Pivotal Moment in Dairy

Dairy is a hard industry, even on its best days, and a lot of that comes from understanding the puzzle of how prices are set under the Federal Milk Marketing Order (FMMO) system. It feels like an uphill battle fighting current dairy market conditions and regulations that, at times, seem to work more against producers than for them. Outdated provisions of the system have led to uncertainty and ultimately blocked some farmers from clear and fair payments they deserved. FMMO’s have shaped the U.S. dairy market for more than 80 years, and apart from a provision in the 2018 farm bill, we haven’t seen any notable changes to the system since milk pricing reforms made in 2000. More than two decades later, it’s time to bring transparency and fair prices to America’s dairy farmers.

Farm Bureau has long been concerned with ensuring the pricing and pooling of milk on FMMO’s is fair for all dairy producers. And now, after the COVID-19 pandemic shined the spotlight on faults within the system, we have doubled down on our efforts. Our grassroots members have identified and support a range of policy proposals to update the system including expanding price discovery, examining alternative pricing methods that minimize harmful market behavior and utilizing mandatory and audited data to modernize price formula factors.

The American Farm Bureau has been a leader in bringing the industry together to discuss these challenges and opportunities. In response to the call by Secretary Vilsack for dairy to come together and find solutions, we gathered hundreds of farmers, cooperative representatives, dairy trade groups and processors together last fall to find common ground at our Federal Milk Marketing Order Forum. These meetings helped set the stage for USDA’s formal process to amend the FMMO. Through the incredible work of Farm Bureau’s producer-led Dairy Working Group, continued advocacy by our grassroots leaders and calls upon the USDA for reform, we are now fully engaged during a pivotal moment for the dairy industry.

USDA has begun a multi-step process to receive proposals, listen and interpret public testimonies, publish proposed and final rules and from there implement changes to the FMMO system based on the outcome of a future referendum of dairy farmers.

This summer in Carmel, Indiana, the USDA began hearing testimony on 21 accepted industry proposals related to milk price formulas, giving farmers and stakeholders the chance to testify in-person. USDA included four of AFBF’s nine proposals in the scope of the hearing and we support five additional included proposals made by other organizations. This hearing has been unique in that farmers have been given the unique opportunity to testify virtually, an opportunity we are very thankful to USDA for offering as many of our farmers are busy with harvest. Under the six subjects categorized by the USDA, farmers and stakeholders have discussed topics including how dairy commodity market prices are surveyed, the setting of make allowances and other equation factors, the fluid milk pricing formula and Class price differentials.

Our members, along with AFBF staff have been elbow-deep, analyzing proposals and ensuring that our voice is represented throughout this hearing, and I am excited to see what great changes we can achieve to help ensure the future of the dairy industry. I am also especially thankful for our devoted members who have traveled to Indiana to testify in person or have called in virtually to tell their story.

The hearing is ongoing until the middle of October and we will continue to take a leading role in the process with our strong farmer-developed positions through all six categories. Once the hearing is concluded, USDA will issue its recommendations and our work to respond to them will begin.

The journey to this FMMO hearing has been a long road and I am so proud of all the work our grassroots leaders have done to get us to this pivotal moment for dairy.