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NMPF Economists Lead on Path to FMMO Modernization

September 6, 2023

  • Led development of NMPF’s policy proposals to modernize the Federal Milk Marketing Orders.
  • Requested national order hearing to amend five pricing provisions, as agreed unanimously by the NMPF Board.
  • Developed testimony and gathered witnesses in support of the FMMO modernization efforts in advance of the hearing.

The Economics team this year has led NMPF’s efforts to modernize the Federal Milk Marketing Order system, a complex and critical component of the industry’s future.

After nearly two years of work and more than 200 virtual and in-person meetings, NMPF’s FMMO efforts reached another milestone August 23 on the long path towards implementation. with the start of the national USDA hearing in Carmel, IN. NMPF’s Chief Economist, Peter Vitaliano, providing the first testimony of any of the interested parties presenting at the hearing, expected to last six weeks. Vitaliano’s initial testimony laid out the context for NMPF’s full proposal before he focused on the rationale for updating the milk component factors in the skim milk price formulas, the first of National Milk’s five proposals to amend the FMMO pricing provisions.

Before the hearing concludes, Vitaliano will testify another four times on NMPF’s other proposals to ensure the FMMO better reflects current market conditions. Those additional four proposals recommend that USDA:

  • Discontinue use of barrel cheese in the protein component price formula
  • Return to the “higher-of” Class I mover
  • Increase make allowances in the component price formulas; and
  • Update the Class I differential pricing surface.

In addition to Vitaliano, experts from NMPF member cooperatives along with dairy farmer leaders will be testifying in support of NMPF’s proposals. Throughout the process, NMPF staff, attorneys, and consultant/FMMO expert Jim Sleper will remain actively engaged in formulating strategy to achieve the best possible outcome for U.S. dairy farmers and their member cooperatives. Economics has also assisted Government Relations in advocating for Farm Bill language to direct USDA to conduct mandatory plant cost studies every two years to better inform future make allowance discussions.

Beyond the extensive Federal Order work, the Economics team provided the analytical and administrative backbone to the Cooperatives Working Together program, supporting the export of more than 600 million pounds milk equivalent of dairy products through August of this year. Additionally, the team has been helping members and farmers stay ahead of the market, publishing 40 market reports and delivering over 35 presentations so far this year.