USDA Decision Time Nears for FMMOs

By Peter Vitaliano, Vice President, Economic Policy & Market Research, NMPF

The April 1 deadline for interested parties to submit post-hearing briefs summing up their arguments for changes to the Federal Milk Marketing Orders (FMMO) has passed. Now that participants in USDA’s record-length FMMO hearing having had their final say, it’s time for USDA to review the complete hearing record and formulate its recommended decision, which should be reported around July 1.

The National Milk Producers Federation offered by far the most comprehensive and constructive set of proposals for effecting long-overdue updates to the federal order pricing formulas. Our brief reemphasized that updating formulas to reflect the dynamically changing structure of the U.S. dairy industry is critically important for the order program to achieve its basic purposes of ensuring an adequate supply of milk for fluid milk use, promoting orderly marketing, and providing adequate prices to dairy farmers for doing so. NMPF’s five specific proposals put farmers first, in keeping with the FMMO mission. They also have very broad support from groups and individuals representing dairy farmer interests.

By contrast, the major hearing participants representing processors opposed most of the hearing’s 21 proposals, including NMPF’s proposals to raise the Class III and Class IV skim milk component composition factors, remove barrel cheese from the protein component price formula, and update the Class I differentials to reflect current costs of supplying milk for fluid processing. Advocacy by proprietaries focused primarily on just two issues: the particularly high profile matters of the make allowances and the Class I mover.

While all parties to the hearing broadly agreed that the make allowances in the orders’ component pricing formulas need to be updated in stages — due largely to how much current costs likely exceed the current make allowances — hearing participants significantly disagreed on specifically how to do so. NMPF and its member cooperatives argued that USDA needs to have the authority and the directive to conduct regular mandatory, audited studies of manufacturing costs and yield factors so the industry, and dairy farmers in particular, can have confidence that the numbers are truly accurate — certainly more accurate than the voluntary cost studies that have more holes than Swiss cheese. All parties support mandatory studies, which almost certainly will be included in the upcoming farm bill. But proprietary manufacturer interests have requested that substantial increases, based only on voluntary studies, be fully implemented with a relatively short phase-in period, a move that would significantly harm dairy farmer incomes.

NMPF and other parties representing dairy farmer interests also universally support returning to the “higher of” Class I mover, a position equally strongly opposed by proprietary processor interests. No one supports the current “average of” mover, with its 74-cent per hundredweight fixed factor, but proprietary interests lined up behind keeping the average of mechanism with an adjustable factor that would mimic, with considerable lags, the higher of mover. This approach, done in the name of improving risk management, unfortunately mutes the immediate market signals the higher of approach sends. It also offers cold comfort to dairies that might go out of business because of a lower mover and don’t have the lag time to wait for a make-up adjustment later.

A low point in the hearing from the standpoint of farmer interests was reached when a group of proprietary fluid processors pushed back against NMPF’s carefully worked out proposal to increase the Class I differentials by proposing instead to eliminate the fixed portion of the current ones, which would effectively erase any difference between Class I and the manufacturing class prices in many orders and render them unworkable. It garnered no support from any other party.

But for all the controversy seen thus far, soon it will all be superseded by USDA’s plan. NMPF remains hopeful that careful thinking and attention to the purpose and mission of federal orders carries the day. We’re confident in a positive outcome.


This column originally appeared in Hoard’s Dairyman Intel on April 15, 2024.

CWT Assists with 4.5 Million Pounds of Dairy Product Export Sales

ARLINGTON, VA – Cooperatives Working Together (CWT) member cooperatives accepted 29 offers of export assistance from CWT that helped them capture sales contracts for 2.5 million pounds (1,150 MT) of American-type cheese, 309,000 pounds (140 MT) of butter, 454,000 pounds (210 MT) of anhydrous milkfat, 628,000 pounds (285 MT) of whole milk powder and 600,000 pounds (270 MT) of cream cheese. The product is going to customers in Asia, Central America, the Caribbean, Middle East-North Africa and Oceania, and will be delivered from April through August 2024.

CWT-assisted member cooperative year-to-date export sales total 30.4 million pounds of American-type cheeses, 309,000 pounds of butter (82% milkfat), 617,000 pounds of anhydrous milkfat, 7.9 million pounds of whole milk powder and 3.1 million pounds of cream cheese. The products are going to 24 countries in five regions. These sales are the equivalent of 386.4 million pounds of milk on a milkfat basis. Over the last 12 months, CWT assisted sales are the equivalent of 1.033 billion pounds of milk on a milkfat basis.

