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CEO's Corner:

FMMO Modernization Must Be Done Right

April 4, 2022

For all of the positive developments we are seeing in dairy, from record exports to much improved prices, this industry always faces challenges. Some are short-term (high input and energy costs), and some develop over longer periods. A top priority at the National Milk Producers Federation, as we emerge from a pandemic that placed unusual pressures on the Federal Milk Marketing Order system, is an in-depth review and modernization of that system.

NMPF has been deeply involved in this process for the better part of the last 18 months. And coming off a very successful March meeting of our Board of Directors, we’re determining what issues demand closer examination, the process we will follow going forward, and the paths we can chart toward crafting improvements to an FMMO system that addresses needs of producers in all regions.

Work on FMMO modernization – in some ways an outgrowth of our work on the Class I mover earlier in 2021 – began last year as our Economic Policy Committee met to share expertise and perspectives. It became clear to us that a lot of technical nitty-gritty detail in this program that we need to get into requires the expertise that we have resident in our co-ops — folks who are working on the program every day to facilitate orderly marketing of milk for our co-ops and our producers.

From there we have created task forces and working groups that have also been meeting to address specific areas, helping us delve deeply into these issues, so we can make meaningful progress on recommendations. That process is going very well, aided by expertise of Jim Sleper, an FMMO expert with decades of experience with its complexities through his work with several of our member cooperatives.

Given the complexity and interconnectedness of all these issues, careful consideration is critical to successful solutions that have the necessary widespread support from dairy farmers and the broader industry. We’re trying to move as quickly as we can. But we also have to move deliberately and take the time to get this right. The task force is working through a series of issue-specific working groups. When they get done, they’ll report their findings to the Economic Policy Committee, which will make recommendations to the Executive Committee and the NMPF Board.

Along with our own efforts, we’re engaging in dialogue with other interested parties as well. I’m in communication with Michael Dykes, my counterpart at the International Dairy Foods Association, which also has a group working on some of these same issues. A number of our member cooperatives are also members of IDFA, which should help facilitate consensus development. My sense is that we may be more deeply “in the weeds,” if you will, in examining some of these issues, and that’s to be expected given the FMMO system is a producer focused program.

We are also working closely with USDA, talking with them in a collaborative fashion, asking questions and gathering feedback.

We also want to solicit input from other relevant groups whose views are important in these discussions. This is an issue that will affect all producers. We want to make sure that producers are informed and understand as best they can how this program functions, because it is very technical, as you all know. There is lots of misinformation, lots of misunderstanding. And frankly, FMMO discussions need to focus on seeking solutions rather than on posturing for undefined “change” that doesn’t materialize when it’s time to make complex decisions.

In the past year, a few industry observers have talked up the need for “reform” or “simplifying” federal orders without offering specifics of what that means. If the net effect of federal order modernization is simplification, there is nothing to suggest that will benefit producers. This is where NMPF and its members, as representatives of the bulk of U.S. milk, become indispensable to any solution.

Once we are further along in this process, we will share additional information and provide opportunities for dialogue. Everybody should clearly understand what the issues are that we’ll be trying to address when we eventually get to a national federal order hearing. When you think about all that, it’s going to take time; in fact, it may take the rest of this year to get all this done and get it right.

If we can keep the spirit of collaboration I have seen so far going throughout this process, I’m confident that we’ll have a national federal order proposal that reflects the consensus of our membership and the needs of dairy producers across the country. This may be a multi-year process when all is said and done, but there is a reason we don’t have national federal order hearings very often. It’s tough to develop consensus on issues that require give-and-take across the country.

But our work so far has all been positive. As long as we keep that going – and maintain the consensus that’s the hallmark of dairy’s progress — we’ll be in good shape in finding solutions we all can stand behind. And all of dairy will owe a debt of gratitude toward everyone who is making this long-term, but critical for our industry, priority a success.