Clarifying What Are the Three Grades of Milk and Dairy Classifications

November 16, 2025 •

5 min read

Over 90% of commercially produced milk in the US is Grade A, leading many to wonder about the other categories. In fact, what are the three grades of milk is a common misconception, as the U.S. dairy industry operates primarily on two federal grades for raw milk, not three, alongside a distinct system of usage classes. This article clarifies these systems and explains why most consumers only see Grade A milk.

Quick Summary

The federal government primarily uses two grades for raw milk, Grade A and Grade B, for fluid consumption and manufactured products, respectively. The notion of three grades often arises from confusion with end-product milk classes.

Key Points

Grade A vs. B: The US federal government primarily uses two grades for raw milk, Grade A and Grade B, not three.
Fluid vs. Manufacturing: Grade A milk is bottled for drinking, while Grade B milk is used for processed dairy products like cheese and butter.
High Standards: Grade A milk requires stricter sanitation and has lower bacterial and somatic cell count limits due to its use for direct consumption.
Classes vs. Grades: The confusion over 'three grades' often stems from a separate system of federal milk classes (I-IV) that categorizes milk based on its end-product, not raw quality.
Pasteurization is Key: All fluid Grade A milk is pasteurized to eliminate harmful bacteria, ensuring its safety for drinking.
End-Use is Flexible: Most milk produced is Grade A, and it can be used for manufacturing purposes, while Grade B can only be used for manufacturing.
Butter Exception: A Grade AA exists specifically to denote the highest quality of finished butter, not raw milk.

The Two Official Federal Grades of Raw Milk

Contrary to popular belief, the U.S. dairy industry relies on two main federal grades for raw milk: Grade A and Grade B. This grading system is based on strict quality and sanitation standards set by public health authorities. The grade assigned determines how the milk can be used, with Grade A milk having the most stringent requirements to ensure it is safe for direct human consumption as fluid milk.

Grade A: Fluid Grade Milk

Grade A milk is the highest designation for raw milk and is the only grade that can be bottled and sold for drinking. It is also known as 'fluid grade milk' or 'market milk'. To be classified as Grade A, milk must meet strict sanitary regulations concerning the milking process, farm sanitation, bacterial counts, and temperature control. These regulations are based on the Grade 'A' Pasteurized Milk Ordinance (PMO), which is enforced by state and local regulatory agencies. The stringent standards are in place because Grade A milk is intended for direct consumption, so any potential for bacterial contamination must be minimized. The vast majority of milk produced in the US is Grade A, and even if it's not sold for drinking, it can still be used for manufacturing other dairy products.

Grade B: Manufacturing Grade Milk

Grade B milk is produced under less strict sanitary standards than Grade A milk and is designated exclusively for manufacturing purposes. It is used to create a wide range of dairy products that undergo significant processing, such as cheeses, butter, and dry milk powder. While the standards are less demanding, Grade B milk is still inspected and must meet federal guidelines outlined by the USDA. The final manufactured products derived from Grade B milk are safe because the processing methods, like pasteurization or cheese aging, eliminate any harmful bacteria that might be present in the raw milk. For example, Grade B milk can be used for manufacturing butter, though there is an even higher designation for butter production called Grade AA.

The "Three Grades" Misconception: Grades vs. Classes

The idea that there are three grades of milk likely stems from a misunderstanding of how the dairy industry classifies milk based on its end-use. The federal government has a separate system called the Federal Milk Marketing Order (FMMO) system, which categorizes milk into four classes for pricing purposes, not quality. Many people confuse this classification system with the quality-based grading system.

Decoding Milk Classes

Class I: This is milk used for fluid products, including whole, low-fat, skim milk, and flavored milk. This milk must be Grade A milk.
Class II: This class includes milk used for soft products like yogurt, ice cream, sour cream, and cottage cheese. Again, Grade A milk can be used for this purpose.
Class III: This category covers milk used for hard cheeses, such as cheddar, as well as whey products.
Class IV: This class is for milk used in the production of butter and dry milk powders.

It is important to understand that both Grade A and Grade B milk can be used for manufacturing purposes (e.g., Classes II, III, and IV), but only Grade A can be used for fluid products (Class I). The Grade A versus Grade B distinction is about the initial raw quality, while the four classes relate to the final product application and pricing.

