As the industry begins to address updates to the Federal Milk Marketing Order (FMMO) system, opinions are flooding in from a number of sources. During the June 15, 2022, Hoard’s Dairyman DairyLivestream, Kroger’s Mike Brown presented a few considerations from the perspective of someone who has been in dairy for many decades both on the production side and the buyer side.

“Do federal orders truly provide orderly marketing?” Brown presented as the first question for federal order reformers to consider. “Depooling, in my mind, causes more harm than the federal order pooling helps because it makes it hard to do risk management. The ability to depool causes a lot of problems. How do you fix that when you have a price system that hasn’t updated make allowances in 15 years?”

Brown’s other three observations come from his time working in cheese production. He gave the example of Idaho where only 3% of milk goes into fluid products.

“Idaho, at one time, was about 90% cheese; now it's about 70%,” he detailed. “We (Idaho) have grown mostly in powder and a lot of specialty powders, milk proteins, and products such as that,” said the one-time dairy economist for Glanbia Foods.

Yet, milk moves to its highest value. When Class IV is above Class III and a person is trying to make cheese, it’s hard to find milk. The opposite is true as well.

Another challenge is presented by Class I utilization dropping. Since the last update to federal orders, the fluid milk decline has impacted the effectiveness of the entire system, explained Brown.

Finally, the seasoned dairy industry leader reminded listeners of the difficulties presented by regional differences across the United States.

“My co-op that supplies me in the Southeast has a different view than those (co-ops) that supply me in Arizona versus Indiana versus Ohio versus California versus Oregon. So, our markets have diversified in some ways,” he went on to say. “Again, we love the independent federal orders, but how do we best make them work and recognize those differences between markets? We all have our work cut out for us.”

To watch the recording of the June 15 DairyLivestream, go to the link above. The program recording is now also available as an audio-only podcast on Apple Podcasts, Spotify, Google Podcasts, and downloadable from the Hoard’s Dairyman website.

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(c) Hoard's Dairyman Intel 2022
June 20, 2022
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