FMMO Modernization Takes Effect, With NEXT Next

  • Final Rule updating Federal Milk Marketing Order pricing formulas implemented June 1
  • NMPF Exports & Trade (NEXT) gained approval from NMPF’s Board of Directors and started accepting bids

NMPF’s Economics team saw the culmination of a multi-year effort to update the Federal Milk Marketing Order pricing formulas on June 1, when the new FMMO rule took effect.

The “higher-of” Class I price mover for most non-ESL milk has been restored; dairy product make allowances and Class I differentials nationwide are updated, and USDA is no longer using barrel cheese to determine the Class III price. USDA will implement a final part of the rule increasing the component composition factors for skim milk in all FMMO price classes Dec. 1 to avoid disrupting existing risk management positions.

NMPF successfully argued for these necessary updates in five specific proposals presented at a record-long FMMO hearing from late summer 2023 to early winter 2024. The arguments all flowed from the fundamental principle that FMMO product price formulas must evolve with the changing structure of the dairy industry to properly fulfill their role of accurately translating dairy product prices into milk values embodied in the orders’ classified prices. The rule comes after more than four years of effort that included more than 200 meetings to formulate and defend NMPF’s proposal, led by NMPF leaders and experts.

Also spearheaded by economic analysis and consultations, NMPF’s Board of Directors approved the NMPF Exports & Trade (NEXT) program to succeed the Cooperatives Working Together export assistance program, at its June board meeting, with bids beginning in July.

NEXT expands its service to dairy producers and to testing innovative new ways to expand U.S. dairy’s market share. NEXT provides an effective means to move domestic dairy products to overseas markets by helping to overcome U.S. dairy’s trade disadvantages. New initiatives in the new NEXT program include:

  • Expanding the program’s product mix
  • Creating market development initiatives that provide targeted, additional support beyond primary assistance to level the playing field and drive U.S. export volume growth in key markets around the world where the U.S. is at a tariff
    disadvantage and/or where the U.S. has the room and ability to gain market share
  • Enhancing program operations to assist in NEXT’s mission by extending delivery periods, removing volume limits and providing greater insight into program operations; and
  • Creating a strategic advisory council to guide program strategy.

NEXT charges cooperatives paying into the new program two cents/cwt of member milk, a reduction from the four cents/cwt previous assessment in the CWT program. Within the first month of the program, NEXT-assisted export sales boomed, reaching nearly 38 million pounds of product – a tremendous start for the new program.

June DMC Margin Rises $0.70/cwt

The June margin for the Dairy Margin Coverage Program was $11.10/cwt in June, an increase of $0.70/cwt from May. The June all-milk price was unchanged from May at $21.30/cwt, while the June DMC feed cost formula dropped by $0.70/cwt for the month, as the prices of all three formula feed components decreased, particularly that for premium alfalfa hay.

The forecasts maintained by DMC Decision Tool on the USDA website at the end of July showed the DMC margin topping out $13.20/cwt in November and averaging $12.11/cwt for the year.

Dairy Maintains Momentum Through Turbulence

It doesn’t really need to be said, because evidence is everywhere. But it’s worth repeating, in light of how easy it is to lose focus among turbulence in labor, trade and politics: Dairy’s future is incredibly bright.

Any skepticism toward that idea can quickly be countered with about 10 billion reasons. That’s the dollar amount of investments in new dairy processing capacity that’s coming online between 2023 and 2026, according to an NMPF analysis. Ultimately, these investments are an investment in the U.S. dairy farmer.

From Washington state to Georgia, manufacturers are placing their bets on increased consumer demand for dairy products. State-of-the-art facilities are promising to put affordable, nutritious dairy foods on store shelves and dinner plates in the United States and around the world. The processing growth is creating new outlets for dairy farm production, a tide that lifts all boats across the industry.

And the realization that growing consumer demand isn’t just a forecast: It’s current reality.