What Determines a Milk's Grade?

Several key factors influence the grade of raw milk. These are tested regularly to ensure compliance with federal and state standards. A cow's milk will be downgraded or rejected if it fails to meet these criteria.

Key quality indicators include:

Bacterial Count: Grade A milk must have a very low bacterial count, measured in colony-forming units (CFU) per milliliter. This ensures the milk is as clean as possible before pasteurization.
Somatic Cell Count (SCC): A lower somatic cell count indicates better udder health in the dairy cattle. High SCC can suggest an infection like mastitis. Lower SCC limits are required for Grade A milk.
Temperature: Raw milk must be cooled to a specific temperature within a short period after milking to inhibit bacterial growth. The temperature must be maintained during storage and transport.
Sanitation: Regular inspections of dairy farms and processing plants ensure all equipment is cleaned and sanitized properly. Grade A farms undergo more frequent and rigorous inspections.

The Role of Pasteurization

All Grade A milk sold for fluid consumption in the U.S. is required to be pasteurized. Pasteurization is a process of heating milk to a specific temperature for a set time to kill harmful bacteria without affecting its nutritional value significantly. This is a critical step in ensuring the safety of milk for the consumer. It is important to remember that even pasteurized milk must begin with high-quality raw milk to ensure the final product is safe and clean.

Grade AA: A Specific Butter Designation

While not a grade for raw fluid milk, the term Grade AA is used for butter. This represents the highest quality of finished butter, considering factors such as flavor, quality, and texture. The use of Grade AA for butter can add another layer of confusion to the milk grading system, but it is entirely separate from the raw milk grading system.


Feature	Grade A Milk	Grade B Milk
Intended Use	Fluid (drinking) milk	Manufacturing dairy products (cheese, butter, powder)
Sanitary Standards	Most stringent, per Pasteurized Milk Ordinance (PMO)	Less stringent, follows USDA guidelines for manufacturing
Regulatory Oversight	Strict inspection and certification by state authorities	USDA guidelines for manufacturing purposes
Maximum Bacteria Count	Lower legal limit allowed	Higher legal limit allowed
Somatic Cell Count (SCC)	Lower legal limit allowed	Higher legal limit allowed

Conclusion

While many people search for what are the three grades of milk, the truth is that the federal system is based on two primary raw milk grades, Grade A and Grade B. This distinction is critical for public health, as it ensures that milk intended for direct consumption meets the highest safety standards. Consumers can rest assured that any milk they purchase for drinking is Grade A, while milk used in processed products like cheese and butter may be either Grade A or Grade B. The separate system of milk classes further categorizes milk based on its end product, helping to manage a complex dairy market. By understanding the difference between grades and classes, consumers can have a clearer picture of how their dairy products are classified and processed. For more information, refer to official dairy glossary sources from government bodies such as the California Department of Food and Agriculture.

Frequently Asked Questions

Milk grade refers to the quality of the raw milk based on sanitary conditions and bacterial counts, primarily Grade A (for fluid consumption) and Grade B (for manufacturing). Milk class is a separate system used for pricing, categorizing milk by its end-product use, such as Class I for fluid milk and Class III for cheese.

All fluid milk sold for direct consumption in the United States must meet the stringent quality and safety standards of Grade A milk. Therefore, the milk found in the dairy aisle is exclusively Grade A milk, which has been pasteurized and processed for drinking.

Grade AA is not a grade for raw fluid milk. It is a separate designation for finished butter, indicating the highest quality based on flavor, texture, and other characteristics.

No, Grade B milk cannot be used for fluid consumption. Its less stringent sanitary requirements mean it must be manufactured into other products like cheese and butter, where processing methods eliminate potential contaminants.

If raw milk fails to meet Grade A standards, it is typically downgraded to Grade B for use in manufactured products. If it doesn't meet Grade B standards, it may be rejected entirely.

The grade of milk primarily relates to its initial sanitary quality and bacterial count, not its nutritional content. The nutritional profile is more dependent on factors like fat content (whole, 2%, skim) and breed of cow.

Yes, milk grading systems can vary significantly by country. For example, some countries may use different designations or have unique quality control measures based on their specific regulations.