National Milk Producers Federation requests milk marketing order hearing

The National Milk Producers Federation has asked the USDA to conduct a hearing on the Federal Milk Marketing Order system.  CEO Jim Mulhern tells Brownfield the formulas are important for determining the price of milk, regardless of what it’s used for. “That’s what our proposal does, a comprehensive update that would adjust those pricing formulas and deal with the major issues that need to be addressed in this program so it works for today’s dairy industry.”

Jim Mulhern

A separate request for a Federal Milk Marketing Order hearing has been made by the Wisconsin Cheese Makers Association requesting adjustments to the make allowance, but Mulhern says adjustments are needed beyond the make allowances. “Make allowances need to be adjusted. They haven’t been changed in fifteen years, but other parts of the program haven’t been changed in 23 years, so a make allowance adjustment is part of our proposal. It’s an interim adjustment because we really don’t have good, solid data.”

And, Mulhern says the need for better data on manufacturing costs is why they are asking Congress to require mandatory production cost surveys every two years as part of the next farm bill. “Our proposal is to do an interim adjustment in those make allowances, get the audited data for the future, and then be able to make further adjustments down the road.”

Mulhern says the mandatory manufacturing cost survey is their only major farm bill item, and the other issues can be addressed in a USDA hearing.

In a letter, the National Milk Producers Federation is asking USDA to consider the following changes:

  • Increase make allowances in the component price formulas to the following levels: Butter $0.21 per pound, Nonfat dry milk $0.21 per pound, Cheese $0.24 per pound, Dry Whey $0.23 per pound,
  • Discontinue the use of barrel cheese in the protein component price formula
  • Return to the “higher-of” Class I mover
  • Update the milk component factors for protein, other solids, and nonfat solids in Class III and Class IV skim milk price formulas.  
  • Update the Class I differential pricing surface throughout the United States

NMPF’s plan would include adjusting the butterfat price from USDA’s survey price minus 17.15 cents to the survey price minus 21 cents.  The nonfat solids price would be the nonfat dry milk survey price minus 21 cents instead of 16.78 cents.  There would also be adjustments for protein prices.

Other groups including American Farm Bureau Federation and the American Dairy Coalition are asking USDA for Federal Milk Marketing Order hearings.  Laurie Fischer with American Dairy Coalition tells Brownfield they are now evaluating the proposal from National Milk Producers Federation.  The American Dairy Coalition is on record questioning the make allowances and how the Federal Milk Marketing Order system takes money from farmers to pay for processing capacity growth and to reduce vulnerability to international competitors.

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