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Dairy Defined:

Co-ops Lead in Developing Milk-Pricing Consensus

May 8, 2023

It would seem daunting that the highly diverse dairy community, which ranges from small, 20 cow farms to 20,000+ animal operations using state-of-the-art equipment for everything from housing to enhanced sustainability, would be able to reach a unanimous consensus on a comprehensive proposal to modernize milk pricing, which is both incredibly important and incredibly complicated for each of those farms.

But dairy farmers, as represented by the members of NMPF, have a mechanism that allows the industry to tackle complex issues and work on solutions that can make improvements for all: the cooperative. And after two years and more than 150 meetings on milk marketing orders, that structure again is proving essential to industry progress.

Even after decades of consolidation and increasingly sophisticated operations, the co-op remains the heart and soul of dairy. Cooperatives handle 85 percent of U.S. milk, produced on farms that are 97 percent family owned. By providing technical and risk-management support, economic expertise and most importantly, a guaranteed buyer for a perishable product, co-ops meet dairy needs – including the need to reach agreement on all-encompassing issues such Federal Milk Marketing Order modernization. Working together for mutual self-help is the cooperative spirit. It’s the engine that makes dairy move.

Though not every dairy cooperative is an NMPF member (although they should be, if they want to be engaged in building industry positions on critical issues such as FMMO modernization), the strength of its membership covers two-thirds of the U.S. milk supply –which enables us to solidly speak for dairy farmers in federal policy debates. That’s why NMPF became the natural place to craft an FMMO modernization proposal. Top economists and analysts from member cooperatives talked with the farmer-leaders of NMPF co-ops nationwide, arriving at solutions to thorny problems that respected the interests of all and, in total, achieves mutual benefits.

The result is the plan NMPF submitted to USDA last week. That’s how things should be done – and that’s how things will continue to be done as the Agriculture Department considers the plan and, assuming successful consideration, a federal order hearing takes place.

Not every dairy farmer is a co-op member, of course, and the industry includes other parts of the supply chain that have an interest in FMMO issues. That’s obvious, and the farmer-led plan NMPF has submitted wouldn’t have been as well-considered – and certainly not as likely to succeed – without the input and support from stakeholders across dairy.

But in the end, the vehicle driving the first major FMMO update in nearly a quarter-century is the farmer-owned cooperative. Co-ops are where the ideas come from, and where the initiative to realize those ideas come from as well. As the federal-order process continues, each will be important to success. Fortunately, supplies of both are ample.