TeachMeFinance.com - explain Multiple basing points
Multiple basing points The term 'Multiple basing points ' as it applies to the area of agriculture can be defined as ' 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'.
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