The National Milk Producers Federation hand-delivered a comprehensive proposal to the U.S. Department of Agriculture today asking for a modernization of the Federal Milk Marketing Order system.
The last comprehensive revision occurred in 2000, but a log has changed in the dairy industry since then — from product preferences and plant costs to milk composition.
“Dairy farmers and their cooperatives need a modernized Federal Milk Marketing Order system that works better for producers,” said NMPF President and CEO Jim Mulhern. “By updating the pricing formulas to better reflect the value of the high-quality products made from farmers’ milk, by rebalancing pricing risks that have shifted unfairly onto farmers, and by creating a pathway to better reflect processing costs going forward, we are excited to submit this plan as a path toward a brighter future for dairy.”
Upon official acceptance, the USDA will have 30 days to review the plan and decide whether and how to move forward with a federal order hearing to review the plan.
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Here are some of the key takeaways from NMPF’s proposal:
- Updating dairy product manufacturing allowances or the “make allowance” contained in the USDA milk price formulas
- Discontinuing the use of barrel cheese in the protein component price formula
- Returning to the “higher of” Class I mover
- Updating milk component factors for protein, other solids, and nonfat solids in the Class III and Class IV skim milk price formulas; and
- Updating the Class I differential price system to reflect changes in the cost of delivering bulk milk to fluid processing plants.
NMPF will pursue two other components of its Federal Order proposal, approved unanimously by the organization’s Board of Directors in March, outside of the federal order hearing process, as they don’t involve changing federal order regulations. The recommendations, which remain essential parts of NMPF’s modernization plan, are:
- Extending the current 30-day reporting limit to 45 days on forward-priced sales on nonfat dry milk and dry whey to capture more export sales in the USDA product price reporting, which can be implemented through federal rulemaking.
- Developing legislative language for the farm bill to ensure the make allowance is regularly reviewed by directing USDA to conduct mandatory plant-cost studies every two years.
Mulhern urged the USDA to grant a hearing on the entire NMPF proposal, noting how some components’ effectiveness depends on including others. Mulhern also thanked other organizations that have helped NMPF forge necessary producer consensus by sharing views and insights throughout the process, saying that the spirit of unity and good-faith discussion will help FMMO modernization move forward more quickly.
“From state and regional dairy associations to the American Farm Bureau Federation, dairy farmers have had many allies and friends throughout this process,” Mulhern said. “As Secretary Vilsack has stated, consensus is necessary to successful modernization. We have that producer consensus, and we look forward to working together toward the adoption and implementation of our plan.”
