At its March meeting, the National Milk Producers Federation’s Board of Directors unanimously endorsed a proposal to modernise the Federal Milk Marketing Order system, capping more than two years of discussion and more than 130 meetings on various aspects of the proposal.
The plan to revitalise the FMMO system, which governs milk pricing, reflects an industry that has changed dramatically since the last comprehensive overhaul in 2000. “It’s a proposal that all dairy can support,” said Randy Mooney, chairman of the National Milk Producers Federation’s board of directors and a dairy farmer from Rogersville, Missouri.
“After gathering dairy’s best minds and consulting with industry partners, we are moving forward today with a comprehensive FMMO proposal that the entire industry can support,” Mooney said. “We look forward to leading a thorough, deliberate process as we submit this proposal to USDA and collaborate with our allies to modernise milk pricing in ways that benefit dairy farmers and the industry as a whole.”
The board reviewed a set of changes developed and proposed by an NMPF task force of cooperative experts and later approved by the organization’s Economic Policy Committee.
With the board’s approval, NMPF will proceed to submit the proposal to USDA as the basis for a federal order hearing, while also continuing discussions with other dairy stakeholder partners. As the process unfolds, NMPF President and CEO Jim Mulhern stated that the organisation is ready to assist farmers, the dairy industry, and federal officials in any way it can.
“We believe in a brighter future for this industry, and this proposal will contribute to that vision,” he said.
Revisions to the Federal Milk Marketing Order
The most recent comprehensive revision occurred in 2000, but a lot has changed in the dairy industry since then, from product preferences to plant costs to milk composition. According to NMPF, the adopted changes reflect the industry’s evolution while benefiting the farmers who form the foundation of US dairy.
Among the proposed changes to the Federal Milk Marketing Order System are:
- Going back to the “higher of” Class I mover
- Removing barrel cheese from the protein component price formula
- Extending the current 30-day reporting limit on forward priced sales of nonfat dry milk and dry whey to 45 days in order to capture more export sales in USDA product price reporting.
- Updating milk component factors in the Class III and Class IV skim milk price formulas for protein, other solids, and nonfat solids.
- Creating a process to ensure that make-allowances are reviewed more frequently by requiring USDA to conduct mandatory plant-cost studies every two years.
- Changing dairy product manufacturing allowances in USDA milk price formulas
- Class I differential price system is being updated to reflect changes in the cost of delivering bulk milk to fluid processing plants.
This proposal will be submitted to the USDA for an FMMO hearing and a potential producer referendum on the modernization of the Federal Milk Marketing Order in 2023.