Federal Milk Marketing Orders

Organic Dairy Groups File Lawsuits Over Federal Milk Pricing System

Tue, 28 Apr 2026 17:54:05 GMT

Organic dairy farmers are challenging their required participation in the Federal Milk Marketing Order (FMMO) program through a series of federal lawsuits, arguing the system does not reflect how organic milk is produced or marketed.

Members of the Coalition for Organic Dairy Exemption (CODE), including Aurora Organic Dairy , Horizon Organic Dairy and CROPP Cooperative/Organic Valley , have recently filed three federal court actions questioning the constitutionality of including organic milk in FMMOs. A separate class action claim seeks compensation for payments farmers say were collected over the past six years without providing a return.

At the center of the filings is a request to exempt organic dairy from the FMMO system, rather than dismantle the program entirely.

“The federal government has locked in an updated dairy pricing regulation that actively harms organic dairy farmers,” says Elvin Ranck, an organic dairy farmer plaintiff from Pennsylvania. “It systematically siphons revenue generated from organic dairy sales and redistributes it to non-organic dairy producers and their partners.

He continues: “This is effectively a government taking. CROPP Cooperative, of which I am an owner-member, pays millions of dollars each year into the Federal Milk Marketing Order pools, yet those dollars never return to organic farmers like me, and under the current system, they never will. At some point, we have to stand up for ourselves.”

Separate Supply Chains, Shared Pricing Rules

The lawsuits argue organic and conventional milk are treated the same under FMMO pricing and pooling rules, even though they operate under different production systems.

Organic milk cannot be intermingled with conventional milk under federal regulations and typically moves through separate supply chains. Organic production also comes with higher feed, certification and handling costs, along with additional processing requirements.

While organic milk represents about 3% of total U.S. milk production, it accounts for roughly 7% of fluid milk sales. More than 10% of U.S. dairy farms are certified organic.

Plaintiffs argue the current structure pulls revenue out of organic milk checks instead of supporting investment in that segment.

Previous Attempts Through USDA

According to CODE, the legal filings follow multiple attempts to address the issue through USDA’s administrative process.

The group submitted proposals in 2015 that were not advanced and presented organic-specific recommendations during the 2023 national FMMO hearing that were not considered. Concerns raised in post-hearing comments in 2024 were not reflected in the final rule, and administrative challenges filed in 2025 were opposed.

“USDA, under both Republican and Democratic administrations, has spent more than a decade protecting a Depression-era pricing system that forces organic dairy to subsidize conventional products, while refusing every administrative avenue that might have resolved the dispute without litigation,” CODE members said in a press release. “There is a growing movement in this country, across party lines, that wants to know where food comes from and how it’s produced. Organic farmers help make that possible. The federal government should not be making it harder for us to survive, and it has had every opportunity to fix this.”

What the Lawsuits Would Change

The lawsuits emphasize that the goal is not to eliminate FMMOs, but to remove organic milk from a pricing structure plaintiffs say was not designed for it.

“Federal law already recognizes organic as different. USDA’s own organic standards treat our milk as a distinct product with distinct requirements,” CODE members said. “We are not asking to tear down the FMMOs. We are asking FMMOs to reflect a distinction that the law already makes – and that consumers already understand.”

If successful, the cases could change how organic milk is handled within federal pricing orders and whether producers remain subject to pooling requirements moving forward.

The Hidden Squeeze: Why the $5 Make Allowance is the New Battleground for the U.S. Milk Check

Wed, 08 Apr 2026 11:58:29 GMT

In the world of dairy economics, there is a term that often flies under the radar of the average consumer, yet it keeps thousands of dairy farmers awake at night: the make allowance. To a processor, it is a necessary calculation of the cost to turn raw liquid milk into cheese, butter or powder. To the American Dairy Coalition (ADC) and the farmers they represent, it has become an invisible, multidollar tax that is fracturing the foundation of the family farm.

As of March 30, 2026, the tension between the barn floor and the processing plant has reached a boiling point. After requesting an extension March 20, which was not granted, ADC submitted final comments by the March 30 deadline to the USDA Agricultural Marketing Service (AMS) regarding the Advance Notice of Proposed Rulemaking (ANPR).

Math of the Margin: A $5 Deduction

For years, the make allowance was a relatively stable figure. However, following the 2025 Federal Milk Marketing Order (FMMO) changes, the math has shifted dramatically in favor of the processor.

According to a deep dive by Sherry Bunting, ADC market analysis and policy adviser, the first eight months under the new 2025 rules have seen total make allowances surge.

“When translated from cents per pound into real milk check impact, and paired with rising component levels, total deductions now range from $3.22 to as high as $5.04 per cwt at pool average test,” she says.

Using federal pricing formula calculations developed with longtime expert Calvin Covington, former CEO of Southeast Milk and National All-Jersey, Bunting points out that the eight-month average deduction for Class III increased $1 at $4.74 per cwt, with Class IV up $0.93 at $3.32.

“In practical terms, that’s a multidollar deduction built into the pricing system on the front end,” says Laurie Fischer, CEO of ADC.

The impact of this front-end deduction is staggering. ADC analysis shows that while estimated processor gross margins have jumped by 26% to 39%, the minimum milk value paid to farmers has plummeted by 5% from this change alone. To put that in perspective, that 5% reduction effectively wipes out nearly two decades of modest, hard-won price gains for producers — at a time when the cost of diesel, labor and feed is at an all-time high.

Transparency Gap

One of the primary green flags producers were looking for in USDA’s mandatory survey was transparency. If farmers are going to pay for the processing, they want to see the receipts. However, the process has been marred by what ADC calls a “lack of meaningful engagement.”

USDA provided a 30-day comment period — a window so small that many producers were unaware the conversation was even happening. With limited public outreach, the very people whose checks are being “audited” were left on the sidelines.

“Farmers didn’t have time to fully engage in a process that directly affects how their milk is priced,” Fischer explains. “There is a real expectation that this survey will provide transparency, and USDA needs to ensure that expectation is met.”

Efficiency Paradox: Where are the Savings?

Perhaps the most compelling argument raised by ADC involves the massive leap in plant efficiency over the last quarter-century. Historical data compiled by Covington shows that in 2000 it took 99.47 lb. of milk to produce 10 lb. of 38% moisture cheddar cheese. By 2025, that dropped to 87.2 lb.

“In more practical terms, it required almost 25 less tankers (50,000 lb./tanker) of milk per day to produce 1 million pounds of 38% moisture cheddar cheese compared to 2000,” Covington notes.

The logic is simple: If it takes fewer trucks, less milk volume to handle, less time to process the same amount of product and more product to spread the fixed plant costs, why are the deductions for processing costs reaching record highs? In its comment, ADC seeks distinction between fixed and variable costs to recognize this yield gain.

ADC is urging USDA to ensure the survey accounts for these gains in plant efficiency. They are also sounding the alarm on “cost shifting.” Modern dairy plants produce an array of high-value products — ultrafiltered milks, specialized proteins and niche ingredients — that aren’t even part of the federal pricing formulas. Without a clear separation of costs, farmers fear they are subsidizing the production of high-margin items that don’t actually contribute to their own milk checks.

Price Taker Dilemma

The fundamental struggle of the U.S. dairy farmer is their status as a “price taker.” In almost every other sector of the economy, if your costs go up, you raise your prices. In dairy, the farmer ships the milk weeks before they even know what they will be paid for it.

“Dairy farmers remain the only participants in the supply chain without the ability to set prices or recover costs through a built-in mechanism,” Fischer says.

Processors have the make allowance to protect their margins. Retailers have the ability to adjust the price on the shelf. The farmer, standing at the beginning of the chain, has only the hope that the federal formulas remain fair. But when the gap between the All-Milk price (used for risk management programs like DMC) and the mailbox price (what actually hits the bank account) widens to over $1 per cwt, the system begins to break.

Road to a Fair Formula

ADC’s message to USDA is one of focus and fairness. They are calling for an end to scope creep within the cost survey; the survey must remain strictly focused on the physical cost of converting milk into the four specific products used in federal formulas: butter, nonfat dry milk, cheese and dry whey.

As the industry moves toward the next chapter of the margin revolution, the demand for a stable, legal workforce and high-tech efficiency must be matched by a regulatory environment that values the producer.

The domestic supply chain is more than a logistical network; it is a promise of food security for a growing world. However, that chain is only as strong as its first link: the producer. If the $5 make allowance continues to deepen its impact without transparency or justification, the heartbeat of U.S. dairy — the family farm — is at risk of stopping.

“This is about transparency and fairness,” Fischer says. “Farmers should not be paying for costs tied to products that do not determine their milk price.”

Key Structural Shifts That Dairy Producers Need to Follow in 2025

Thu, 06 Mar 2025 14:18:31 GMT

The dairy industry is no stranger to change, but as we move through 2025, several significant transformations are on the horizon. According to Ben Laine, a senior dairy analyst with Terrain, there are three major structural changes to watch closely: federal milk marketing orders, new cheese processing capacity and trade dynamics. These shifts are intricately linked, shaping the industry’s landscape in profound ways.

Federal Milk Marketing Orders and Trade
Laine points out that adjustments in federal milk marketing orders are crucial, impacting both cheese plant investments and broader trade considerations. The election outcomes have influenced perspectives on trade and globalization, weaving these factors together. A significant issue raised by Laine is the potential surplus of cheese due to increased processing capacity, which could affect pricing if not balanced with robust trade.

Reflecting on the past years, Laine observes that the distinction between successful and challenging years for milk prices often hinges on exports. Domestically, the industry seems stable, but exports remain pivotal, especially amid unpredictable trade and tariff situations.

“I think that if we look back over the last several years, what separates a really good year from a really bad year, from a milk price perspective, has been exports,” he says, noting that domestically, we’ve been doing pretty good in terms of what can swing the balance. “And that’s why I think exports are one of the key things this year, if not the key thing to watch, especially as we’ve got uncertainty around trade and tariff battles.”

The Resilience of American Dairy Farmers
Michael Dykes emphasizes the adaptability of American dairy farmers in meeting processing demands. He praises their ability to respond to market signals effectively. When faced with questions about their capacity to satisfy processing requirements, Dykes confidently states, “Never underestimate the American dairy farmer. If there’s a call for milk, dairy farmers will have milk.”

Laine agrees, expressing belief in the farmers’ resourcefulness.

“American dairy farmers are going to find a way. They are going to make it happen. If there’s a need for milk, somebody’s going to be willing to build that,” he says.

