The volatility of the federal order pricing during COVID-19 and the ensuing economic upheaval has caused many dairy industry members to re-evaluate the effectiveness of federal order pricing. During the January 11 Hoard’s Dairyman DairyLivestream, panelists addressed the likelihood of a federal order change in the near future.

“You don't have to agree on every chapter and verse, but if you're wildly in disagreement, you can't expect Solomon to pull out his sword and say he would just split the baby in half,” Cornell University’s Andy Novakovic shared regarding the need for industry agreement on federal order changes. “The USDA is not going to get in that game.”

Specifically, Secretary of Agriculture Tom Vilsack has asked that the industry come with a unified plan for federal order modifications. According to the International Dairy Foods Association’s Dave Carlin, the U.S. Department of Agriculture would like to have consensus at least on what the scope of a hearing should address.

“I think the department is not expecting processors and producers to show up with the same exact number before they initiate any kind of a federal order process,” he said.

Consensus is so important because the federal orders are meant to be equitable to all affected parties.

“A key thing to keep in mind is the Agricultural Marketing Agreement Act requires the United States Department of Agriculture to balance its decisions on federal order rules to be equitable across the supply chain for farmers and consumers,” explained Novakovic. “It has to be a balance; it has to look like a reasonable balance.”

That being said, he also expects USDA to consider some parts of the updates to be more producer focused while other concerns will be more processor oriented. To that end, the National Milk Producers Federation endorsed its plan last fall.

“The key thing is that there has to be some kind of balance so all the voices are important,” Novakovic concluded. “All the regions are important – big and small and in between.”

To watch the recording of the January 11 DairyLivestream, go to the link above. The program recording is also available as an audio-only podcast on Spotify, Google Podcasts, Apple Podcasts, and downloadable from the Hoard’s Dairyman website.

For additional insight, please read:

Federal order modernization takes careful cultivation

Federal order forum amplifies farmer voices

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(c) Hoard's Dairyman Intel 2023
January 16, 2023
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