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Federal Milk Marketing Order changes kick in

June 1^st kicked off Dairy Month, and many changes under the Federal Milk Marketing Order system.

American Farm Bureau Federation economist Danny Munch tells Brownfield all but one federal order change has been made. “All except for the composition factor increases which USDA delayed six months until December, so those won’t be into effect, which will benefit dairy farmers eventually when they do go into effect.”

Changes include increased Class I fluid milk differentials, going back to the “higher of” Class I price mover, removing barrel cheese from the cheese protein price formula, and an increase to make allowances, which allows processors to keep more money from the farmers’ milk checks.  “Especially in those regions of the country like the upper Midwest, California order, Southwest order, where a significant portion of their utilization is in Class III & IV manufactured milk classes, we do expect to see those bite into dairy farmers’ checks.”

Munch says Farm Bureau’s analysis of make allowance changes would reduce farmer milk checks 87 cents per hundredweight for Class I, 85 cents for Class II, 90 cents for Class III, and 85 cents for Class IV.

He says processors argued during the federal hearing farmers would likely see the impact of make allowances balanced out by higher milk component premiums.  Munch says most milk premiums have disappeared, so that remains to be seen. “We will see if some of those things return and we will be keeping close track by talking to our members to see if that actually happens.”

The Federal Milk Marketing Orders were examined during a USDA hearing, and USDA’s Agricultural Marketing Service wrote the final rule, which was voted on and approved in January.