However, Laine notes changes from a decade ago when surplus heifers were commonly kept on hand. Today, factors like strong cull cow checks and beef-on-dairy income have shifted the dynamics, making such practices less prevalent.

Challenges and Opportunities
As the dairy industry evolves, Laine highlights the importance of addressing whether to pursue beef-on-dairy strategies or increase dairy numbers. These decisions rest largely with the producers who control breeding processes. Emphasizing beef-on-dairy as a crucial element for strategic management, he suggests conducting hard discussions at the farm level to evaluate growth potential.

Looking Ahead: Market Competitiveness
Laine remains optimistic about potential reforms in federal milk market orders, anticipating less volatility for dairy farmers by 2025. He believes that emerging cheese manufacturing plants will drive a competitive market for milk, fostering opportunities for negotiation and strategic movement by producers.

“I think that ultimately the markets are going to work,” he says. “And the thing that I keep coming back to is, if I think about as it relates to cheese manufacturing plants, if you’re building new cheese plants and you need to fill them with milk, you’re going to pay what it takes to get the milk in there.”

Laine shares that it will be more of a competitive market for milk.

“It’s going to be a little bit more of a seller’s market in terms of milk. So, producers might be able to negotiate and move around and look at it, and that’s not something they’ve had in a long time,” he says.

The prospect of a more seller-friendly environment could benefit dairy farmers significantly, given the anticipated demand from new cheese processing facilities. Ultimately, the industry is poised for a transformative phase, offering both challenges and opportunities for those ready to adapt to this changing landscape.

As the dairy sector navigates 2025, stakeholders must keep these structural shifts in focus to leverage emerging opportunities while bracing against potential market turbulence.

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Insights into the USDA's New Milk Pricing Reforms

Thu, 16 Jan 2025 19:32:38 GMT

The United States Department of Agriculture (USDA) Agricultural Marketing Service (AMS) has unveiled a pivotal final rule that amends the uniform pricing formulas for all eleven Federal milk marketing orders (FMMOs). This substantial shift follows a 49-day national hearing that took place from August 23, 2023, to January 30, 2024, in Carmel, Indiana. During this hearing, the AMS gathered testimonies and evidence supporting 21 proposals from the dairy industry, leading to essential reforms in milk pricing.

After the hearing, a recommended decision was issued on July 1, 2024, and subsequently published in the Federal Register on July 15, 2024. This marked the commencement of a 60-day public comment period, during which a total of 128 comments were received.

Industry Responses
Michael Dykes, President and CEO of the International Dairy Foods Association, commented on the announcement: “The reforms included in today’s USDA announcement include important updates to elements of the FMMO system, including much-needed changes to ‘make allowances.’ While the USDA process did not address all issues within the supply chain, particularly for Class I and organic milk processors, IDFA is optimistic that this process has laid the groundwork for a unified and forward-looking dairy industry, and we are grateful to our members who provided testimony and engaged in this process over the past 2+ years.”

Additionally, National Milk Producers Federation (NMPF) also thanked USDA and the dozens of farmers and cooperative leaders who successfully steered Federal Milk Marketing Order modernization to what they call a successful conclusion.

“Dairy farmers and cooperatives have done what they do best – lead their industry for the benefit of all,” Gregg Doud, president and CEO of NMPF said. “This final plan will provide a firmer footing and fairer milk pricing, which will help the dairy industry thrive for years to come. We appreciate the monumental contributions across government and the dairy industry that made this happen. The industry, and all dairy consumers, owe all of you a debt of gratitude.”

Edge Dairy Cooperative CEO, Tim Trotter said that they are pleased with this announcement today, but also recognize there is more to be done.

“We are glad that AMS recognized the importance of risk management, through the introduction of ESL pricing for beverage milk, and lag for implementation of higher skim component tests. More work should be done to improve milk check transparency so dairy farmers know if their milk is pooled or not pooled. We hope all future changes will also be done in a way that does not interfere with other USDA programs that benefit dairy farmers, such as livestock insurance,” he said.

Key Amendments to Pricing Formulas
The final rule contains several significant updates to the pricing formulas:

Skim Milk Composition Factors: Updated to 3.3% true protein, 6.0% other solids, and 9.3% nonfat solids, with a six-month delayed implementation.

Survey Adjustments: Removal of 500-pound barrel cheddar cheese prices from the Dairy Product Mandatory Reporting Program survey.

Manufacturing Allowances Update: Class III and Class IV manufacturing allowances are updated as follows:

• Cheese: $0.2519 per pound

• Butter: $0.2272 per pound

• Nonfat Dry Milk: $0.2393 per pound

• Dry Whey: $0.2668 per pound

• Butterfat recovery factor adjusted to 91%

Class I Pricing Formula: Reverting to the higher-of advanced Class III or Class IV skim milk prices for the month, with an additional extended shelf life (ESL) adjustment based on a 24-month rolling average adjuster with a 12-month lag.

Class I Differential Values: Updates reflect the increased cost of servicing the Class I market.

Implementation Timeline
The majority of these rule changes will take effect on June 1, 2025. However, adjustments to the skim milk composition factors are scheduled for December 1, 2025. These modifications will impact milk marketed from those dates, influencing the advanced prices, pricing factors, and component prices announced monthly.

For those seeking more detailed information, copies of the final rule, educational materials, and the entire hearing record are accessible via the hearing webpage or by contacting USDA/AMS/Dairy Program at STOP 0225 - Rm. 2530, 1400 Independence Ave. SW, Washington, DC 20250-0225. Inquiries can also be directed to fmmohearing@usda.gov.

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Looking Back and Ahead: Insights from NMPF Chief Economist Peter Vitaliano

Tue, 14 Jan 2025 13:17:41 GMT

The dairy industry, a sector in constant evolution, owes much of its transformation and adaptation to visionary leaders such as Peter Vitaliano. After nearly four decades serving as the Chief Economist for the National Milk Producers Federation (NMPF), Vitaliano recently retired, leaving behind a legacy of insight and progress. In a recent episode of the Dairy Defined podcast, Vitaliano reflected on the changes he has observed over his tenure and shared his vision for the future of the industry.

A Journey Through Time
Vitaliano’s journey with NMPF began shortly after the 1985 Farm Bill, a time of significant policy implementation, such as the whole herd buyout program and adjustments to federal orders. Reflecting on the industry back then, Vitaliano highlighted the larger number of smaller farms and cooperatives in traditional dairy regions like the upper Midwest and the Northeast. These areas, although rich in dairy history, were not expanding in production, contrary to the rapid growth witnessed in the Western states with their larger farms. The Southeast, meanwhile, was experiencing a notable decrease in milk production capacity.

This geographical shift brought about challenges in unifying the industry’s policy approach. Vitaliano noted the difficulty NMPF faced during those early years in reconciling different regional needs. The overarching issue was how to manage the substantial dairy surpluses created by peak price support levels—a dilemma that dominated the industry discussions during Vitaliano’s early years.

Future Outlook: Continuing Trends and New Challenges
The trajectory that Vitaliano foresees suggests a continued decline in the number of smaller dairy farms, as larger farms, and potentially another wave of cooperative consolidation, take precedence. Interestingly, he anticipates the emergence of dairy farms so sizeable that they may opt-out of the traditional cooperative marketing structures.

This trend introduces specific challenges, particularly concerning the volume of milk that may fall outside the eligibility criteria for NMPF membership, prompting potential policy overhauls. According to Vitaliano, these changes will call for adjustments in federal orders, dairy margin coverage, and policies that are increasingly accommodating to the evolving industry. Crucial areas of focus include immigration reforms favorable to dairy, progressive trade policies, accurate food labeling, and the expansion of farm programs to meet modern consumer demands.

A Promising Future Built on a Solid Foundation
Despite potential challenges, Vitaliano remains optimistic about the future of the dairy industry. His confidence stems from the progressive nature of farms and farmers, alongside the leadership and robust infrastructure present within dairy organizations. He emphasizes that this dynamic foundation was evident when he joined NMPF, remains today, and will continue to be a fundamental aspect of the industry’s future.

While Vitaliano may be stepping back from his role at NMPF, his reflections and forecasts provide invaluable insights into the past, present, and future of dairy. As the industry navigates consolidation and policy evolution, it is the innovative spirit and strong community leadership that will guide its ongoing success.

To listen to the whole conservation between Vitaliano and Alan Bjerga, NMPF’s Executive Vice President of Communications and Industry Relations: Vitaliano’s Valedictory: Economist Shares Thoughts on Dairy’s Evolution - NMPF

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USDA Finally Releases New Federal Milk Marketing Order Recommendations

Tue, 02 Jul 2024 19:30:11 GMT

Almost a year after USDA’s Ag Marketing Service (AMS) first began considering more than 12,000 pages of testimony and evaluating 21 different accepted proposals during a 49-day national hearing held in Carmel, Ind., the organization has finally issued its Recommended Decision proposing to amend the uniform pricing formulas applicable in all 11 Federal milk marketing orders (FMMOs).

According to USDA, the Recommended Decision puts forth a package of amendments to update formulas and factors based on the evidentiary record of the proceeding. More specifically, this decision recommends the following:

1) Milk Composition Factors: Update the factors to 3.3% true protein, 6.0% other solids, and 9.3% nonfat solids.

2) Surveyed Commodity Products: Remove 500-pound barrel cheddar cheese prices from the Dairy Product Mandatory Reporting Program survey and rely solely on the 40-pound block cheddar cheese price to determine the monthly average cheese price used in the formulas.

3) Class III and Class IV Formula Factors: Update the manufacturing allowances to: Cheese: $0.2504; Butter: $0.2257; NFDM: $0.2268; and Dry Whey: $0.2653. The Recommended Decision also proposes updating the butterfat recovery factor to 91%.

4) Base Class I Skim Milk Price: Update the formula as follows: the base Class I skim milk price would be the higher-of the advanced Class III or Class IV skim milk prices for the month. In addition, adopt a rolling monthly Class I extended shelf life (ESL) adjustment that would provide for better price equity for ESL products whose marketing characteristics are distinct from other Class I products.

5) Class I differentials: Update the Class I differential values to reflect the increased cost of servicing the Class I market. The county-specific Class I differentials are specified in the decision.

National Milk Producers Federation president and CEO Gregg Doud issued a statement following the news of the Recommended Decision .

“Based on our initial reading, NMPF is heartened that much of what we proposed after more than two years of policy development, and another year of testimony and explanation, is reflected in USDA’s recommended Federal Milk Marketing Order modernization plan.

