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Cooperative seeks changes in milk pricing and contracts

A dairy cooperative’s members would like to see changes in how milk is priced. 

Karen Gefvert with Edge Dairy Farmer Cooperative tells Brownfield producers are seeking changes, and there needs to be flexibility in each federal order to allow pricing to better adjust to what the milk is used for. She says that will require legislation to pass modifying the Agricultural Marketing Act. “The reason why that needs legislation and couldn’t be introduced into a federal order hearing is because right now, based on the law, it’s not allowed. We couldn’t have that conversation about flexibility for different orders to price their milk differently.”

Gefvert says it would make sense to hold off on a federal order hearing until legislation altering the Agricultural Marketing Act is changed, as a stand-alone bill or as part of the farm bill, but the National Milk Producers Federation is one of two groups seeking a hearing and they tell Brownfield a hearing could happen as soon as August.  Gefvert says USDA hasn’t scheduled a hearing yet, but they are gathering more information. “They do have a pre-hearing informational meeting scheduled for Friday, June 16th where organizations can bring forth proposals.”

Along with flexibility in milk pricing, Edge Dairy Farmer Cooperative would like to see the federal government require fair, written contracts between dairy farmers and milk processors.

Gefvert tells Brownfield it comes down to fairness in business practices since many farmers have no guarantees from the processor about buying milk and no course of action if the processor no longer wants the farmer’s milk. “How do we ensure that farmers and processors continue to have a very transparent and fair relationship, and we think that starts with having a conversation about contracts, written contracts, and then some of the provisions that are included in those contracts.”

Gefvert says their working group assembled ten contracting principles starting with a written contract that includes payment terms. “Right now, if you are in the federal order and you are pooled, you have protections on how often your processor has to pay you. If you are depooled or not part of a federal order, those protections go away.” She says if the processor depools their milk, then they could also tell the farmers they won’t get paid when expected… and there’s nothing the farmers can do about it.

Gefvert also says making sure the machines weighing and testing samples for milk components are accurate is important for making the correct payments to producers.  She also says both farmers and processors need clear terms for how and when contracts can be terminated.

Allowing farmers to continue utilizing risk management tools, allowing farmers to send milk to another processor if their main processor limits their volume, and having all processors follow the same rules are also part of Edge Dairy Farmer Cooperative’s priorities.

Edge Dairy Farmer Cooperative has producer members in nine states.