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FMMO Hearing Ends with NMPF Unity Strong as Ever

February 5, 2024

USDA’s longest-ever federal order hearing ended Jan. 30 with NMPF’s comprehensive approach to modernizing milk pricing at the center of industry discussion. With the FMMO update process now moving to its next phase, NMPF leadership remains critical as USDA moves to formulating its own proposal to put before producers.

“NMPF spent more than two years preparing for USDA’s Federal Order hearing, and that preparation paid off,” said NMPF President and CEO Gregg Doud in a statement after the end of testimony and rebuttals. “Our proposals, unanimously supported by our Board of Directors, reflect farmer unity and a good-faith effort to build industry consensus.

“After five months, 12,000 pages of testimony, and almost two dozen separate proposals considered, our plan remains the most comprehensive, coherent, and compelling framework for modernizing a system that’s badly in need of improvement. We look forward to working with USDA and the entire industry in the weeks and months to come, noting that any plan USDA designs will by necessity require complex analysis to result in a proposal that serves diverse farmer needs well.”

Organized discussions of the federal milk-pricing system, which showed strains under the weight of the COVID-19 pandemic and continues to struggle in the face of a changing industry, began with NMPF in 2021. The five-month USDA hearing in Carmel, IN, revolved around NMPF’s suite of proposals for change unanimously adopted by its Board of Directors last year.

The hearing has addressed critical issues for dairy farmers, including the “make allowance” re-imbursing processor costs, component pricing for milk, and the Class I price surface that considers travel expenses. Recent discussions have revolved around the so-called Class I mover, a change to which in 2019 has cost farmers roughly $1.2 billion. Doud called for change to the mover in his statement and in NMPF’s monthly CEO’s Corner column published today.

“We’ll continue to advocate for badly needed changes in areas such as the Class I mover,” he said. “It needs to change back to the previous “higher-of’ formula that served farmers best. The higher-of responds quickly to the marketplace, it helps farmer cash flow, it’s simple to understand, and it would have no real impact on processors who are using the formula to boost their immediate balance sheets, not manage future risk as they claim.”

NMPF and member cooperative staff are currently formulating NMPF’s elaboration and defense of its positions in the hearing to USDA, the first step toward USDA’s own proposal. That’s due in less than two months – and only underscores how much work is left to do in creating a fairer pricing system for farmers, Doud said.

“This final year is the most critical,” he said. “We are excited to continue our leadership, and will, as always, fight for the best approaches to ensure that dairy farms prosper.”