Assisting CWT members through the Export Assistance program positively affects all U.S. dairy farmers and cooperatives by fostering the competitiveness of US dairy products in the global marketplace and helping member cooperatives gain and maintain world market share for U.S dairy products. As a result, the program has helped significantly expand the total demand for U.S. dairy products and the demand for U.S. farm milk that produces those products.

The amounts of dairy products and related milk volumes reflect current contracts for delivery, not completed export volumes. CWT pays export assistance to the bidders only when export and delivery of the product is verified by required documentation.

 

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The Cooperatives Working Together (CWT) Export Assistance program is funded by voluntary contributions from dairy cooperatives and individual dairy farmers. The money raised by their investment is being used to strengthen and stabilize dairy farmers’ milk prices and margins.

 

NMPF’s Castaneda Discusses WTO, India, CWT

NMPF Executive Vice President Jaime Castaneda discusses efforts to expand dairy market access at recent World Trade Organization meetings in Abu Dhabi in an interview with the Red River Radio Network. Castaneda also discusses trade relations with India and the importance of the NMPF-led Cooperatives Working Together program for the future of U.S. dairy exports.

NMPF’S Cain sums up USDA milk pricing hearing

 

NMPF’s Stephen Cain provides Dairy Radio Now listeners a summary of what USDA will do now that its five-month-long national milk pricing hearing concluded at the end of January. NMPF and other parties will soon submit post-hearing briefs, and the USDA is expected to then weigh the evidence presented by witnesses and issue a draft proposal by mid-summer.

Galen Offers Preview of Upcoming Dairy Policy Developments in Early 2024

NMPF’s Chris Galen tells Dairy Radio Now listeners about the major national policy developments expected to top the headlines in early 2024.  These include efforts to fund the government, including agencies like the USDA.  Lawmakers also have to complete work on a new Farm Bill prior before the political focus shifts away from Washington toward the 2024 election campaign.

 

NMPF’s Bjerga on Trade, FMMO

NMPF Executive Vice President Alan Bjerga speaks with RFD-TV about how all of agriculture needs to fight for the integrity of trade agreements in the wake of a USMCA dispute panel decision that failed to protect U.S. access to Canada’s market. The President’s Export Council, with member co-op Land O’Lakes representing farmers, discussed the importance of market access in a White House meeting on Wednesday. Bjerga also talked about the resumption of the USDA Federal Milk Marketing Order hearing in Indiana this week, and how repeated delays aren’t helpful for milk producers.

NMPF Cheese Contest: A Tradition of Excellence

NMPF’s annual cheese contest, held in conjunction with its annual meeting, has evolved from a quality-improvement initiative to a showcase of some of the world’s top cheeses, as produced by NMPF member cooperatives. RFD-TV goes behind the scenes to talk with cheese judges, contest coordinators and winners to show how the contest — which now features other dairy products — encourages the best in NMPF co-ops, and the best in cheesemaking as well.


NMPF Chairman Mooney Discusses Dairy’s Strength Through Consensus

NMPF Board of Directors Chairman Randy Mooney of Dairy Farmers of America explains the organization’s role as the essential advocate for dairy farmers in Washington and how the organization works with other groups to advance industry prosperity in an interview with RFD-TV. Mooney also talks about what challenges the industry faces and how resilience is the key to future success. The segment also highlights Prairie Farms’ overall win in this year’s NMPF cheese contest.

Overcoming challenges is what we do

By Randy Mooney, Chairman, NMPF Board of Directors

We’ve had a lot of achievements this year, but it’s also been a challenging time.

A year ago, costs on the farm were extremely high, but we had prices that would cover that. This year, costs are still high, but prices are down. That’s a lot of stress on the farm. And we’re also dealing with problems that we’ve dealt with for years.

There are labor problems; you just can’t find anybody to work. Supply chain disruptions are closer to the farm this year. It’s milk trucks getting milk off the farm; it’s feed trucks bringing feed into the farm. It’s getting simple parts that we took for granted we could get anytime we wanted to. There are geopolitical issues and extreme weather events.

