Citing market conditions that are in a “state of flux, aggravated by challenging national dairy product markets,” National All-Jersey and its fellow proponents withdrew their proposal for a multiple component pricing hearing in Orders 5 and 7. Those Federal Milk Market Orders represent the Appalachian region and the Southeast.

In reading the letter addressed to Dana Coale, deputy administrator for USDA’s Agricultural Marketing Service, it’s clear that National All-Jersey, 14 milk cooperatives, and three statewide producer organizations would like to revisit the issue, however.

“While none of these variabilities in marketing conditions lessens in any way the need for, or proponents’ support for multiple component pricing (MCP) in the two Orders, resources needed to advance our case for MCP in the two Orders must be redeployed to handle pressing day-to-day marketing issues,” wrote National All-Jersey’s Erick Metzger on behalf of the fellow proponents.

The case for multiple component pricing
“The absence of multiple component pricing for the Southeast and Appalachian markets has caused marketing inefficiencies by creating inequitable procurement costs and understated revenue for producers,” wrote Metzger in the May 10, 2018, Hoard’s Dairyman article, “It’s time to expand multiple component pricing.”

At the close of that article, Metzger continued, “. . . it is worth noting that since the Great Basin Order first adopted MCP nearly 30 years ago, no federal order has reverted to skim-butterfat pricing after adopting multiple component pricing. Certainly, that track record of success shows that MCP works well for both producers and processors.”

Move would erode milk checks
“MCP pricing would continue to erode production within the boundaries by moving dollars out (of the region),” wrote John Harrison in the July 2018 issue of Hoard’s Dairyman in his article, “Move to multiple component pricing would erode milk checks.”

“We just experience months of producers losing their market while at the same time all this other milk that is associated with these orders continues to flow here,” the Tennessee dairyman continued when speaking of Orders 5 and 7. “Let’s bring some common sense back to milk orders,” he concluded.

Two counter proposals
As the process unfolded, USDA received two proposals prior to the June 1 deadline after everyone had the opportunity to review the National All-Jersey proposal.

The Kroger Company’s proposal asked to reduce the required amount of Class I sales for a distributing plant from 50 to 25 percent to allow growth of other dairy product manufacturing. Essentially, that would allow a plant to expand manufactured dairy products without jeopardizing its pool plant status.

Meanwhile, the Tennessee Dairy Producers Association flat out opposed the plan for many of the reasons outlined previously by Harrison.

Next move
“We anticipate resubmitting the proposal when the current marketing challenges have stabilized and resources necessary to advance the proposal again become available,” concluded Metzger in his letter to Coale.

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(c) Hoard's Dairyman Intel 2018
July 16, 2018
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