“If we're talking about no regulation, you're going to look at a lot more vertical integration, and a lot less transparency. It isn't necessarily going to be like poultry,” shared Cornell’s Andy Novakovic in response to an audience member’s question on elimination of federal orders. “It would be a bit wild, Wild West out there. There would still be milk at the grocery stores, but it would get there a lot differently than it does now.”
The University of Wisconsin-Madison’s Mark Stephenson agreed with Novakovic’s assessment as it relates to deregulation. As for potential modernization, Stephenson had this to say, “There may be incremental steps toward relieving some of the problems,” the seasoned economist explained. “The first one is if we're going to have classes, and product price formulas, we've got to update those make allowances much more often.”
New formula options
For the panelists, updated federal orders would start simply.
“To be modern, you can't be using 30-year-old data for formulas,” the American Farm Bureau Federation’s Roger Cryan said. “If we're going to follow our tradition of federal orders with modern federal order system and it involves two classes, we have a strong interest in seeing that examined more closely.”
For Kroger’s Mike Brown, there are two important things he sees as necessary.
“First, if you're going to have a system that really provides orderly marketing, it needs to include more milk. It can't by regulation force a processor into large negative profitability, like it would have with cheesemakers in 2020,” Brown said. “You need to make a pricing system that makes pooling, to a point, less onerous. I think there is a chance for balance.”
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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