News & Resources

NMPF Board of Directors Approves Proposal to Improve Federal Milk Marketing Order System as Part of Foundation for the Future

April 1, 2011

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At its spring meeting on March 8, the National Milk Producers Federation’s Board of Directors agreed to support a series of major reforms in the Federal Milk Marketing Order (FMMO) program, intended to renovate the economic structure of the U.S. dairy sector. The changes will be packaged as part of the Foundation for the Future program that NMPF has been developing during the past 18 months.

The proposal:

  • Replaces end product pricing formulas with a competitive milk pricing system;
  • Incorporates two classes of milk – fluid (Class I) and manufacturing (formerly Class II, III and IV product uses);
  • Maintains the higher of for establishing the fluid use (Class I) minimum base price;
  • Maintains current Class I regional differentials;
  • Maintains the number and basic structure and provisions of Federal Orders.

The changes approved at the board meeting – which were developed by a committee of dairy policy experts from across the industry – maintain the basic framework of the FMMO system, but eliminate some of the most contentious elements from the current structure, such as make allowances, which are the result of the end product pricing formulas now used to price farmers’ milk.

NMPF President and CEO Jerry Kozak said that the Federal Order reforms will be incorporated into legislative language and submitted to Congress to review, as part of the overall Foundation for the Future package. He said that the proposal will be shared with other stakeholders in the dairy sector, including processors, in an effort to build consensus around the changes.

“There has long been a shared notion that change is needed; now we’ve taken a big step toward defining what that change should look like,” Kozak said. “We are looking forward to explaining to everyone, from farmers to processors to lawmakers, how a competitive pricing system, and shifting the pricing basis to two classes of milk, will make the Federal Order system more flexible and sensible.”

New documents giving an overview of the proposed FMMO reform and an explanation of how the FMMO reform works were posted in the News & Resources section of the Foundation for the Future website. A new video was also released last month that described the need for policy reform in the U.S. dairy industry, and how Foundation for the Future could accomplish it. The video is available at www.futurefordairy.com and on NMPF’s YouTube channel. Anyone interested in receiving a hard DVD copy of the video may do so through the Contact Us page on the Foundation for the Future website.