Well done, co-ops. Your leadership is shaping a better future for dairy.
On Monday, an effort that took more than three years, more than 200 meetings, 49 days of a record-long Federal Order hearing, and countless hours of analysis and discussion were reflected in a recommended USDA plan for Federal Milk Marketing Order modernization that incorporates much of the comprehensive approach to improvements we advocated throughout.
Yes, not every detail is exactly as we would have had it – we always knew that would be the case. And USDA’s plan isn’t set in stone – we take very seriously the comment period we will soon be in and plan a detailed response to this proposal. Our FMMO task force is meeting to discuss the plan next week; even as we speak, our staff and cooperative experts are putting pen to paper to better understand how various parts of the USDA plan will interact to affect dairy farmers and the cooperatives they own, as well as the broader industry.
That’s all to say our work is far from over. But Monday’s decision was arguably the critical milestone in this process. And this industry – led by the member-owners of the nation’s leading dairy cooperatives – has many reasons to be heartened by the improvements USDA has proposed to the nation’s Federal Milk Marketing Order system.
A few notes on what USDA offered, and how it compares to what we’ve advocated.
- On the “higher of” Class I mover. Noting that dairy farmers have lost roughly $1.3 billion in revenue since the mover was changed in 2019, we fought for a return to the higher-of in the name of fairness and real-time market signals. Processors proposed a different formula, citing its importance to risk management, especially for extended shelf-life milk. Recognizing the need to restore orderly milk marketing, USDA decided to go back to the higher-of, with an accommodation for extended shelf-life milk, thus granting NMPF’s request for the vast majority of U.S. fluid milk. USDA’s solution is, frankly, as innovative as it is fair – a classic case of two sides not getting all that everyone wanted, but everyone getting what they most needed.
- On make allowances. USDA’s numbers for an adjustment were higher than what NMPF proposed, though not greatly out of line with our analysis. And USDA denied the processors’ request to automatically increase the numbers over the next three years, which NMPF opposed. Agreement was nearly universal that make allowances, which hadn’t been revised since 2000, needed to change. The next step now will be seeking better plant-cost data through mandatory surveys via legislation, a step that’s been included in every significant congressional farm bill plan that’s been proposed.
- On increasing the Class price skim milk component factors. Again, USDA’s plan takes a direction similar to NMPF’s, though it doesn’t include the automatic update provision we proposed.
- On the Class I differentials. In many cases, USDA’s county-level calculations matched our own. In many others, the calculations deviated minimally. And in a few others, the differences were significant. Meanwhile, USDA denied a processor proposal to zero out the base differential, which would have significantly reduced every differential in the country and set the Class I differentials to zero at some locations in the West. We will be examining USDA’s methodology to better understand its calculations, reflecting the best data and our members’ input.
- On removing barrel cheese from the protein price formula. USDA accepted NMPF’s proposal without modification.
As has always been the case, member leadership is what has made this process work for dairy. The conversation is continuing, and the comprehensive, consensus-driven approach that has been our hallmark will also continue.
Once Monday’s proposal is officially published in the Federal Register, we and other stakeholders will have 60 days to submit comments to USDA. A final producer vote is projected for early 2025. Again, thank you to all the cooperative leadership for what has been accomplished so far, and for the good work for dairy that will continue. And with that, happy Independence Day. We’ll be back next week for the second half of an already successful year.
