This question has been raised frequently since the announcement at the beginning of the year of a new method of payment for components (effective January 2021).
In order to evaluate the financial impact on your farms, graph #1 shows the revenue gap for one kilogram of fat/day with different solids non-fat/fat ratio. Currently, revenue is favoured with a high SNF/Fat ratio. The new method will considerably reduce the impact of the SNF/Fat ratio on your revenues.
As shown in Table 2, a farm producing 100 kg of fat/day with an SNF/Fat ratio of 2.0 will see its revenues increase by $22,620/year with the new method, while a farm with a ratio of 2.35 will see its revenues decrease by $9,325. If the annual revenue gap is currently more than $40,000 between these 2 farms, it will be reduced to $8561 in January 2021.
Consider that the comparison is based on component prices that we currently have and these prices vary over time. The calculation is based on current conditions in Ontario, but the impact will be similar across P5. The purpose of this article is to measure the impact of the new policy on your annual income.