“Crafting an effective milk-pricing system for farmers is complex and requires a careful balance. USDA’s plan acknowledges that complexity and, while not matching our proposal in every detail, looks largely in keeping with the comprehensive approach painstakingly determined by the work of dairy farmers and their cooperatives over the past three years. We look forward to examining this proposal topic-by-topic, gathering input regarding the various needs of our members nationwide, and adding their insights as this process moves toward a vote of producers,” Doud concluded.

Edge Dairy Farmer Cooperative CEO, Tim Trotter, also issued a statement, noting that the 332 page document will take some time to review.

“We will need a few days to analyze today’s report thoroughly, but what we can say is we appreciate the thorough and dedicated work the AMS team did in curating all the testimony, written responses and market analysis done to get us where we are today,” Trotter said.

With the USDA having released its recommendations, the next phase involves gathering feedback from stakeholders. Publication of the Recommended Decision in the Federal Register is anticipated in early July 2024 and will invite public comments on the recommended proposals. Once it is published, comments may be submitted followed by a farmer vote to decide whether to accept the proposal.

“Today’s announcement provides us a preview of the official recommendation, which will be published in the Federal Register sometime in the next few weeks,” said Lucas Sjostrom, Edge Managing Director. “Once the recommendation is published, the clock starts. From the day of publication, there will be a 30-day window to provide feedback to the AMS; 60 days after public comments close the AMS will release their final recommendation. We anticipate there will be a period of education between the final recommendation and when farmers will need to vote. We anticipate a vote to take place sometime close to early 2025.”

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Producers See Room for Improvement When It Comes to Processor Relationships

Mon, 24 Jun 2024 12:52:12 GMT

One vital ingredient for establishing a solid processor – producer relationship is communication. In fact, fluid dialogue between the two is what is needed, especially as dairies grow more sophisticated. Producers truly need to fully understand more than just what happens to their milk once it leaves the farm.

Ed Gallegher, president of Dairy Farmers of America (DFA) Risk Management program, also adds the need for producers to have a strong relationship with someone who can talk about milk price risk and food price risks that are in the marketplace.

“It’s an important aspect to focus on,” he says.

The world pandemic shined a light on this subject, as many dairies were forced to dump their milk. Stories have unraveled of farms losing their milk market overnight. And these dairies know trying to find a processor is easier said than done. Now, as we await a new Farm Bill, it appears that nearly every group tied to dairy has an opinion on the Federal Milk Market Order (FMMO) reform debate.

So, despite billions of dollars in the pipeline for future processing capacity, it was not a big surprise that nearly a third of our survey respondents cited processors and market confidence as one major challenge impacting their ability to expand and grow.

In fact, one evaluator shared, “We just left a milk cooperative that had drastically increased a marketing fee and milk hauling rate over the past two years.”

Near-Term Hurdles

Ten percent of respondents shared that inadequate capacity for processing as a near-term hurdle with one surveyor sharing, “It’s hard to find a milk buyer for a dairy of my size, so I have to plan to wind down operations or change to a different type of farming as I approach retirement.”

New York dairy farmer, Tyler Reynolds, shared with Dairy Herd Management that the more honest producers are with the processors on their future hopes and desires, is a win for all.

“Processors need to plan, too,” Reynolds, who owns Reyncrest Farms, home to 1,400 cows near Buffalo, says.

Roughly half of dairy operators that responded to the survey are not terribly confident in their processor relationship. When asked about their confidence in the future of their existing milk market, the overall response was softer yet.

However, 70% of respondents believed the dairy industry has future opportunities when it comes to innovation and processing. Overall, most operators shared they are not looking to vertically integrate as an avenue to generate market stability.

Download Farm Journal State of the Dairy Industry Report here:

State of the Dairy Industry | Dairy Herd

A Big Look Ahead for Dairy: Register for a Free Webinar Today

Mon, 17 Jun 2024 12:25:10 GMT

The challenges and opportunities that dairy farmers face are real. The rollercoaster prices that we have seen unfold in the last couple of years really underscores just how volatile the dairy economy is.

During a free Farm Journal State of the Dairy Industry webinar, leading industry experts will share their insights and perspectives on what the future of the dairy industry looks like. We will explore every corner of dairy—from future technology investments to succession planning, sustainability, alternative profit sources, including beef-on-dairy, and processor and producer relationships.

The panelists include:

Stephen Cain, Senior Director of Economic Research and Analysis, National Milk Producers Federation (NMPF), supports the federation through the analysis of both domestic and international dairy markets. He regularly publishes reports on dairy market dynamics and provides ad-hoc analysis on a wide range of dairy and related areas.

Prior to joining NMPF, Cain worked as an agribusiness consultant with IHS Markit, where he covered a number of commodities and specialized in economic impact analysis. He holds a bachelor’s degree in Agribusiness and a master’s degree in Agricultural Economics, both from Texas A&M University.

Michael Dykes, CEO of International Dairy Foods Association (IDFA), is a long-time government affairs strategist, agricultural policy expert, and veterinarian. In his current role with IDFA, Dykes represents members that make most of the milk, cultured products, cheese, ice cream and frozen desserts, and dairy-derived ingredients produced in the United States and marketed throughout the world. Dykes grew up on a small dairy and tobacco farm in Kentucky. He earned a Doctor of Veterinary Medicine degree from Auburn University as well as a master’s degree in agricultural economics and a bachelor’s in animal science from the University of Kentucky.

Erica Maedke, Vice President, Ever.Ag Insights, has roamed from the halls of the U.S. Senate to the floor of a Wisconsin cheese plan. Before joining the team at Ever.Ag, she has held positions with then Senator Hillary Clinton, Kraft Foods, Foremost Farms, Land O’Lakes and Winona Foods.

These three panelists will talk about the opportunities and challenges ahead for dairy farmers and address topics rolled out in the 2024 Farm Journal’s State of the Dairy Industry Report.

Register now: https://events.farmjournal.com/fcu-june26

Accelerating Efficiency in the Milk Supply Chain

Wed, 10 Apr 2024 13:00:00 GMT

How can we become more efficient? This is a question that not only dairy producers ask, but also many dairy companies evaluate. Recently, at the 2024 Dairy Farmers of America (DFA) Annual Meeting in Kansas City, Mo., Corey Gillins, chief milk marketing officer for DFA, spoke about accelerating efficiency in the raw milk supply chain.

Through a member survey conducted over a year ago, DFA anticipates fewer member farms in the years to come. Tough financial situations unfolding on farms accelerated the pace of farms exiting, and Gillins noted that more than 500 of their member farms exited in 2023. DFA is now planning to have around 5,100 farms by 2030.

Even with the decline in farm numbers this past year, DFA did not see much of a drop in milk production. Gillins pointed out that they anticipate their member’s milk production to increase at a moderate pace going forward.

“There are several factors that will impact that growth and some of these we’ve been dealing with for a while,” he said.

Gillins pointed out that high interest rates and the low heifer inventory will challenge growth, at least for the short term.

“While they will have some impact on us, we do still anticipate some growth,” he said.

Supply and Demand

A unique story is playing out, especially as the Southwest area, like New Mexico, is decreasing in milk production. Gillins questions where Southeast milk will come from, as previously it would come from areas like New Mexico. This means that milk likely will be transported further distances in the future.

“We’re going to be moving more milk further distances to meet the market demands,” he says.

“And we see some of these dynamics, even within areas if you look at the Mideast area and Michigan, where we’re going to continue to see strong growth in milk supply. And yet, if you just go south into Ohio, we anticipate seeing some level of decreased milk supply.”

According to Gillins, more than 1.5 million lbs. of milk per day is being moved out of Michigan and it is unlikely that number will decrease in the future.

Moving Milk Further Distances

Over the next couple of years, Gillins shares that we are going to see an increased demand for more than 50 million lbs. of milk per day.

“Where’s that all going to come from?” he asks, sharing that some of it is going to come from new growth. “And some of it is going to come from milk moving from current processing facilities to these new plants.”

Gillins alluded that DFA’s future milk supply is looking tight, where they will likely be short on milk at certain times which means milk will have to be transported further distances to fill the needs.

“So how do we drive efficiency in the raw milk supply chain when we’re dealing with those dynamics?” he asks, sharing that a more coordinated marketing and logistics plan will be executed locally.

A milk solids optimization plan is in the works at DFA and Gillins says they are looking at balancing efficiency and strategic transportation. While DFA has managed and tracked balancing costs for many years, they now are looking at that number collectively.

Keeping efficiency in mind, DFA is asking questions, like:

How do we better utilize our existing assets?
Where do we have existing capacity that may not be utilized?
What are the product mixes in these plants and are we getting the highest value of products out of these plants that will improve our balance?

When it comes to transportation, DFA spent more than $880 million getting milk from the farm to the plant in 2023. He shares that DFA’s president and CEO, Dennis Rodenbaugh, encouraged 1% improvements. With transportation, the question is how can costs be better managed?

Key Piece

Gillins shares that technology is going to be a key piece and their partnership with Ever.Ag on software solutions will be beneficial. Currently, 43% of their member’s milk is being picked up utilizing a mobile application. Gillins says while there is a cost savings not to deal with a paper trail, the real benefit comes from the data.

“We will have this from every leg of every route that will help us drive efficiency in our business,” he says, sharing that part of efficiency is to make sure trucks are either picking up milk, hauling milk to the plant, or unloading.

“If it’s sitting and waiting, it’s being inefficient,” he says.

As DFA accelerates its raw milk supply efficiencies, they can identify the bottlenecks that can help the cooperative to become better financially, but also more sustainable, sharing how one plant saw a 40% reduction in CO2 emissions.

“This all leads up to how do we become a best-in-class fluid logistics organization,” Gillins says, sharing that standardization is going to be key to their success. “We have to standardize our processes, from milk dispatch to delivery. We have to standardize our data and how we use it. We have to standardize our practices. As we look at the accelerated pace of change in our industry and we look at the technology that’s becoming available to us, we have the opportunity to transform our business and bring more financial value back to our farmer-owners through our raw milk supply chain opportunity.”

Alternative Proposals to the Higher-of Are a Win for Dairy

Mon, 26 Feb 2024 15:53:24 GMT

In the analysis of the recent Federal Milk Marketing Order (FMMO) hearing, one major piece of information has been overlooked: the Class I Mover proposals submitted by the Milk Innovation Group (MIG) and International Dairy Foods Association (IDFA) would have paid dairy farmers on average between 35-40 cents more per cwt than the National Milk Producers Federation “higher-of” proposal over the past two years. Over time, the NMPF, IDFA, and MIG proposals result in roughly equal payments to dairy farmers.

