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Dairy stakeholders discuss Federal Milk Marketing Order issues

Dairy farmers and processors talked about milk pricing and the Federal Milk Marketing Orders during a weekend forum in Kansas City.

Lucas Sjostrom discusses Federal Milk Marketing Order Forum with Brownfield’s Larry Lee
Lucas Sjostrom

American Farm Bureau Federation organized the discussion, and Lucas Sjostrom with Minnesota Milk appreciated how the format encouraged discussion. He tells Brownfield, “American Farm Bureau did a great job at putting us at very diverse tables, and it was very interesting hearing what everyone’s top issue was, and how much we maybe didn’t care about the top issue for the person across the table.” Sjostrom says, “I think that really helped us think about what our problems are and how to solve them collectively.”

Roger Cryan

Farm Bureau’s Chief Economist is Roger Cryan. He tells Brownfield, “I learned that there was a lot more agreement in the industry on what we need to do on federal orders than I had anticipated.” He says, “I was very pleased at how much consensus there was on a lot of issues including changes to Class I, changes to pooling, and even in how we should address the price formulas if they are going to be changed.”

Each table had several discussions between presenters who wrote down their issues and priorities, which Farm Bureau will use to compile a report.  The top priority for most of the working groups was to go back to the “higher of” formula for the class one milk mover, replacing the “average of” formula adopted in the 2018 Farm Bill. That is something Peter Vitaliano with the National Milk Producers Federation says their board is leaning towards supporting in their annual meeting later this month.

Roger Cryan discusses Federal Milk Marketing Order Forum with Brownfield’s Larry Lee
Pennsylvania Farm Bureau President Rick Ebert, USDA’s Dana Coale, Calvin Covington with Southeast Milk, and Anja Radabaugh from Western United Dairies during a panel discussion at the Federal Milk Marketing Order Forum

Discussion throughout the weekend favored keeping the federal orders and not eliminating them. Cryan says, “Federal orders are important to farmers, and we want to fix them.”

After the weekend forum, American Farm Bureau Federation and the National Milk Producers Federation released a joint statement that some but not all participating groups and farmers signed on to. It says, “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.

“We 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.

“We are encouraged by the healthy discussion at this week’s Federal Milk Marketing Order Forum and look forward to continuing the discussion about promoting a healthy dairy industry through modernization of federal order pricing.” 

Organizations participating in the event and endorsing the joint statement include:

American Dairy Coalition

National Farmers Organization

National All-Jersey

Georgia Milk Producers

Indiana Dairy Producers

Kentucky Dairy Development Council

Missouri Dairy

Dairy Producers of New Mexico

Ohio Dairy Producers Association

Virginia State Dairymen’s Association

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