Pounds To Kilograms Global Milk Price Conversion

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Global Milk Price Conversion

Milk prices reported in the media can confuse and mislead farmers, the dairy industry, and the public. The basis of measurement and reporting varies greatly from country to country, not to mention when it comes to financial considerations.

Milk prices are generally reported as prices per volume or weight of milk. Example: cents per liter (cpl); dollars per hundredweight ($/cwt); or euro per 100 kilograms. The biggest problem with these pricing bases is that the actual milk charges are for fat, protein and other solids – very few milk processors charge for water! You need to know the composition of the milk and this changes from farm to farm and country to country. There is no standard set for comparing domestic and international prices. Here are some things to consider when comparing.

Money: This is an obvious issue but consideration should be given to choosing between: the current daily rate; average annual turnover; average conversion rate. In the latter case the exchange rate should be adjusted for the payment period of the farmers.

Fat and Protein Composition:It is common for farmers to be paid based on milk fat and protein composition. This can have a significant impact on the price of milk when expressed in cpl. So for example the cpl milk price of a jersey cow with high milk yield can be over 50% more than a fresian/holstein cow.

The composition of cow’s milk from the main milk exporters around the world is: Europe – 4.2% fat, 3.4% protein; USA 3.7% fat, 3.0% protein; New Zealand – 4.7% fat, 3.7% protein; Australia 4.1% fat, 3.3% protein.

To add to the confusion, USDA milk prices reported in $/cwt are based on a fat composition of 3.5% and Eurostat milk prices are based on 3.7% fat.

There is no standard milk price for Australia and New Zealand and the safest measure of local price is when it is expressed as $/kilogram of milk solids ($/kg MS). Milk solids are defined as the sum of fat and protein content in milk.

Weight or Volume Measurement: Along with the composition of fat and milk protein you also need to know that the test ratio is defined as weight / weight (eg kg / kg) or weight / volume (eg kg / liter). The average density of milk is close to 1.03 grams / liter so an error here can affect the calculation of the value of milk by 3%.

True or Crude Protein: Crude protein is an estimate of milk protein composition based on nitrogen measurements (usually by the Kjeldahl nitrogen test). The protein content of milk is calculated from the international ratio of Nitrogen x 6.38.

True protein is an estimate of true milk protein based on near-infrared measurements. The difference between crude and true protein is the so-called “non protein nitrogen” (NPN).

It is estimated that a true protein measurement will give results 0.1 – 0.2% lower than crude protein. This can affect the milk price calculation by up to 5%.

In the US and Australia the protein content of milk is usually expressed as true protein while in the EU and NZ, crude protein is often used.

Example Calculation: Here is an example of how you can convert the quoted milk price from one country to another by taking the above factors into account:

A US farmer is paid US 11.50/cwt for milk with 3.7% fat and 3.0% actual protein by weight/weight.

A New Zealand farmer wants to know if this is equivalent to $NZ / kg MS and milk solids equivalent to fat + crude protein. Assuming an exchange rate of NZ 1.00 = $US 0.70, and crude protein = true protein + 0.15%, the calculation is as follows:

$US 11.50 / cwt = $NZ 16.43 / cwt

Milk composition = 3.7% fat + (3.0 + 0.15) % crude protein = 6.85% milk solids weight/weight

1 cwt of milk / 220.4 = 45.4 kilograms

$NZ $16.43 / cwt / 45.4 / .0685 = $NZ 5.28 / kg MS CP (crude protein)

For the Australian Farmer there is no need to adjust the crude protein – milk solids = %3.7 + 3.0% = 6.7%. Estimated exchange rate of AU 1.00 $ 1.00 = US 0.87:

$US 11.50 / cwt = $AU 13.22 / cwt

$ AU 13.22 / cwt / 45.4 / .065 = $ AU 4.35 / kg MS TP (real protein)

A UK farmer wants to know what this is in cents pence per liter for their standard milk composition of 4.2% fat and 3.4% crude protein (~3.25% actual protein). This question is a bit difficult because we don’t know the value of fat and protein. The best we can do is assume that the value of milk solids is the same. That will give a fairly close estimate if the ratio of fat to protein is the same in both cases. So by assumption: $US 1.00 = 63 English pence

$US 11.50 / cwt = 724.5 pence / cwt (7.25 English pounds / cwt)

724.5 pence / cwt / 45.4 = 16.0 pence / kilogram

16.0 pence / kilogram x 1.03 = 16.4 pence / litre

This is of course worth combining 3.7% fat and 3.0% real protein. To get an estimate of the European farmer’s sector prices use the relative ratio of total milk solids:

16.4 pence / liter x (4.2 + 3.25) / (3.7 + 3.0) = 18.2 pence per litre.

In continental Europe they think in euros / 100 kg of milk. We’ll take a shortcut here and convert from pence a liter to Euros/100 kg assuming the same milk mix as a UK farmer. At an exchange rate of 1.00 euro = 92 English pence:

18.2 pence per liter = 19.8 euros / 100 liters

19.8 euros / 100 liters / 1.03 = 19.2 euros / 100 kg

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