For years, dairy producers and processors have been discussing proposed regulatory changes to ensure the FMMO system better reflects contemporary market realities. Since the last major FMMO changes implemented in 2000, American consumer preferences have shifted to the point where total cheese consumption has increased by 58% while fluid milk consumption has declined by 23%. Other major shocks including COVID-19, supply chain challenges, fuel prices, and high inflation have impacted all of dairy from the farmer and processor to the end customer, whether retail or wholesale, foreign or domestic.

To prepare for the FMMO hearing, dairy stakeholders conducted market and economic research and developed proposals to improve the current system. During the hearing itself, USDA examined that data and analysis with the assistance of witness testimony under oath and before an Administrative Law Judge. Years ago, Congress established this legal procedure to ensure USDA sets FMMO regulations based on thoroughly reviewed facts, economic data, and market principles that would best serve the dairy industry and their consumers. At the direction of the Secretary, the USDA considered six different proposals to update the base Class I skim milk price, or the Class I mover. The dairy processors submitted two proposals, and both suggested changing the mover. Dairy processors agree with farmers that the Class I mover needs updating.

To that end, both IDFA and MIG proposed updating the current average-of Class I mover formula to change the current fixed $0.74 adjuster to address dairy producer criticism when there’s a widespread between Class III and IV milk prices. Specifically, our proposals retain the “average-of” formula, but deploy dynamic adjusters based on the “higher-of” and simple average relationships that will increase the price paid dairy farmers when the spread widens between Class III and IV milk. These proposals will result in about the same returns for farmers as the “higher-of” mover over time, using either monthly or annual adjustments that better reflect the economic changes in the marketplace than the current formula. In fact, the MIG and IDFA Class I mover proposals would have paid dairy farmers significantly more on average over the past two years than the “higher-of” mover proposal.

IDFA and MIG made these proposals to also reflect the reality that Class I processors and their customers are currently hedging fluid milk costs, just like makers of all other dairy products. In particular, numerous Class I processors testified that the current average-of mover encouraged them to hedge their price risk and they are currently utilizing risk management tools. Others testified that they intend to start because their customers are demanding more price stability. These are the same types of risk management tools that farmers and cooperatives currently use to manage their businesses.

Our proposals both protect the dairy farmer and enable Class I market participants to continue to manage price risk. Risk management allows fluid milk processers to provide consumers with more stable, predictable pricing at the shelf and on the menu. We think price stability is critical to stopping the decline of fluid milk consumption and will help maintain dairy’s overall growth, which benefits the dairy farmer, cooperative, processor, and consumer.

The hearing has ended and USDA is working now on all the FMMO pricing changes, including the Class I skim formula. Secretary Vilsack has expressed USDA’s commitment to issue its final decision on Federal Order updates before the end of 2024, consistent with Federal law. Some have demanded Congress step in to immediately restore the “higher-of,” which would serve to preempt the USDA experts and cause more division within our industry. We all know that the dairy industry has fundamentally changed in the last 25 years and the current FMMO system is not supporting growth and prosperity across the dairy supply chain. Let’s all give USDA the time and respect it deserves to amend these complex, outdated formulas to reflect the reality of the modern dairy market and reunite our industry.

Written by: Mike Brown, International Dairy Foods Association’s chief economist and Sally Keefe, an economist consultant to the Milk Innovation Group.

Twenty Years Overdue? Why Producers Are Pushing for These 7 Major Changes to FMMO

Fri, 01 Dec 2023 21:28:19 GMT

Sentiments have dramatically shifted in just a year’s time for the dairy industry. A year ago, dairy farmers were still seeing high costs, but they also saw higher milk prices. This year, margins are some of the tightest dairy producers have ever seen.

“We had a little bit of pressure get relieved in the last couple of months, but over the summertime, we hit record low margins on the DMC (Dairy Margin Coverage) numbers. And that’s putting farmers in a tough spot,” says Stephen Cain, Senior Director, Economic Research and analysis at National Milk Producers Federation (NMPF) and US Dairy Export Council.

The tight margins triggered dairy margin coverage program payments from FSA every month so far this year. DMC is a risk management tool passed in the 2018 farm bill.

“I think most folks are pretty pleased with the dairy margin coverage program and how it operates,” says Jackie Klippenstein, Sr. VP and Chief Government & Industry Relations Officer, DFA. “It needs to be modernized, though, and reflect today’s modern dairy to make sure the farmers receive the benefits from the program.”

A Serious Look at FMMO

While DMC has been a risk management tool producers are able to tap into when feed prices are high and milk prices are low, the dairy industry is also pushing to modernize a separate federal program: the Federal Milk Marketing Order (FMMO). The industry has been holding hearings to gather input on what updates should be made.

NMPF has been working on the issue for more than a year, tapping into input from their members in all regions of the country. The dairy industry says the FMMO are overdue for an update, as NMPF hasn’t seen a large overhaul or update since 2000.

NMPF says based on feedback from producers, the FMMO recommended updates and changes include:

Return to the “higher of” Class I mover
Update Class I differentials throughout the U.S.
Discontinue use of barrel cheese in the protein component price formula
Extend current 30-day reporting limit to 45 day on forward-priced sales of NFDM and dry whey
Update the milk component factors for protein, other solids and nonfat solids in the Class III and Class IV skim milk price formulas
Develop a process to ensure make allowances are reviewed on a more frequent basis by enacting legislation authorizing USDA to conduct mandatory plant cost studies every two years and report results to the dairy industry
Proposed interim make allowance adjustments

The biggest change being demanded from producers, according to NMPF, is the return to the “higher of” Class I mover.

“Today, it’s the average of Class III and IV prices plus 74 cents,” Cain says. “ We’re pushing to move back to the higher of. We used to be at the higher of, we made the change several years ago at the behest of the processor groups in looking for better opportunities for Class I hedging, we came up with a solution that was meant to be revenue neutral and wasn’t going to put more money in the pocket of producers. It was meant to just be a change that’s going to allow hedging to be more feasible,” he adds. “We had a pretty stark realization in 2020, where we realized that this was not revenue neutral. It’s costing dairy producers about a billion dollars in Class I skim milk revenues. And so we’re looking to move back to the Class I to the higher of for class mover because it works. It’s been tested, it’s been tried. We know it works for dairy farmers, it works for the industry.”

Related Story: Federal Milk Marketing Order Hearing Start This Week, Sign Up Now to Testify

NPMF says there are two separate ways the dairy industry is trying to push these changes through Washington, one is the new farm bill , the other is the federal order process.

“We’re taking a two-prong approach,” Cain says. “This is such an important factor for dairy farmers, we want to make sure we do it right and the fastest way possible. So, we’re taking one route to the farm bill, and the other route is the federal order process. Whichever one works first is great, but we feel confident that we’ll get this passed. It’s just one way or the other, we will hopefully get this done.”

A Possible Dairy Revenue Win with Conservation

As the dairy industry looks to the farm bill as a possible vehicle to push those changes through, Klippenstein says there are other positives that could come in a new farm bill for dairy, including conservation programs.

 “Other commodities, I think, are still trying to figure out how they fit in sustainability. For dairy, it’s quite clear, we’re both a carbon emitter, but also a carbon sink,” she says. “We’re part of the solution when it comes to addressing climate concerns.”

Related News: Could It Be Two Years Before Farmers See a New Farm Bill? The Ugly Truth About the Fight Over Funding

Klippenstein says she understands conservation and climate programs aren’t always viewed in a positive light, but she thinks this could be another valuable revenue stream for producers.

“Dairy farmers right now, because of our customer base, are being asked to do more. They’re being asked to measure and verify and report the carbon credits and environmental credits that they’re creating on their operation. And these conservation funds can help them cost share some of that progressive work they’re doing on their farm,” she says.

Klippenstein thinks these conservation and carbon programs have the potential to be more valuable than the price of milk for dairy farmers, which could be a major win for dairy farmers.

“The U.S. government and our customers are now investing on dairy farms to see the accelerated adoption of technology and practices many of which farmers are already doing on their operation,” she says.

The White House recently announced its allocating millions of dollars to address methane emissions from California’s dairies. DFA just received $22 million dollars from USDA’s regional conservation program grant funds. That money is intended to help develop feed additives aimed at reducing methane emissions from dairy cattle.

Mooney and Mulhern Celebrate Unity at the 2023 Joint Annual Dairy Meetings

Mon, 20 Nov 2023 15:58:21 GMT

Last week in Orlando, Fla., National Milk Producers Federation (NMPF) Chairman Randy Mooney spoke about the ongoing challenges dairy farmers face that cause a lot of stress on the farm, including the razor-thin operating. Despite the mountain of challenges, Mooney remains optimistic about the unity of the industry.

“I’ve dairied for a long time, through good times and bad times, but there’s never been a time that I haven’t laid my head down on my pillow at night and been proud of what I accomplished on my farm,” Mooney said. “We’re nourishing families around the world through milk’s unbeatable nutritional value.”

Mooney was inspired that as an industry, farmers and professionals came together and united on a number of issues, including getting farmers to testify at the USDA-led Federal Milk Marketing Order (FMMO) hearings, which began in August and will resume Nov. 27 after a temporary pause.

“The producers who got the opportunity to tell the story made a difference,” he said, in reference to those producers who testified at the FMMO hearings.

Passing the Baton

NMPF President and CEO Jim Mulhern, who is retiring at the end of this year after leading the organization for a decade, also took the stage at the joint annual meetings in Orlando, underscoring that working on behalf of the nation’s dairy farmers and their cooperatives has been the highlight of his professional career.

“I’ve tried to remain true to what I see as the hallmark of the dairy community: people who work hard, approach things with common sense, and care passionately about the product they produce,” Mulhern said. “You all strive to do the right thing. And I can tell you, looking over the course of my career, those are qualities that can take you a very long way.”

Mulhern points out he is bullish on the future of the dairy industry and is proud to pass the baton off to Greg Doud, former chief agricultural negotiator for the U.S. Office of the Trade Representative. His efforts helped lead the U.S.-China “Phase One” agreement and the USMCA negotiations.

“Greg is no stranger to agriculture. He’s got an incredible pedigree. He knows policy from the inside and knows how Washington works. And he’s going to be a great leader for the future of this industry. I couldn’t be more excited about him taking over,” he says.

Elections

Also at the meeting, NMPF’s Board of Directors approved the organization’s policy positions and elected new members. New directors elected and approved by NMPF delegates include Brad Bateman of Dairy Farmers of America and Rick Burkhamer of Foremost Farms. Burkhamer, who farms near Richland Center, WI, was also named to NMPF’s Executive Committee.

