June 01, 2023

Dairy industry releases plan to modernize FMMO system

Dairy industry releases plan to modernize FMMO system 

By: Sydney Sheffield 

The National Milk Producers Federation (NMPF) sent a comprehensive proposal to the United States Department of Agriculture (USDA) that will modernize the Federal Milk Marketing Order (FMMO) System. NMPF has worked over the last two years to develop this plan, including more than 150 meetings with various stakeholders. Upon official acceptance, USDA will have 30 days to review the plan and decide whether and how to move forward with a federal order hearing to review the proposal. 

“Dairy farmers and their cooperatives need a modernized Federal Milk Marketing Order system that works better for producers,” said NMPF President and CEO Jim Mulhern. “By updating the pricing formulas to better reflect the value of the high-quality products made from farmers’ milk, by rebalancing pricing risks that have shifted unfairly onto farmers, and by creating a pathway to better reflect processing costs going forward, we are excited to submit this plan as a path toward a brighter future for dairy.”

The current FMMO system has not been significantly changed since 2000. The proposal includes: 

  • Updating dairy product manufacturing allowances (the “make allowance”) contained in the USDA milk price formulas
  • Discontinuing the use of barrel cheese in the protein component price formula
  • Returning to the “higher of” Class I mover
  • Updating milk component factors for protein, other solids, and nonfat solids in the Class III and Class IV skim milk price formulas
  • Updating the Class I differential price system to reflect changes in the cost of delivering bulk milk to fluid processing plants

“Modernizing the Federal Milk Marketing Order system has been due for some time; the pandemic experience, which exposed fault lines in the system, underscored just how necessary this effort has been and created the impetus for change. We’ve been deliberate in our approach because we wanted to make sure that we addressed the concern that Agriculture Secretary Vilsack stated well over a year ago when he said it was important to have consensus within the producer community,” Mulhern said

“We have achieved that consensus, and we believe we have sent USDA a strong signal — both in the thoroughness of our proposal and our depth of support among producers — that our comprehensive proposal is the proper basis for FMMO hearings and a path toward modernization.” 

Read the proposal here.