Economics: Advancing FMMO Modernization Through Analysis, Discussion
September 7, 2022
- Provided backbone of FMMO economics analysis as NMPF guides industry to modernized pricing system
- Focused industry communications to build consensus as FMMO modernization moves forward
Federal Milk Marketing Order modernization is a critical goal for NMPF members in 2022, with NMPF asserting leadership through its discussions with members and stakeholders on how to best craft solutions for farmers and the industry.
Economic analysis and guidance is the backbone of successful FMMO changes. The focus of FMMO modernization is the dairy product pricing formulas, which determine the federal order component and Class prices and thus constitute the foundation of the entire order system. The formulas need to provide accurate reflections of the real-world conditions under which the components of dairy farmers’ milk are actually transformed into such products, via such factors as producer milk composition, manufacturing costs, and product yields. These formula factors mostly have not been updated since 2000, while the dairy industry has evolved significantly.
About 20 federal order and milk marketing specialists from the staffs of NMPF member cooperatives, led by including Chief Economist Peter Vitaliano and Jim Sleper, a consultant and FMMO expert, are actively participating in this extensive effort, which so far has involved over 60 virtual and in-person meetings, with a goal of having a complete package of all pertinent recommendations for consideration and approval by the NMPF Economic Policy Committee and the Board of Directors at the annual meeting this fall. After that, NMPF will offer a comprehensive proposal to USDA to amend the orders, potentially leading to a national hearing on these issues in 2023.
In tandem with the policy analysis meeting, NMPF experts have worked with its member services staff on a series of hour-long Zoom webinars for membership to reviewed FMMO issues, giving participants the opportunity to pose questions, offer input and understand how task force recommendations may affect their respective cooperatives. NMPF staff also provided customized webinars to three cooperative members.
In addition to those virtual sessions, NMPF created a structured dialogue among state dairy organizations about major policy issues, including milk pricing, by organizing a state dairy association summit meeting on July 11-12 that gathered 45 farmers and executives from 22 state organizations in Chicago. Participants gained a deeper understanding of pressing public policy challenges affecting other regions and learned more about how national issues are being handled at the local level, in milk pricing and in areas both within and outside economics.
While FMMO work continues, the economics team continues to oversee the administration of the Cooperatives Working Together (CWT) program, a voluntary, marketing-focused export program, helping member cooperatives gain and maintain market share in the international market. The team’s work in administering the program includes recommending assistance levels, providing market insight and managing the dispersal of funds.
Finally, the team, which in July merged with USDEC economics staff to provide comprehensive analysis across the dairy spectrum, offered its economic and market insight through engaging with farmers, cooperatives, processors and the broader industry, through August delivering nearly 40 speaking engagements and 42 market publications in addition to many telephone conversations, Zoom meetings and in-person conversations throughout the year.