It takes a "quality mind-set" to produce high-quality milk on a consistent basis. But, pride in the product and regulatory influence can only go so far in motivating producers to do a better job. Basically, it comes down to economics.
The economics involve premiums for higher-quality milk. From my own personal experience, I have seen a correlation between processors who pay high premiums and producers who consistently deliver higher-quality milk as a result. In fact, the "value" message sent by whomever purchases the milk carries more influence than the time that I spend working with producers to improve milk quality.
As I travel the country, I am hearing more about milk quality premiums being offered. These programs are almost as varied as the number of processors offering them. As is the case with employee incentive programs, it is important to evaluate the potential impact of these programs. In many instances, the effect is not nearly as dramatic as we would like. In some cases, the consequences may actually be negative.
In reviewing different programs, the following points become apparent:
- Pay enough
One of the most frequent comments I hear is that the premium offered is not enough to influence a management change. This is a valid concern. Milk quality has a considerable impact on cheese yield, shelf life of fluid milk, quality of yogurt, and so on. And, no processor wants to produce a product that fails to meet consumer expectations.
- Change carries a cost
Consideration must be given to the "on-farm" cost associated with improved quality. In order for a quality premium to be meaningful, it must offset the cost required of a producer to make the needed management changes.
While I don't have a favorite dollar amount, I do think that premiums of just 10 to 15-cents per hundredweight are way too low. From the producer standpoint, it doesn't help offset the cost of management changes, and it doesn't reflect the economic impact that higher quality has at the processor level.
- Premiums vs. penalties
Most of the programs that I consider effective use a combination of premiums and penalties. But, penalties should not become a detriment to on-farm progress. Some programs take away premiums when things go wrong, which sometimes leaves no incentive for the remainder of the period in question. On the other hand, I have seen a program where any penalties assessed were made available to the producer to pay for the development and implementation of a milk-quality plan.
- Use test results carefully
When developing a premium program, processors must give careful consideration to the types of tests used to determine milk quality, how rapidly the test results are reported, and the quality of field support. If problems exist in one of these areas, the quality program could become the source of contention over time rather than a constructive motivator.