June 7 2023 08:49 AM

“Our farmers agree the Class I mover should be restored to the ‘higher of’ as soon as possible.”

The information below has been supplied by dairy marketers and other industry organizations. It has not been edited, verified, or endorsed by Hoard’s Dairyman.

American Dairy Coalition sent a letter to Agriculture Secretary Tom Vilsack asking USDA to grant a hearing and call for proposals on the petition filed by National Milk Producers Federation.

“ADC appreciates the work of NMPF in putting together a package of proposals that is comprehensive and seeks to balance needs within the dairy sector,” said ADC CEO Laurie Fischer. “We specifically want to see the Class I mover addressed, and we applaud the work of the American Farm Bureau bringing stakeholders together and hosting the forum last October where returning the Class I mover to the ‘higher of’ method received universal consensus.”

As a grassroots dairy farmer organization, ADC has been focused on several of the items addressed in the NMPF proposals, especially the Class I mover.

“Our farmers agree this should be restored to the previous ‘higher of' method as soon as possible. In the 50 months of USDA’s implementation of the ‘average of’ method, farmers lost $920 million in net cumulative Class I value,” said Fischer. “The asymmetric risk borne by farmers in the ‘average of’ method, and the impact on FMMO participation are additional concerns.”

The letter also urges USDA to understand make allowance updates should be based on mandatory audited cost surveys so that the cost data from all price-reporting plants are included, which relate to only those products that are used in the FMMO pricing formulas.

“If the value of a product is not captured and used in the milk component prices, then the cost to make that product should not be included in the embedded ‘credit’ known as the ‘make allowance,’” said Fischer. “All of the other products that are NOT captured in the end-product pricing formulas can be sold by processors at prices that cover their costs without coming back to the farmer for it.”

The NMPF proposals seeks to remove the 500-pound barrel cheese pricing from the FMMO formula for protein. “We’ve asked USDA if a bulk product replacement, such as 640-pound block cheese, could be evaluated,” she added.

The ADC letter to Vilsack expresses support for raising standard milk component levels in classified pricing to more accurately reflect the higher components in milk today. However, the letter points out that only the protein and skim solids are included in the NMPF proposal. Raising the standard butterfat levels are excluded and would not change how farmers are paid, but it could be evaluated for updating as relevant to how minimum prices are communicated and compared on net milk checks.

With concerns farmers have about price discovery and milk check transparency, ADC is also looking into potential legislative or administrative changes that could expand reporting. “A farmer should be able to follow market trends, understand in real time the value of their milk, and be able to look at their final payment after four to six weeks of shipping milk out the driveway and clearly see how it was calculated to determine their net payment,” said Fischer.

Read Letter Here

About The American Dairy Coalition:

The American Dairy Coalition (ADC) is a farmer-led national lobbying organization of progressive, modern dairy farmers. We focus on federal dairy policy. For more information, contact CEO Laurie Fischer at 920-288-7190.