We have challenges all the time, but it just seems like we continue to have more. It seems like we’re in the eye of a storm. But as farmers, we always anticipate a moment before the dawn, before things turn, before things get good again.

One of the things I’ve learned is that a lot of the world is envious of what we have.

They’re envious because we have the Farmers Assuring Responsible Management (FARM) Program, a self-governing program. We have a government that recognizes what we’re doing with sustainability — it’s not being mandated down from the top.

We’re taking care of our own. Today, we produce more milk using fewer and fewer natural resources. We’re revitalizing rural communities. For every dollar generated in dairy farming, it turns over three to seven times in local communities, generating $750 billion in the United States. That‘s pretty impressive.

We’re nourishing families around the world through milk’s unbeatable nutritional value. I’ve dairy farmed for a long time, through good times and bad times, but there’s never been a time that I haven’t laid my head down on my pillow at night and been proud of what I accomplished on my farm. We’re putting the most nourishing, most nutritious product known to man in that milk tank. And when that truck leaves, I know I’ve done something good.

Our ability to evolve how we work and adapt our resiliency is becoming more and more important. This year, we came together as an industry to unite around issues that helped build that resiliency. NMPF worked with member co-ops, farm bureaus, and state dairy organizations to come to consensus on the most substantial issues. Even going back to 2021, when you talk about Federal Milk Marketing Order modernization, we’ve worked hard to get these things done. Nobody knows what the outcome’s going to be, but you telling your story has made a difference.

Beyond that, we’re going to get a farm bill passed — we’re going have an extension. We’ve been working to implement the next version of FARM, FARM 5.0, that goes into effect in July. We also will work on promoting dairy’s sustainable nutrition. Dairy offers the most complete nutritional package available, and what’s amazing is that as we produce more milk, we’ll continue to use fewer natural resources. That’s the definition of sustainable nutrition.

For years, we’ve talked about sustainability in terms of environmental stewardship and how that translates into financial value for farms. Now, the financial values are there. You take solar panels, wind, methane digesters, and a lot of things happen on a farm that’s generating electricity to run your farms and to run your neighbor’s households. We’re there now. What we need is conservation funding in the farm bill through USDA grants through state and federal programs. There’s real money available to help us continue to do that, and we will.

No imitation food from a nut, a bean, or grain can hold a candle to dairy’s nutritional package. We all know that. That’s why it’s important to keep fighting the fight on plant-based alternative labeling. In the guidance that was issued earlier this year, the Food and Drug Administration (FDA) recognized and admitted that plant-based alternatives are nutritionally inferior to real dairy.

Dairy protein plays a critical role in feeding people around the world, and it can’t be replaced by alternatives, including plant-based. Consumers have the right to understand how they’re nourishing their families, and we’re going to continue to advocate for the Dairy PRIDE Act to try to get that passed in Congress.

We’re going to continue to fight for more flavored milk in schools and higher fat levels, especially for those children whose main source of nutrition is through the school milk program. Milk is essential to their diets, and we’re not going to give up that fight. We’re all part of an industry that’s doing remarkable things. We are winning.


This has been adapted from Chairman of the NMPF Board of Directors Randy Mooney’s speech at the National Milk Producers Federation annual meeting in Orlando, Fla., on Nov. 14, 2023. This column originally appeared in Hoard’s Dairyman Intel on Nov. 22, 2023.

NMPF’s Bjerga on the Return of the FMMO Hearing

NMPF Executive Vice President of Communications & Industry Relations Alan Bjerga speaks on WEKZ Radio, Janesville, WI, about the resumption of USDA’s Federal Milk Marketing Order hearing in Carmel, IN, next week. The hearing, which was originally expected to last until mid-October, may now slip into 2024. Scheduling issues and unexpected confrontations are pushing back the timeline for the necessary modernization many farmers are hoping can take effect to help their operations thrive, Bjerga said.


NMPF’s Doud Discusses Dairy’s Future

Incoming NMPF President & CEO Gregg Doud explains NMPF’s role in Washington policy formulation and dairy farmer priorities, including a new farm bill, Federal Milk Marketing Order modernization, integrity in plant-based labeling and dietary guidelines that maximize the benefits of dairy, in an interview with RFD-TV. He also emphasized the importance of international trade and global issues to U.S. dairy’s future. “We need to look five, 10 years ahead and see what this industry needs,” he said.