With USDA’s Federal Milk Marketing Order (FMMO) hearing concluding after a record 49 hearing days, National Milk Producers Federation (NMPF) is now going through about 12,000 pages of hearing testimony transcript, reviewing our own proposals and those from others to prepare for the next FMMO milestone — the submission of our final comments in early April to sum up the benefits of our proposal for the benefit of dairy farmers and the broader industry.

Because of the unity of our members and the rigor of our analysis, we feel confident. Federal order pricing formulas have increasingly failed to reflect the needs of farmers and the broader industry, which has evolved considerably over the past quarter-century. Our plan brings those formulas up to match where the industry is now and where it will be going forward.

Some of NMPF’s proposals simply update USDA’s basic FMMO principles — our Class I price surface, for example, acknowledges changing price structures while maintaining the integrity of USDA’s approach to calculating them. Other proposals strengthen those principles. In the case of the Class I mover, we’re proposing rolling back a change made in the 2018 Farm Bill that’s cost farmers an estimated $1.2 billion to bring it back in line with USDA’s own reasoning behind its mover.

And we also clearly delineate what FMMO modernization is and what it isn’t. Even as risk management becomes more important for the dairy industry, it’s important to note that the FMMO system remains fundamental to its structure. Our plan acknowledges that reality while providing the necessary changes needed to adapt to farmer needs in 2024.

In the end, what separates NMPF’s proposals from others is our comprehensive approach. You can’t look at the federal order system having not been updated in more than 20 years and not address all facets of the industry. You can’t say in good faith, for example, that Class I differentials need to be updated because costs have gone up without also conceding the fact that make allowances, which are critical to many cooperatives and the broader industry, need to go up for the same reason. Such ideas have not proven universally popular, but they’re necessary to pursue because that’s what advances the entire industry. We’ve been fortunate at NMPF to have members and leaders who understand this and have made the decisions necessary to build the consensus that’s absolutely required for any plan to succeed.

Throughout this process, our guiding principle has been to move the industry forward. That’s meant reconciling diverse interests, but the result is a plan we believe USDA will appreciate for taking a balanced approach to complex issues, helping them make the best decisions possible.

We will know those decisions in early July, when USDA releases it recommended decision, based on ours and others’ briefed comments based on the hearing record. After that decision, there will be an opportunity for reply from the industry to USDA, but only minor changes would be expected to its decision. As always, we will be ready to respond to whatever plan is released and ready to advocate for the farmers who have led us through this process.

NMPF is proud of the 37 technical experts and 32 dairy farmers who testified on our behalf at the hearing, as well as the task force members and numerous interested parties who contributed to the formulation and support for our proposal. This work, a once-a-generation heavy lift, will benefit dairy for years to come. We look forward to continuing our leadership in this critical area, and we will see it through its successful conclusion.

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(c) Hoard's Dairyman Intel 2024
February 19, 2024
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