After a dozen weeks of testimony and cross-examination spread over six months, the Federal Milk Marketing Order (FMMO) public hearing concluded on Tuesday, January 30. The hearing, which began in late August, covered 21 proposals submitted by industry groups.

While the completion of a thorough hearing is an important and positive step, it will be a while before any updates are made to the FMMO. Next, the hearing record must be made available online for individuals and organizations to review and submit suggested corrections. Then, participants will be able to file posthearing briefs. After that, USDA will issue a recommended decision, which will follow with an open period for comments and exceptions to be filed. Following this process, USDA will issue a final decision and, if approved, will announce when the amendments will become effective.

At the close of the hearing, the American Farm Bureau Federation immediately filed an emergency petition, asking USDA Secretary of Agriculture Tom Vilsack to issue a final decision on an emergency basis to speed up the implementation of the “higher of” Class I mover formula to buffer dairy farmers from further losses during the remaining FMMO rulemaking process. That “higher of” pricing provision existed prior to the 2018 Farm Bill.

“When the spread between Class III and Class IV is under $1.48, the ‘average of’ provision has worked fine,” explained Corey Geiger, the lead dairy economist for CoBank. Unfortunately, wide spreads between Class III and Class IV take a hit on milk checks. Late last year, losses totaled $50 million in November and $38 million in December.

“The current formula has cost farmers $1.2 billion in losses since its implementation after the 2018 Farm Bill, with additional losses expected in the coming months,” reported Gregg Doud, president and CEO of the National Milk Producers Federation. “

“It needs to change back to the previous ‘higher of’ formula that served farmers best,” he continued. “The ‘higher of’ responds quickly to the marketplace, it helps farmers cash flow, it’s simple to understand, and it would have no real impact on processors who are using the formula to boost their immediate balance sheets, not manage future risk as they claim.” Changes to the Class I mover was one of the top priorities in the proposal NMPF submitted to USDA prior to the hearing.

In the letter submitted by the American Farm Bureau Federation, their vice president of public policy, Sam Kieffer, wrote, “The comprehensive process of amending federal orders, though important, means dairy farmers remain stuck with current pricing regulations until USDA publishes a final rule. The current Class I mover was a well-intentioned policy misstep that has reduced dairy farmers’ checks, with little relief in sight. Emergency implementation of the ‘higher of’ Class I mover formula will help buffer against persistent losses associated with mistaken and outdated policies that have left dairy farmers struggling to make ends meet.”

Now, dairy farmers and industry organizations will wait for a response from USDA to this request.

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(c) Hoard's Dairyman Intel 2024
February 5, 2024
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