  • U.S. fluid-milk consumption rose last year for the first time since 2009. Milk’s market share versus plant-based imposters continues to rise (as if nut drinks were ever truly a threat in the first place).
  • Cottage cheese has emerged as the go-to snack food for Generation Z.
  • And per capita overall U.S. dairy demand continues at levels last seen in the 1950s.

All that is a tribute to the fact that, even with all the diet diversification since then, dairy remains a bedrock of American diets, accessible to all, affordable, and trusted. It’s also a tribute to the industry’s vision and how long-term producer investment in the dairy checkoff has encouraged innovation in new research, technologies, and products.

Overseas sales remain a bright spot for the industry as well. That may seem surprising, given all the headlines of volatility in global trade as the United States tries to reset global commerce. But it’s true: In 2025 through May, the value of U.S. dairy exports was $3.873 billion, 13% higher than the same period last year, when they were $3.422 billion.

That’s a powerful testament to the resilience of U.S. dairy producers and exporters who work around the clock, managing and building relationships that are being heavily tested this year. While overall year-to-date sales volumes are slightly down, and Chinese retaliatory tariffs have heavily weighed down sales to that market, higher-value products like high protein whey products have grown 8% by volume and 30% by value year-to-date. Similarly, U.S. cheese exports are up 7% by volume and 18% by value when compared to 2024 exports through May.

Recent progress in new trade deals with trade partners such as Indonesia also brings encouragement that eventually trade waters will calm, with new opportunities possible for U.S. dairy producers as the turbulence ebbs. Thank you, U.S. Dairy Export Council, thank you NMPF member cooperatives, thank you, NEXT Program, and most all thank you, dairy farmers, for keeping this momentum going.

All this, of course, isn’t meant to give short shrift to the significant challenges ahead. At NMPF we are well aware of the workforce challenges facing dairy farms as a nationwide crackdown on illegal immigration disrupts agricultural workforces. Current trade success so far doesn’t mean policy upheaval can’t damage or reverse progress, nor that export momentum will stay the same if new trade policies don’t improve global access opportunities. And consumer confidence faces misinformation threats that only become more sophisticated.

But heading into August, when Congress goes back home and policymaking hits a temporary pause, we at NMPF couldn’t be prouder to represent a growing, thriving industry — not one that’s free from challenges, but one that meets the challenges at hand. Dairy’s momentum becomes our momentum. That momentum is significant. It augurs well for the months and years to come.


Gregg Doud

President & CEO, NMPF

 

NMPF’s Castaneda Explains for Dairy Radio Now the Importance of Investigation of Milk Powder Trade

NMPF’s executive vice president Jaime Castaneda explains for listeners of Dairy Radio Now why NMPF asked the Trump Administration to investigate the world trade in milk powders, and, in particular, the impact of Canada’s protectionist practices on U.S. producers. Castaneda and NMPF colleague Will Loux testified this week on the issue.

Little Change from April in May DMC Margin

The May DMC margin lost $0.02/cwt from a month earlier to $10.40/cwt, according to the DMC Decision Tool on the USDA Farm Service Agency website. The Tool had previously predicted the April margin to be the lowest for the year, but a large increase in the price of premium alfalfa hay, equivalent to $0.34/cwt of milk in the DMC feed cost formula, more than offset a $0.30/cwt increase in the May all-milk price, to $21.30/cwt, while much smaller, offsetting prices of corn and soybean meal could only bring the feed cost down by another $0.02/cwt.

The Decision Tool continues to show the DMC margin increasing steadily, now from May, to top out at $13.76/cwt in November and average $12.43/cwt for the year.

NMPF’s Galen Explains Importance of DMC Signup in 2025

NMPF’s senior vice president Chris Galen discusses why farmers not already enrolled in the Dairy Margin Coverage program should consider using the risk management tool this year. DMC is one of several options, including Livestock Gross Margin and Dairy Revenue Protection programs, that can be used in tandem.  The deadline for producers to sign up for the USDA program is Monday, March 31.