Along with adopting official federal policy positions, NMPF’s membership also raised funds for the organization’s college research scholarships and held its annual cheese and dairy product contest in conjunction with the meeting.

Cheese Awards

The Chairman’s Award for the NMPF Cheese and Yogurt Contest went to Prairie Farms Dairy for its Cave Aged Rinded Swiss, produced in Faribault, MN. Ellsworth Cooperative Creamery won the Chairman’s Reserve Award for its Pepperoni with Marinara Rub produced in Menomonie, WI. This year’s contest included 252 entries from 14 participating NMPF co-ops, a total of 3,350 pounds of cheese and yogurt.

Dairy Policy Hearing Set to Address the Federal Milk Marketing Order

Mon, 24 Jul 2023 18:32:18 GMT

In response to petitions from the dairy industry, USDA announced that it will hold a hearing on Aug. 23 to discuss potential revisions to the Federal Milk Marketing Order (FMMO) system that determines the price farmers receive for fresh milk.

What to Expect from the Milk Hearing

The hearing, which will take place in the Indianapolis suburb of Carmel, Indiana, could potentially result in the first significant reform of milk marketing orders since 2000.

In a Federal Register notice , USDA’s Agricultural Marketing Service outlined six subjects for testimony, including suggestions to increase the “make” allowance accorded to processors to offset the expense of converting milk into products like cheese or butter.

The FMMO system, established in 1937, covers 11 regions that represent the majority of U.S. milk production, spanning most, but not all, of the 50 states.

The American Dairy Coalition has praised the comprehensive nature of the hearing and indicated strong support for a change in the price setting formula for milk intended for retail sale. Specifically, the proposal to use the “higher of” rather than the current “average of” pricing method.

What’s Next for Federal Milk Marketing Order

Following the hearing, the USDA will publish a recommendation that will be open for public feedback. After a period of comments, there will be a final decision. Following this, a referendum will be held for producers to vote on whether to accept the proposed changes.

Witnesses at the hearing will be given an hour to provide testimony, and the USDA has identified 19 proposals to modify the marketing orders.

Dairy farmers may provide testimony in person at any time during the hearing or give virtual testimony via Zoom on Fridays for 15 minutes each starting Sept. 1.

Largest Dairy Cooperative Withdraws from International Dairy Foods Association

Tue, 20 Jun 2023 12:00:00 GMT

The largest dairy cooperative in the U.S., Dairy Farmers of America (DFA), decided to withdraw its membership from the International Dairy Foods Association (IDFA) over IDFA’s decision to proceed with its single-issued petition to modify the federal milk marketing order (FMMO) system.

DFA stated that as a longstanding member with 83 processing plants, they appreciate the significant value IDFA provides in supporting the dairy processing and manufacturing sector.

“While IDFA generally maintains a neutral position on policies lacking full membership consensus, a critical exception was made earlier this year when they submitted a divisive milk pricing policy proposal to USDA. This placed DFA in the untenable position of being represented as supporting a policy position, which contradicts what we believe to be in the best interests of our farmer-owners and the dairy industry. Following requests to return to a neutral policy position until a consensus position could be reached, DFA made the difficult decision to submit notice to withdraw from IDFA membership,” DFA said in a statement to Dairy Herd Management.

IDFA said they feel that they are being fair and taking a balanced approach with their FMMO proposal to USDA.

Andrew Jerome, associate vice president of communications of IDFA, says that because IDFA is a diverse membership, they do expect disagreements from time to time.

“Our job is to be inclusive and balance those diverse interests. We have been here before on federal order reform, and we are confident that we will come out of this stronger. We are confident that we are taking a balanced, inclusive approach that is in the best interest of the full dairy supply chain. Our efforts related to federal order updates have been ongoing for more than a year,” he says.

“We have engaged in an extensive process with several dozen meetings and multiple streams of work internally with members across all segments of our industry, including our dairy cooperative members, dating back more than a year ago. We have continued extensive efforts to find a united approach. In March, IDFA met twice with leadership from the National Milk Producers Federation (NMPF) to seek consensus on a set of priorities for Federal Order reform; however, consensus was not achieved. IDFA then acted on the direction of our Boards and filed its petition at the end of March 2023. Since that time, we have updated our initial proposal on make allowanced, per USDA’s direction, and submitted a balanced proposal on the Class I mover. It is because of our diverse membership that we can submit a balanced approach that is based on sound data and beneficial to both processors and dairy farmers,” Jerome shared.

“We care deeply about the future of this industry and ensuring its stability, and we understand the pressure cooperatives are under with complexity and the challenge of balancing the interests of their farmer owners with their processing objectives. IDFA has a broad membership of hundreds that continues to include many dairy cooperatives as well as dairy companies from all segments of the dairy supply chain, from cooperatives to proprietary processors to retailers who produce their own private labels. No other dairy association has this kind of diverse, influential membership with a global footprint. IDFA is a critical part of a growing dairy industry that is responding to rising demand from consumers here and abroad. We need to keep our eye on the ball and continue to deliver value for our full membership by supporting and cultivating that continued growth,” Jerome said.

In a pre-hearing USDA informational session that took place on Friday, hearing from dairy industry members and representatives, USDA shared that it is considering 38 proposals from 12 different organizations.

MULHERN TO RETIRE AS NMPF PRESIDENT AND CEO AFTER DECADE OF SERVICE

Tue, 06 Jun 2023 16:00:00 GMT

NMPF President and CEO Jim Mulhern announced Tuesday he will retire from his position at the end of this year, concluding a decade of service leading the organization and capping a 45-year career in U.S. agricultural and dairy policy.

“Directing the policy efforts of the nation’s dairy farmers and their cooperatives has been the highlight of my professional career,” said Mulhern, who was asked to lead the organization in 2013 and guided NMPF through two completed farm bills, the COVID-19 crisis, and an ever-quickening pace of change in an industry that in some ways is unrecognizable from that he entered in 1979, when he began his career working for a Midwest dairy cooperative. After coming to Washington to work on Capitol Hill in 1982, he began his first stint with NMPF in 1985, directing the organization’s government affairs activities and shaping NMPF strategy in the face of earlier farm crises.

He returned to Capitol Hill in 1990, to serve as chief of staff to Wisconsin Sen. Herb Kohl. Following that, he was a partner at Fleishman-Hillard, an international communications firm, and managing partner of Watson/Mulhern LLC, a life sciences communications and public affairs firm that focused on food and agriculture policy challenges.

While his work included providing expert strategic counsel to numerous Fortune 500 companies and working extensively in government relations, issues and crisis management, media relations, and litigation communications, the Portage, WI, native always considered the dairy industry his professional home.

“My hope, all those years ago when I first came to Washington, was to make a difference and remember where I came from. Being part of the agricultural policy community here in Washington and working with and on behalf of many great people in the dairy community across the country has enabled me to achieve both goals,” Mulhern said.

Mulhern leaves NMPF in a commanding position, with the organization spearheading a once-a-generation update of federal milk marketing orders and advancing both a fairer economic and regulatory environment for dairy farmers and a more transparent marketplace for consumers amid the proliferation of plant-based dairy imposters. Through its partnerships with the U.S. Dairy Export Council and others, NMPF has supported policy changes to boost dairy exports, which are reaching records; and through its stewardship of the National Dairy FARM Program, it is enhancing dairy’s leadership agricultural sustainability and animal care.

“Dairy farmers have numerous reasons to be thankful for Jim Mulhern’s leadership at NMPF,” said Randy Mooney, a Rogersville, MO dairy farmer and chairman of NMPF’s Board of Directors. “Jim has been a leader, a visionary, and a friend to dairy, and through that, a leader in agriculture. The combination of his depth of knowledge, his energy, and his unflagging passion for dairy producers is impossible to replace, but we all will know that his influence and achievements will resonate in this industry for years to come.”

The topic of naming a new top executive at NMPF will be discussed at NMPF’s Board Meeting this week in Arlington, VA.

NMPF’s Jim Mulhern Discusses Federal Milk Marketing Orders Modernization Proposal

Wed, 10 May 2023 13:30:00 GMT

Recently, National Milk Producers Federation (NMPF) president and CEO, Jim Mulhern, spoke to AgriTalk’s host, Chip Flory, about federal milk marketing orders. Mulhern stated that the orders are needed, especially on the producer level to promote orderly market conditions, supervise terms of trade, achieve more equality of bargaining between dairy farmers and milk processors and assure that consumers have an adequate dairy supply.

“It’s a real fact to make sure that there is an orderly market for producers who have a product that they are producing on a daily basis, shipped from the farm every day and every other day to a plant where it’s tested,” Mulhern says. “To ensure that we have clear market transparency in terms of prices, and to help regulate that class one fluid market, the class one market is the milk that goes into fluid form into the gallon jugs, half gallons, half pints and quarts.”

According to Mulhern, the real benefit for consumers regarding milk market orders is to ensure that dairy products are going to be there when they want them and in the form that they want them.

In 2020 when COVID-19 hit, the entire country was thrown into a form of chaos and the world shut down. Mulhern shared that there was a tremendous backlog of dairy products and plants were trying to shift their operations.

“You have plants that are producing just for the food service market, and they had to shift milk into other suppliers or other processors and figure out what they’re going to do with their operations going forward,” he says. “The net result of all that was a sharp, very steep decline in milk prices across the country.”

Although Mulhern shares the federal government Farmers to Families Food Box program helped turn milk prices around, especially on the cheese side.

“The food box program was a saving grace for dairy,” he says.

New Proposal

The last time the Federal Milk Marketing Order was overhauled was in 2000. Mulhern shares that the new proposal has been a long process and a team effort on behalf of NMPF to draft up.

“The program hasn’t been updated in 23 years. It needs some fine-tuning and needs some updating as we’re calling it a modernization of the program,” he shared. “That’s what we’ve done in our proposal that went to USDA earlier this month.”

The proposal serves as a petition to the USDA to update the program. NMPF is hopeful that USDA will move forward with a national federal milk market order hearing to look at the five issues that they have included in the proposal.

“At the end, it will produce a referendum to vote on possible updates to the program. It’ll take a while to get there. It’s taken a while to get to this point, but it’s a very, very important journey for this industry,” Mulhern told Flory.

Five Main Points

NMPF has requested a national hearing to amend five pricing provisions under all Federal Milk Marketing Orders. The package of proposals was considered and approved unanimously by the NMPF Board of Directors.

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 the Class III and Class IV skim milk price formulas.
Update the Class I differential pricing surface throughout the United States.

