The fundamental question bouncing around the minds of many dairy operators throughout 2020 is probably the one posed in the title of this article. Are we certain that milk pricing is better off with the Federal Milk Marketing Orders?

During the November 18 Hoard’s Dairyman DairyLivestream, which was sponsored by Diamond V, Cornell’s Andy Novakovic addressed this question by describing the three goals the federal orders are designed to achieve.

Playing from the same rulebook
While farmers may consider the federal order’s first pillar of fairness to be far from achieved Novakovic explained it not in terms of a fair price for farmers and processors but rather a competitive one for each separate group.

“Federal orders also justify themselves by saying it’s fair for processors. If I’m a cheesemaker, I kind of like knowing that my competitor is facing what I’m facing, so buyer to buyer fairness,” he explained. “Farmer to farmer fairness is also there. You know your neighbor and you are going to have pretty similar prices. It’s going to differ by composition, transportation costs, or perhaps you belong to different coops and you have different other things going on, but basically you’re looking at playing from the same rulebook.”

The second point ties in closely with fairness, and that is the creation of a level playing field for all farmers.

“Could we get higher prices with federal orders? Maybe, but the thing of it is, if you push it up on one part of the market, you kind of end up pushing down on the other part of the market in order to make sure all of the milk clears,” he detailed the principle.

A good deal for farmers
The final cog in the federal orders goal is one of the founding principles of classifying dairy products, and that is achieving a good deal for farmers. Novakovic warned that this third key also comes with a balance.

“What’s fair to a consumer?” he questioned the webcast audience. “I don’t know, but this kind of market balancing seems to be a way that we’ve reconciled how to do that.”

Certainly, Novakovic shared with the audience that the Federal Milk Marketing Order system has its flaws, but he also reminded listeners that they must try their best to keep these flaws in context.

“Are all the details right? All the individual rules right? I don’t know,” he said. “Those are things that certainly we can talk about that stand apart from whether or not you want to play the game with a referee, which at the end of the day, is I think probably one of the biggest features of the federal orders that we should be keeping in the back of our heads.”

An ongoing series of events
DairyLivestream will air twice each month for the remainder of this year. The next broadcast, "What we want and what we might get from Washington," will be on Wednesday, December 2. Each episode is designed for panelists to answer over 30 minutes of audience questions. If you haven’t joined a DairyLivestream broadcast yet, register here. Registering once registers you for all future events.

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(c) Hoard's Dairyman Intel 2020
November 25, 2020
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