NMPF unanimously endorses Marketing Order modernization plan

National Milk Producers Federation (NMPF) leadership unanimously endorsed a proposal to modernize the Federal Milk Marketing Order milk-pricing system at its annual meeting in Denver.

“Dairy is positioned to be a trusted anchor in an uncertain world,” said NMPF Chairman Randy Mooney in remarks at the meeting, part of a joint event held by NMPF, the National Dairy Promotion and Research Board and the United Dairy Industry Association. “Together we can seize opportunities to feed the world. Our product is one of the most nutritionally valuable foods available. We create vibrant rural communities that keep America strong by helping to retain local schools, build energy independence, preserve the environment, and ensure food security for everyone.”

Central to discussions was recommendations developed on federal milk pricing after more than 100 meetings that have taken place over the past year. NMPF’s Board of Directors endorsed a proposal that:

• Returns to the “higher of” Class I mover;
• Discontinues including barrel cheese in the protein component price formula;
• Extends the current 30-day reporting limit to 45 days on forward priced sales on Nonfat Dry Milk and dry whey to capture more exports sales in the USDA product price reporting;
• Updates milk component factors for protein, other solids and nonfat solids in the Class III and Class IV skim milk price formulas;
• Develops a process to ensure make-allowances are reviewed more frequently through legislation directing USDA to conduct mandatory plant-cost studies every two years; and
• Updates dairy product manufacturing allowances contained in the USDA milk price formulas.

NMPF continues work on the Class I milk price surface as it examines information on county-level Class I price differentials. That work is expected to be completed later this year. Any final proposal will be reviewed by the organization before it’s submitted to USDA to be considered for a federal order hearing.

“We have made tremendous progress and are moving forward with the strong level of consensus in the producer community that we will need to achieve our goals of modernization,” said NMPF President and CEO Jim Mulhern. “We’ve had many challenging conversations that were important to getting to a national consensus because of the regional nature of federal milk orders. But the give and take that’s needed to get to anything important done will place the entire industry on a sounder footing, creating a lasting benefit for all.”

The American Farm Bureau Federation stated that it supports proposal in a joint statement.

“We support the federal milk marketing order (FMMO) system as key to fair market-based farmer milk pricing and recognize the importance of periodically updating the program to reflect changes in the dynamic U.S. dairy industry. With the last major update to the FMMO system occurring in 2000, we believe it is time to consider improvements that better reflect today’s milk markets.

“In addition, the pandemic-related market disruptions of 2020 also highlighted the need to modernize the program so that it can better mitigate the impacts on producers of disruptions in milk pricing such as occurred then.  At that time, a combination of federal order price formulas, temporary market imbalances, and sudden demand disruptions created disorderly marketing of milk, to the detriment of producers.

Leaders anticipate the prospect of a hearing conducted by USDA in 2023 that could address FMMO price formulas, including all four Classes, as well as the Class I price surface.  An amended pricing system should improve price discovery, improve the clarity of the program, continue to support timely payments to producers, and reduce price incentives to de-pool milk.

Organizations participating in the event and endorsing the joint statement include: American Dairy Coalition, National All-Jersey; Georgia Milk Producers; Indiana Dairy Producers; Missouri Dairy; Dairy Producers of New Mexico; Ohio Dairy Producers Association; Virginia State Dairymen’s Association.

Earlier in the month, American Farm Bureau Federation was joined by representatives of the National Milk Producers Federation, dairy cooperatives, processors, state dairy associations and dairy farmers from across the country for a successful first-of-its-kind industry-wide Federal Milk Marketing Order (FMMO) Forum.

The three-day event provided a platform for farmers’ voices to be heard while also answering the call from USDA Secretary Tom Vilsack to bring the dairy producer community together to discuss FMMO modernization. Discussions at the forum focused on Class price formulas and de-pooling, among other topics.

Edge Dairy Farmer Cooperative, one of the largest dairy co-ops in the country, participated in an industry-wide effort.

"Edge is grateful for the opportunity to join other dairy groups in this collaborative forum to share ideas on the future of our milk pricing system. Discussion highlighted an interest in collaboration and laid a strong foundation for the dairy community to move towards the expectation of consensus laid forth by Agriculture Secretary Tom Vilsack," said Tim Trotter, CEO of the cooperative.