The letter NMPF send USDA on the federal milk marketing order proposal - NMPF-FMMO-Modernization-hearing-request-and-proposal-050123-1.pdf

To listen to the entire conversation between Jim Mulhern and Chip Flory - AgriTalk-5-8-23-Jim Mulhern - AgriTalk - Omny.fm .

NMPF Submits Milk-Pricing Plan to USDA, Moving FMMO Modernization Forward

Mon, 01 May 2023 20:09:02 GMT

The National Milk Producers Federation (NMPF) today submitted to USDA its comprehensive proposal for modernizing the Federal Milk Marketing Order (FMMO) system, the product of two years of examination and more than 150 meetings held to build consensus behind updates to a program that last saw significant changes in 2000.

“Dairy farmers and their cooperatives need a modernized Federal Milk Marketing Order system that works better for producers,” said NMPF President and CEO Jim Mulhern. “By updating the pricing formulas to better reflect the value of the high-quality products made from farmers’ milk, by rebalancing pricing risks that have shifted unfairly onto farmers, and by creating a pathway to better reflect processing costs going forward, we are excited to submit this plan as a path toward a brighter future for dairy.”

Upon official acceptance, USDA will have 30 days to review the plan and decide whether and how to move forward with a federal order hearing to review the plan. Highlights include:

· Updating dairy product manufacturing allowances (the “make allowance”) contained in the USDA milk price formulas;

· Discontinuing the use of barrel cheese in the protein component price formula;

· Returning to the “higher of” Class I mover;

· Updating milk component factors for protein, other solids and nonfat solids in the Class III and Class IV skim milk price formulas; and

· Updating the Class I differential price system to reflect changes in the cost of delivering bulk milk to fluid processing plants.

NMPF will pursue two other components of its Federal Order proposal, approved unanimously by the organization’s Board of Directors in March, outside of the federal-order hearing process, as they don’t involve changing federal order regulations. The recommendations, which remain essential parts of NMPF’s modernization plan, are:

· Extending the current 30-day reporting limit to 45 days on forward priced sales on nonfat dry milk and dry whey to capture more exports sales in the USDA product price reporting, which can be implemented through federal rulemaking; and

· Developing legislative language for the farm bill to ensure the make allowance is regularly reviewed by directing USDA to conduct mandatory plant-cost studies every two years.

Mulhern urged USDA to grant a hearing on the entire NMPF proposal, noting how the effectiveness of some components are dependent on the inclusion of others. Mulhern also thanked other organizations that have helped NMPF forge necessary producer consensus by sharing views and insights throughout the process, saying that spirit of unity and good-faith discussion will help FMMO modernization move forward more quickly.

“From state and regional dairy associations to the American Farm Bureau Federation, dairy farmers have had many allies and friends throughout this process,” Mulhern said. “As Secretary Vilsack has stated, consensus is necessary to successful modernization. We have that producer consensus, and we look forward to working together toward adoption and implementation of our plan.”

A New, Exciting Vision for Dairy

Fri, 24 Feb 2023 16:23:16 GMT

The up and down of the dairy industry is something we all have grown accustomed to, especially over the last couple of years. We now are in a world that seems to be divided by before and after COVID, whether that is with supply chain hiccups, high inflation, or even labor. Seizing opportunities ahead and navigating challenges, Michael Dykes, the president and CEO of the International Dairy Foods Association (IDFA) sees the glass full—optimistic about IDFA’s new vision for dairy. He says dairy’s future doesn’t have to feel like a rollercoaster.

Dykes kicked off his speech at the 2023 Dairy Forum with the fact consumption is up 12 pounds per person per year, adding that exports also give reasons for producers to smile.

Looking at exports, the U.S. had both record volume, but also record value with $9.5 billion and 2.8 million metric tons in 2022.

Hailing from an upbringing on a dairy, barley and tobacco farm in southern Kentucky, Dykes leads with a true appreciation for farmers.

“I think about the dedication that it takes 24/7 to milk cows. To keep the milk flowing, it all starts with you, the farmers in the room,” he says. “This industry starts with you. Without the milk, we don’t have anything to process.”

Labor Challenges

With labor struggles felt everywhere across our industry, Dykes outlined positive steps IDFA has taken to overcome labor challenges within the dairy industry.

“Most of you are down 10% to 20% in the workforce, and that’s true across our industry,” he says. “It’s especially clear at the dairy farm level, but also in the processing plants, the retain institutions, it is clear across the board.”

Efforts have been put in place to help attract the best and brightest employees in dairy. These programs include:

The NextGen Leadership Program – This includes an estimated 115 individuals that have either completed or are in the NextGen Leadership Program.
Women in Dairy – Consisting of nearly 700 women who are involved in mentoring circles, networking events, and dairy diversity, equity, and inclusion efforts.

“We know that we’ll have a more diverse workforce, and we know that will only make us better,” he says.

Farm Bill

During the IDFA Dairy Forum, Dykes joined the stage with former U.S. House Speaker Paul Ryan talking about the need for immigration reform.

“We’re working closely with the National Milk Producers Federation on that, and others in food and agriculture, but we won’t give up, and will keep going,” Dykes says.

Understanding that we ideally want a workforce that comes from a dairy farm or who has experience in the industry, ultimately Dykes says we need all kinds of labor.

“We need computer skills, we need microbiologists, we need logistics experts. We need all kinds,” he says.

Speaking on the upcoming Farm Bill, Dykes says we call it a farm bill, but it’s really a food bill.

“Over $1 trillion is nutrition, which is primarily SNAP,” he says. “I often say, ‘food is produced in Red America, but consumed in Blue America.’ We need to merge the two groups.”

Areas that IDFA are pushing for in the Farm Bill include:

Health, Nutrition and Wellness. “If there’s one thing that unequivocally unites this dairy industry, nutrition, health and wellness is that,” he says.

Bringing science forward, Dykes encourages everyone in the industry to be bold in this area.

“We must be bold, we must be aggressive, and we must get out there with our latest science. We need to bring it and we need to bring it now, and we need to stay united. And in this area, I say we need unexpected people saying unexpectedly positive things about dairy in unexpected places,” he says.

Sustainability. “Our dairy industry is investing significant resources to achieve some ambitious environmental goals,” Dykes shares. “More than half of our ice cream companies are reporting they’re moving towards sustainable packaging options. We’re looking at water. How do we use less water?”

Infrastructure. According to Dykes more efforts are underway to digitalize our supply chains. He shared that we saw 111% increase in dairy in containers carried by CMA going out of the port of LA and 57% across all other ports in 2022.

Milk Pricing. Dykes says that the federal milk marketing orders are aging, and we need to think about our pricing system.

“Does it need to evolve? Does it need to change to make it better for everyone,” he asks. “Farmers, processors, consumers, everyone won’t work if we only do this to advantage farmers and not processors or vice versa. This has to be a supply chain.”

27 billion More Pounds of Milk

To produce 27 billion more pounds of milk by 2032, Dykes says we need market access.

“Today we are exporting more of your milk product than we are drinking,” he says. “And as we move forward, we’re going to need to export more.”

According to Dykes, we need people with economic development so they can afford to purchase dairy.

“China is number one for most agriculture exports,” he says. “Number two for dairy. De-linking from China is not in the cards.”

While China is a large target to grow dairy, Dykes also outlined that five of the 10 largest countries in the world by 2100 will be in Africa.

To show different results, we must have different actions. Speaker Ryan shared that we need to come together, something Dykes echoes. “This is going to take real courage,” he says. “Real courage to stand up, real courage to lead.”

NMPF Unanimously Endorses Marketing Order Modernization Plan in Annual Meeting

Tue, 25 Oct 2022 20:01:49 GMT

National Milk Producers Federation (NMPF) leadership unanimously endorsed a proposal to modernize the Federal Milk Marketing Order milk-pricing system at its annual meeting in Denver.

“Dairy is positioned to be a trusted anchor in an uncertain world,” said NMPF Chairman Randy Mooney in remarks at the meeting, part of a joint event held by NMPF, the National Dairy Promotion and Research Board and the United Dairy Industry Association. “Together we can seize opportunities to feed the world. Our product is one of the most nutritionally valuable foods available. We create vibrant rural communities that keep America strong by helping to retain local schools, build energy independence, preserve the environment, and ensure food security for everyone.”

Central to discussions was recommendations developed on federal milk pricing after more than 100 meetings that have taken place over the past year. NMPF’s Board of Directors endorsed a proposal that:

Returns to the “higher of” Class I mover;
Discontinues including barrel cheese in the protein component price formula;
Extends the current 30-day reporting limit to 45 days on forward priced sales on Nonfat Dry Milk and dry whey to capture more exports sales in the USDA product price reporting;
Updates milk component factors for protein, other solids and nonfat solids in the Class III and Class IV skim milk price formulas;
Develops a process to ensure make-allowances are reviewed more frequently through legislation directing USDA to conduct mandatory plant-cost studies every two years; and
Updates dairy product manufacturing allowances contained in the USDA milk price formulas.

NMPF continues work on the Class I milk price surface as it examines information on county-level Class I price differentials. That work is expected to be completed later this year. Any final proposal will be reviewed by the organization before it’s submitted to USDA to be considered for a federal order hearing.

“We have made tremendous progress and are moving forward with the strong level of consensus in the producer community that we will need to achieve our goals of modernization,” said NMPF President and CEO Jim Mulhern. “We’ve had many challenging conversations that were important to getting to a national consensus because of the regional nature of federal milk orders. But the give and take that’s needed to get to anything important done will place the entire industry on a sounder footing, creating a lasting benefit for all.”

Foremost Farms Patrons Receive Letter that Spells Out Large Milk Check Deductions

Tue, 27 Sep 2022 15:52:35 GMT

Over the past weekend, patrons of Foremost Farms received a letter stating that changes will be made starting with the September milk payments to compensate for market adjustments. The cooperative said that the decision to implement market adjustments is based on several inflationary costs factors that impact them, including:

Record high labor costs at manufacturing facilities due to labor shortages.
Higher costs of raw materials to covert milk into finished products (energy, packaging, equipment and quality services) and,
A significant difference between Class III milk costs and the revenue generated from cheese and whey product sales.

Altogether, the market adjustment equals a deduction of $0.90/cwt. that will be subtracted from member milk payments for the remainder of the year.

“Extreme inflationary pressure makes it necessary for Foremost Farms to adjust milk pricing through a market adjustment to ensure the continued viability of the business” Greg Schlafer, President & CEO, Foremost Farms, stated in the letter. “Federal Order milk pricing formulas, which include make allowances, have not been adjusted since 2009. The make allowance is a cost factor built into the milk price to account for all the costs required to convert milk to the final product. These costs have increased significantly over the past year.”

