The price formation mechanism of raw milk is the core issue of the interest linkage mechanism in the dairy industry. This paper focused on the relationship between buyers and sellers,and analyzed the formation mechanism of raw milk prices in China from aspects such as the form of raw milk purchase and sales contracts,raw milk indicator testing,raw milk pricing system,and raw milk transaction settlement methods. On this basis,these issues are discussed e.g. the current raw milk price formation mechanism is mainly formulated by dairy enterprises,the demands of dairy farms （households） to seek fair trade are nowhere to be expressed,the binding force of negotiated prices for raw milk needs to be improved,and the supervision mechanism for raw milk transactions needs to be improved.Five strategies and suggestions are proposed,such as establish a fair,just and open raw milk price formation mechanism,establish an institutionalized raw milk price negotiation mechanism,explore a raw milk purchase and sales contract negotiation mechanism,establish an open and transparent raw milk pricing system,and establish a third-party testing system for raw milk.