Multiple basing points

Multiple basing points is a method of regional pricing in milk marketing orders that would allow more than one basing point, or surplus area, to be used. Surplus areas are administratively defined as areas with low Class I utilization, meaning that a relatively small percentage of the milk produced in an area is used in that area as Class I (fluid) milk. In a multiple basing point system, the order used as the basing point has the smallest Class I differential (the difference between the Class I price and the Class III price). The Class I differential for other orders is then based on transportation costs to the nearest basing point plus the minimum differential. Pricing now largely reflects the Upper Midwest as the only basing point, even though the northeast and southwest are surplus areas.