Foremost says that the inverse market pricing of barrels over blocks has made the cooperative unable to generate revenue. All of this adds to their market adjustment deduction decision.

“Decisions to adjust pay price are difficult and only implemented to ensure the long-term viability of the cooperative,” Schlafer stated.

Two Plant Closers

In other cooperative news, it’s been reported that Foremost Farms will discontinue operations in their Milan and Plover, Wis. plants at the end of the year. This impacts more than 100 employees.

A statement from the company, on behalf of the Foremost Farms Board of Directors and leadership, says that this decision is not a reflection on the performance of employees and leaders in these locations.

“We recognize their dedication to the cooperative and their communities. However, the Foremost Farms Board of Directors and leadership agreed it is in the best interest of the performance of the cooperative as a whole to discontinue operations in these locations,” the statement says.

The production limitations in both of these aging facilities and labor challenges have created financial inefficiencies, and it would take significant investments to bring the plants up to date and to add the kind of technology necessary. Therefore, the decision was made to divert milk and move operations to other plants that are newer or already have the necessary technology in place.

The statement shares that the cooperative will support the impacted employees through this transition and will not eliminate any positions before the closings.

In 1995, Wisconsin Dairies Cooperative and Golden Guernsey Dairy Cooperative consolidated to create Foremost Farms USA Cooperative. There are an estimated 5,300 farmer-members in Minnesota, Iowa, Illinois and Wisconsin, and 25 locations, 1,300 employees, 3.6 billion pounds of milk sold annually and $775 million in sales.

Michigan Dairy Farmer Addresses the Next Farm Bill

Wed, 04 May 2022 18:30:00 GMT

Michigan dairy farmer, Ashley Kennedy, grabbed the opportunity to have a front-seat voice to testify on behalf of Michigan Milk Producers Association and National Milk Producers Federation at the Senate Agriculture Committee’s first hearing committed to the upcoming Farm Bill at Michigan State University in East Lansing.

“I couldn’t have come back to the family farm if it were not for many of these programs,” Kennedy shared during the hearings. “Being a part of the conversation is essential to see a future that reflects opportunity and success.”

Along with family, Kennedy milks 240 cows in east-central Michigan. She shared her perspective as a third-generation farmer on both the successes and shortcomings of current dairy policies and programs Congress needs to address in the next Farm Bill.

Senate Agriculture Committee Chairwoman, Debbie Stabenow (D-MI), who presided over the hearing, was joined by ranking member, John Boozman from Arkansas. Altogether, testimony from 16 witnesses was heard – from farmers, food processors and commodity organizations, to food banks, land conservancies and agribusinesses — provided opinions on USDA programs, which are reauthorized every five years.

Kennedy praised the Dairy Margin Coverage program and called attention to recent improvements that accounted for modest production increases and better reflect dairy farmer feed costs.

The Michigan dairy farmer shared two areas that need to be incorporated into the next reauthorization of federal farm programs. Kennedy shared in her testimony that the effects of federal programs on milk pricing deserve special attention.

“The combined effects of the change made to the Class I mover in the last farm bill, and the government’s heavy cheese purchases, cost dairy farmers over $750 million in Class I skim revenue during the last six months of 2020,” she says.

The dairy industry, under NMPF leadership, is seeking consensus on a range of improvements to the Federal Milk Marketing Order system, including but not limited to the Class I mover, that can be taken to the U.S. Department of Agriculture for consideration in a national order hearing.

In addition, Kennedy also advocated for additional investments in conservation programs to help dairy farmers build on their ongoing sustainability work.

“We must find ways for farmers to be credited for what they’re already doing,” she says.

Kennedy closed by thanking the committee for reauthorizing the Farm and Ranch Stress Assistance Network in the last farm bill but urged that even more robust resources be provided.

“Stress in rural America is not talked about enough, which is unfortunate, because it’s a problem we can only solve by working together,” she shared.

Florida Dairy Farmer Wishes Congress Would Listen Up in Preparation for Next Farm Bill

Tue, 26 Apr 2022 14:49:39 GMT

Brittany Nickerson-Thurlow, a partner in Nickerson Cattle Company LLC. in Hardee County, Florida, wishes congress would listen up to the real needs of dairy farmers. The fifth-generation dairy farmer says that from Pandemic Market Volatility Assistance Program (PMVAP) to immigration reform, there are real missed opportunities for congress to truly understand how to help dairy farms, like hers.

The average size of a U.S. dairy farm has risen over the last two decades to more than 300 cows today.

However, the average size of a Florida dairy farm is much larger, hovering around 1,300 cows. Nickerson Cattle Company ranks above the state average in cow numbers, milking 2,000 head, growing considerably since the family’s debut into the Florida dairy industry.

In the 1960s, 27 cows provided for the Nickerson family. As the family grew, two sons; Nickerson-Thurlow’s father and his brother, made the decision to come back to the farm. Thus, the family decided to purchase two smaller farms with help from their parents in the mid-1980s.

“Those three farms – and their 400 cows – provided for three farm families and a few employees,” Nickerson-Thurlow says.

In 2003, the family decided to build a fourth dairy, Ten Mile Grade Dairy. This brought the milking herd to a total of 5,000 cows – across the entire dairy operation. With the next generation ready to come back to the farm, in 2017 the decision was made to split the four farms into two businesses.

“Today those four farms support six farm families, including my own, along with 36 farm employee families,” Nickerson-Thurlow says.

Pandemic Market Volatility Assistance Program Shortcomings

PMVAP was meant to make up for revenues lost during the early days of the pandemic because of the change to the federal formula on how milk is priced.

In 2021, when this federal program launched, not all dairies came out as winners. Nickerson-Thurlow says dairies like Ten Mile Grade Dairy came up short on the program’s intended advantages.

Through PMVAP, USDA provided more than $350 million in pandemic assistance payments to dairy farmers who received a lower value due to market abnormalities caused by the pandemic and ensured federal policies. It outlined that those payments would reimburse qualified dairy farmers for 80% of the revenue difference per month based on an annual production of up to 5 million lb. of milk marketed and on fluid milk sales from July through December 2020.

“That sounds like a way to help small, family farmers – but many family farms aren’t that small, and many farms have multiple operations which gave them an edge in payments,” Nickerson-Thurlow states.

When the two brothers, Chris and Joe and their families decided to split off back in 2017, they felt the fair way to do this was by dividing cows equally. This resulted in one family getting three smaller farms and Nickerson-Thurlow’s family owning and operating the larger dairy, Ten Mile Grade Dairy, which was built in 2003.

“My uncle and cousins own three of our original four farms. Because of the rules, they were able to capture up to three times the PMVAP funds I received, each dairy having the same EIN number, despite the fact that my single-family farm produces slightly more milk — and thus lost more money — than their three together,” she reports. “Given the average size and mixed demographics of a Florida dairy business, it’s easy to see how the effort falls short.”

Having the advantage of sitting on Southeast Milk’s board of directors, Nickerson-Thurlow feels well educated on how the PMVAP funds were going to be executed, but she says the hang up in payment timing was on USDA’s end.

“Some producers were wondering what calendar year this money was going to come in and were waiting on funds to help cash flow, but also for tax reporting purposes,” she says. “You know that amount of money can impact very much some of your prepaid expense decisions.”

Nickerson-Thurlow reports that her dairy’s portion was around $100,000, but shares that USDA fell short, as the six-figure payment was only a fourth of the total dollars her dairy lost due to the pandemic.

“Don’t get me wrong, I’m grateful, but the expectation of what we were going to be getting was much higher, and it was a disappointment in terms of timing, as well as the inequity of payment distributions,” she shares.

Immigration Reform

Another missed opportunity by legislators, from Nickerson-Thurlow eyes, is immigration reform.

“The biggest challenge isn’t lack of awareness, it is a lack of understanding,” she comments.

Nickerson-Thurlow shares that immigration policy often gets caught up in emotional debates that have nothing to do with farming.

“For example, lower-hanging fruit could be harvested through changes to visa programs that would make a temporary foreign workforce more workable for dairy,” Nickerson-Thurlow says.

Because dairy is a 365-day commitment, the seasonal H2A current program doesn’t work for many dairy producers, like Nickerson-Thurlow.

“Plus, for us to invest in employees by spending the amount of time it takes to bring them up to speed on our protocols and training, we need to re-capture as much return on that investment as possible – which is often challenging - especially if they are not going to be employed very long,” she states.

Evaluating ROIs on everything their dairy does, even with labor, Nickerson-Thurlow says it doesn’t add up in terms of investing time and resources to a nonstop, continuous H2A labor pool.

“It would be so beneficial for us to be able to utilize that program and to be able to depend on a well-educated workforce,” she shares.

Currently, Nickerson-Thurlow’s new hires come from word of mouth, and she says they are currently blessed with a very low turnover rate the last few years. The dairy currently milks in a double-40 swing parlor and the family’s motto is to keep it simple.

“Our whole business model is low input, low output,” she shares. “Everything here is simplistic, so technology isn’t something we are looking to invest in.”

The fifth-generation dairy farmer hopes Congress will listen up, as we prepare for the next Farm Bill.

“Overall, there’s a huge disconnect from the government and legislative level and how that gets down to the field level to actually help farmers,” she notes. “Federal officials need to adapt to changes in how programs are done to make sure the dairy industry, and the communities they serve, continue to thrive.”

USDA Publishes Final Rule For California Federal Milk Marketing Order

Fri, 20 Nov 2020 03:01:36 GMT

Two 'Deal-Breakers' Could Derail California's Proposed Federal Milk Marketing Order

Fri, 20 Nov 2020 02:52:26 GMT

Without these two provisions, California dairy producers are not likely to approve the Federal Order, says a key architect of the historic petition.

California’s quest for a Federal Milk Marketing Order (FMMO) could reach a dead end if USDA rejects two key components of the proposal, according to one of the historic petition’s architects.

Eric Erba, senior vice president and chief strategy officer for California Dairies Inc. (CDI), said a significant departure from the FMMO provisions to retain California’s quota program and to prohibit voluntary de-pooling of any class of milk could be “deal-breakers.”

Erba, who helped craft the FMMO proposal, made his comments March 19 at Western United Dairymen’s (WUD) annual convention in Yosemite, Calif. He offered his “deal-breaker” remarks in response to an inquiry from a producer in the audience during the question-and-answer portion of Erba’s presentation.

CDI is one of three joint petitioners seeking a hearing from USDA to consider a Federal Order pricing system in California. The others are Land O’Lakes and Dairy Farmers of America.

