When Will Dairy's Minimum Pricing System Change?

Since the 1930s, the USDA has implemented a minimum pricing system for dairy farmers through the Federal Milk Marketing Orders (FMMO) program. However, the pricing formulas have not been updated since 2000, causing dairy farmers to face increasing costs for fuel, feed, and medicine. Processors are also experiencing increased expenses.

The COVID-19 pandemic has prompted an examination of the FMMO program, as proposed by the National Milk Producers Federation (NMPF), which has conducted research and dialogues with its 28,000 members. The NMPF's petition seeks to update the program by increasing the prices dairy farmers are guaranteed through changes to transportation and other cost formulas.

Meanwhile, dairy processors represented by the International Dairy Foods Association (IDFA) demand updates to the manufacturing cost allowances last revised in 2006. Although both parties want to modernize the FMMO, they disagree on the details.

In response, USDA announced an action plan on June 1, which includes a pre-hearing on June 16 focusing on the NMPF's petition. USDA will then decide whether to hold a formal hearing and propose changes to the regulatory scheme, which would ultimately require a vote from dairy farmers.

IDFA wants USDA to hold a hearing on their proposed updates to the FMMO program, suggesting a four-year implementation period for their changes. Though both groups agree that prices for processors should increase, the IDFA has not taken a position on other NMPF-proposed revisions.