California dairy producers’ insistence on retaining the California quota program is why a Federal Order effort had never progressed in the state, Erba said. None of the nation’s 10 FMMOs includes quota. But the current Farm Bill grants California the authority to promulgate an FMMO and to address quota preservation, he added.

California’s milk pool quota is an asset that brings its owners a higher milk price. Valued statewide at $1 billion, quota has been part of California’s milk pricing system since 1969. Last month, 58% of the state’s dairies owned quota. California dairy producers can only obtain quota by purchasing it or receiving it by transfer. A unit of quota entitles the owner to a higher solids-not-fat price. That now amounts to 19.5¢ per lb. per day. The actual price a dairy producer receives depends on the dairy’s location.

Under the co-ops’ FMMO proposal, the California Department of Food and Agriculture (CDFA) would continue to administer a quota program.

No De-Pooling “Is a Big Ask of USDA”

The other crucial FMMO component calls for prohibiting voluntary de-pooling of any class of milk, which has been referred to as “inclusive pooling.” All California plants purchasing milk from California Grade A dairy producers would be required to pay the regulated minimum price, similar to current California regulations.

“That’s a significant departure from historic FMMO administration,” Erba said. “Inclusive pooling is a big ask of USDA. No other FMMO has anything like inclusive pooling.”

Eric Erba

However, he added, the 1937 Agricultural Marketing Agreement Act does not expressly prohibit mandatory pooling of all classes of milk.

“De-pooling” is when milk normally associated with a market is not pooled during a particular month, according to USDA. Currently in all Federal Orders, only Class I milk is required to be pooled. Handlers may opt to not pool Class II, III or IV milk when manufacturing class-use values are higher than the uniform price.

Possible Timeline for California FMMO Process

Submitted to USDA on Feb. 4, 2015, California’s Federal Order petition had been 20 months in the making. “We didn’t understand how complicated this would be,” Erba said.

He said the three co-ops wrestled with the details and complexities of reconciling California statues with Federal Order objectives, data-sharing between USDA and CDFA, “what if?” scenarios and precise definitions for words such as “plant” and “producer.”

He also laid out a possible timeline for California’s FMMO petition process, underscoring that the schedule has not been sanctioned by USDA. If USDA agrees to an FMMO hearing, that series of meetings could take place in California from September to December of this year, Erba surmised. USDA could then deliberate the merits of the hearing from January through the fall of 2016. Allowing for required post-hearing briefs, commenting periods and review, USDA could issue a final decision on the California FMMO proposal in May 2017. A producer referendum would then follow in July 2017.

USDA will accept additional proposals from dairy interests regarding a California FMMO until April 10, 2015. California’s dairy processors, who are opposed to the FMMO, will submit at least one rebuttal proposal, said Dana Coale, USDA deputy administrator of dairy programs, who also spoke at last week’s WUD meeting. It’s likely USDA will also receive a producer-handler proposal, she added.

Open to the public, USDA’s FMMO hearings will record everything provided by witnesses testifying both for and against the petition. The process will also include “attorneys, attorneys, attorneys,” Erba said.

Coale said California’s FMMO proposal “won’t be a slam dunk.”

“This is a huge, important process,” Coale said. “[Implementing new] FMMOs [doesn’t] happen very often.”

“It’s important for producers to participate in the hearings,” she added. “It will be an opportunity for you to learn what the proposals are intended to do.”

CDI, Land O’Lakes and Dairy Farmers of America represent more than 75% of the milk produced in California. Combined, the three dairy co-ops operate 12 plants and market milk to a significant majority of the state’s milk buyers. The three co-ops are significant manufacturers of butter, cheese, milk powders, cream and condensed milk.

Read California’s FMMO proposal and learn more about the process here .

California Congressman Introduces Federal Milk Marketing Order Act

Fri, 20 Nov 2020 02:38:30 GMT

Congressman David Valadao proposes legislation that would allow California dairy producers to petition USDA for a federal order plus allow them to keep the state’s quota program.

U.S. Congressman David G. Valadao (R-Calif.) introduced bipartisan legislation March 22 addressing California’s struggling dairy industry.

The California Federal Milk Marketing Order Act would allow California dairy producers to petition the U.S. Secretary of Agriculture to be considered to join the Federal Milk Marketing Order.

The proposed legislation is Valadao’s first bill. The newly elected congressman is a dairy producer from Hanford, Calif., in the heart of the Central Valley. Valadao represents the 21st Congressional District, which includes Kings County and portions of Fresno, Tulare, and Kern counties.

Under the current California pricing system, said Valadao, dairy producers throughout the state have closed down, resulting in lost revenue and jobs.?

“Dairy is California’s largest agriculture industry,” he said. “I’m proud to have introduced this bipartisan proposal as my first piece of legislation in the U.S. House of Representatives. Ultimately, even with this legislation, California dairymen will have the final say regarding their own pricing system. I look forward to working with my colleagues in Congress on this and other issues important to Central Valley agriculture.”

The legislation, known as H.R. 1396, has already received strong support from the California Congressional Delegation. Original cosponsors include California congressmen Kevin McCarthy, Jim Costa, Jeff Denham, Doug LaMalfa and Devin Nunes. The Federal Milk Marketing Act has also received widespread support from dairy farmers across the state.

Milk Producers Council, a California dairy organization which has supported the bill, said Friday it greatly appreciates Valadao’s leadership on the Federal Milk Marketing Order (FMMO) issue.

“While California dairy farmers currently have the opportunity to petition USDA for the establishment of a California Order in the FMMO system, current law does not allow USDA to account for the ‘quota program’ that California has operated the past 40-plus years,” said MPC’s Rob Vandenheuvel. “This has been a sticking point in our previous discussions about joining the FMMO system. H.R. 1396 would specifically address that issue, allowing USDA to craft a California FMMO that recognizes the state-run quota program.”

Specifically, the bill states, “the order covering California shall have the right to reblend and distribute order receipts to recognize quota value.”

The process of petitioning USDA with a proposal creating a California FMMO, scheduling and conducting a USDA hearing on the matter, and ultimately putting the final result before the dairy farmers for a vote (which would require a 2/3 majority for implementation) is a lengthy process, with many opportunities for input from dairy farmers and their representatives.

“H.R. 1396 wouldn’t change that process, but would give us the option to include in our petition a recognition of the state’s quota program and the ability to continue operating it, while participating in the FMMO system,” Vandenheuvel said. “That’s the value of H.R. 1396: it provides us with additional options, while still maintaining our full control over whether or not to ultimately choose to accept the move to the FMMO system.”

California dairy producers maintain they are losing hundreds of millions of dollars in revenue as a result of the lower prices in the state-run marketing order. They believe they would earn higher prices for their milk under an FMMO.

USDA Issues Final Rule on Producer-Handlers

Fri, 20 Nov 2020 02:18:39 GMT

The U.S. Department of Agriculture issued its final decision Friday to limit the unfair pricing exemption enjoyed by large, vertically-integrated farmer-owned bottling plants, which according to NMPF will close the loophole for the largest “producer-handler” milk bottlers.

NMPF estimates there are 40 producer-handlers selling 57 million lb./month or nearly 700 million lb. of milk annually. About six of them are above the new 3 million pound per month limit set by USDA’s action Friday.

Under rule changes to be published this week in the Federal Register, the producer-handler definitions in all Federal Milk Marketing Orders will be amended so that only farms with bottled milk sales of three million pounds or less per month remain exempt from the pooling provisions. Producer-handlers with sales more than that will be treated the same as other bottling operations that don’t own farms, and will have to pay Class I differentials into the shared producer revenue pool effective in their respective Federal Order regions.

“This decision by USDA is the culmination of years of work by National Milk and our members to create a level playing field for milk bottlers, which ultimately benefits dairy farmers of all sizes,” said Jerry Kozak, President and CEO of NMPF. “The USDA has acknowledged that it’s time to close a loophole that was really intended to benefit small producer-handlers, not those as big as any other commercial milk bottling plant.”

Under the previous rules, a milk bottler of any size could avoid paying into the Federal Order pool in its market so long as it only bottles milk it produces. This regulatory exemption provided a large competitive pricing advantage, and reduced average pay prices for other producers who lost out on shared Class I revenue. Those producer-handlers with bottled milk sales of three million pounds or less per month remain exempt from the pooling and pricing provisions.

The new decision also tightens the requirements in the Arizona and Pacific Northwest Federal Order markets, which had allowed producer-handlers up to three million pounds of sales in separate marketing orders; the new rules allow up to three million pounds in total marketings.

This was the first hearing initiated under new timelines advocated by NMPF in the latest Farm Bill. NMPF and the International Dairy Foods Association (IDFA) jointly petitioned for new limits on producer-handlers in January 2009. A hearing was held in May and a resulting recommended decision was issued in October, with comments due in December. USDA must seek producer approval of the final decision before it can go into effect, probably in April or May.

The USDA website has extensive information on the issue. USDA’s decision supports NMPF’s position and frequently cites NMPF’s testimony in its conclusions.

Wisconsin Milk Marketing Board Rebrands to Dairy Farmers of Wisconsin

Fri, 20 Nov 2020 01:55:02 GMT

The Wisconsin Milk Marketing Board has rebranded by changing the organization’s name to Dairy Farmers of Wisconsin.

The name change will better help the Wisconsin’s dairy farmers connect with consumers both domestically and globally.

“As the marketing and promotion arm for Wisconsin’s dairy farmers, this new identity puts the dairy farmers squarely at the center of what we do and provides a much stronger platform to share the Wisconsin dairy story,” says Dairy Farmers of Wisconsin CEO Chad Vincent. “Our organization exists to be tireless advocates for our dairy farmers, to help these family businesses thrive because they, and the fruits of their labor, are the heartbeat of the industry and our state.”

“The dairy industry is facing several challenges, including globalization of our markets, increased regulation and ongoing low prices for milk,” says Jeff Strassburg, Chair of the Board of Directors and a fifth generation Wisconsin dairy farmer. “This change will put Wisconsin dairy farmers in a better position to help us grow and stay focused on the future.”

The Dairy Farmers of Wisconsin helps promote Wisconsin dairy products through marketing and advertising. The organization was established in 1983 when the state’s dairy farmers voted to form the marketing order.

Wisconsin’s dairy industry contributes $43.4 billion annually to Wisconsin’s economy. According to Dairy Farmers of Wisconsin 90% of milk in the state is used for cheese production and 90% of cheese is sold outside of the state.

For more information on the name change watch the following video: