As June Dairy Month begins, NMPF President & CEO Gregg Doud explains for listeners of Dairy Radio Now that NMPF has helped notch two important achievements for the dairy community: the implementation of long-awaited updates to the Federal Order system, and passage by the Senate Agriculture Committee of legislation to expand milk choices in schools.
Tag: Federal Milk Marketing Order
FMMO Changes in Effect as of June 1
June 1, World Milk Day and the start of National Dairy Month, also marked the end of a multi-year process NMPF initiated and led, with the official implementation of the Final Rule to update Federal Milk Marketing Order pricing formulas.
As of this month, 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 barrel cheese is no longer being used to determine the Class III price. A final part of the Rule, to increase the component composition factors for skim milk in all FMMO price classes, will be implemented 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 fulfil their role of accurately translating dairy product prices into milk values embodied in the orders’ classified prices.
USDA not only validated this principle in the Final Rule – it also established a blueprint that will make it much easier to keep the pricing formulas updated in the future, ensuring the FMMO pricing system will never again get as outdated as it has been prior to next week.
NMPF’s exhaustive efforts began in 2021 and included more than 200 meetings to formulate the proposal among NMPF leaders and experts, along with coalition building across agriculture.
A separate “15A” legal proceeding filed earlier this year against the FMMO system by several organic milk companies that are seeking to exempt organic milk from the system does not affect the implementation.
Farmers Ready to Face Policy Challenges, NMPF Farmers Say at Board Meeting
Dairy farmers from across the nation celebrated fairer milk prices for farmers and pledged to work together to meet challenges on labor, trade and other issues at the National Milk Producers Federation’s Board of Directors meeting, which concluded today.
“We’re in a fast-moving environment, with a new administration and things changing every day,” said NMPF Board Chairman Randy Mooney, a farmer from Rogersville, MO, in remarks at the meeting. “We are happy to have NMPF watching out for us here in Washington.”
NMPF’s board meeting brought together more than 50 farmers and dairy-cooperative leaders at the nation’s largest dairy farmer trade organization, which serves as the policy voice for dairy farmers and the cooperatives they own in Washington.
Dairy farmers at the meeting heard presentations updating pressing dairy issues, including agricultural labor, trade and H5N1 bird flu, which has now been circulating in dairy cattle for roughly one year. Milk producers also celebrated a policy win – nationwide adoption of a new Federal Milk Marketing Order that begins taking effect on June 1. The plan, spearheaded by NMPF, culminates a four-year process of seeking fairer pricing for farmers and cooperatives.
“The top two issues we have today are immigration and tariffs,” Mooney said. “Nothing else means anything else to us if we don’t have anyone to milk our cows.” On trade, he said day-to-day turbulence doesn’t change dairy’s commitment to building exports. “We intend to play in the world market, and we will invest in the world market to do it,” he said.
NMPF’s board also charted a path toward a successor organization to the Cooperatives Working Together export assistance program, which has helped dairy build overseas markets. Reflecting that reformation, the board voted to rename the program NEXT (NMPF Exports & Trade) while authorizing a new business plan for final approval in June. The board also welcomed two new directors:
- Mark Leichtfuss of FarmFirst Dairy Cooperative in Wisconsin, and;
- Richard Hill of Upstate Niagara Cooperative in New York.
The board also created the Dr. Peter Vitaliano Legacy Scholarship as part of NMPF’s National Dairy Leadership Scholarship Program. The award, named for a recently retired longtime NMPF economist, will be used to help support a student who demonstrates attributes exemplified by Dr. Vitaliano to honor his decades of commitment to the success of U.S. dairy producers and cooperatives.
FMMO Victory Caps Successful 2024, Gives 2025 Momentum
Four years of NMPF’s coordinated leadership set a positive tone for 2025, with USDA’s announcement Jan. 16 that all federal orders had accepted its proposal for Federal Milk Marketing Order modernization.
NMPF thanked USDA and the dozens of farmers and cooperative leaders who successfully steered FMMO toward a successful conclusion, with a comprehensive revamp heavily influenced by NMPF priorities and advocacy.
“Dairy farmers and cooperatives have done what they do best – lead their industry for the benefit of all,” said Gregg Doud, president and CEO of NMPF, said in a statement released that day.
“This final plan will provide a firmer footing and fairer milk pricing, which will help the dairy industry thrive for years to come. We appreciate the monumental contributions across government and the dairy industry that made this happen. The industry, and all dairy consumers, owe all of you a debt of gratitude.”
The new FMMO comes after more than 200 NMPF-led meetings to formulate the proposal that contributed heavily to USDA’s final decision, as well as a record-length 49-day federal order hearing and approval from the farmers who are covered under all federal milk marketing orders.
The new federal milk-pricing system, which officially will be published in the Federal Register tomorrow, will mostly take effect June 1 – coincidentally, World Milk Day – and is closely aligned with the principles of NMPF’s member-led recommendations, a process that began nearly four years ago.
Highlights include:
- Returning the base Class I skim milk price formula to the higher-of the advanced Class III or Class IV skim milk prices for the month. In addition, adoption of a Class I extended shelf life (ESL) adjustment for all ESL products equal to the average-of mover plus a 24-month rolling average adjuster with a 12-month lag.
- Updating Class III and IV manufacturing allowances for cheese, butter, nonfat dry milk and dry whey, and the butterfat recovery factor.
- Updating the Class I differential values to reflect the increased cost of servicing the Class I market.
- Updating skim milk composition factors, with implementation delayed six months until Dec. 1.
- Removing 500-pound barrel cheddar cheese prices from the Dairy Product Mandatory Reporting Program survey.
NMPF has more resources to understand FMMO modernization and the road taken to get there. Farmers and cooperatives will have opportunities to learn more about the new system through webinars and other materials offered in coming weeks.
NMPF will also continue pushing for elements of its proposal that require congressional authorization, including mandatory dairy manufacturing cost reporting to provide accurate, transparent data to inform future milk pricing discussions.
NMPF Thanks Members, USDA for FMMO Leadership
NMPF thanked USDA and the dozens of farmers and cooperative leaders who successfully steered Federal Milk Marketing Order modernization to a successful conclusion.
“Dairy farmers and cooperatives have done what they do best – lead their industry for the benefit of all,” said Gregg Doud, president and CEO of NMPF. “This final plan will provide a firmer footing and fairer milk pricing, which will help the dairy industry thrive for years to come. We appreciate the monumental contributions across government and the dairy industry that made this happen. The industry, and all dairy consumers, owe all of you a debt of gratitude.”
The new FMMO comes after more than 200 NMPF-led meetings to formulate the proposal that contributed heavily to USDA’s final decision, as well as a record-length 49-day federal order hearing and approval from the farmers who are covered under all federal milk marketing orders.
The new federal milk-pricing system, which officially will be published in the Federal Register tomorrow, will mostly take effect June 1 – coincidentally, World Milk Day – and is closely aligned with the principles of NMPF’s member-led recommendations, a process that began nearly four years ago.
Highlights include:
- Returning the base Class I skim milk price formula to the higher-of the advanced Class III or Class IV skim milk prices for the month. In addition, adoption of a Class I extended shelf life (ESL) adjustment for all ESL products equal to the average-of mover plus a 24-month rolling average adjuster with a 12-month lag.
- Updating the Class III and IV manufacturing allowances for cheese, butter, nonfat dry milk and dry whey, and the butterfat recovery factor.
- Updating the Class I differential values to reflect the increased cost of servicing the Class I market.
- Updating skim milk composition factors, with implementation delayed six months until Dec. 1.
- Removing 500-pound barrel cheddar cheese prices from the Dairy Product Mandatory Reporting Program survey.
NMPF has more resources to understand FMMO modernization and the road taken to get there. Farmers and cooperatives will have opportunities to learn more about the new system through webinars and other materials offered in coming weeks. NMPF will also continue pushing for elements of its proposal that require congressional authorization, including mandatory dairy manufacturing cost reporting to provide accurate, transparent data to inform future milk pricing discussions.
NMPF’s Galen Offers Highlights of 2024 Annual Meeting in Phoenix
NMPF’s Senior Vice President Chris Galen reviews highlights of National Milk’s 2024 annual meeting in Phoenix for the listeners of Dairy Radio Now. The annual conference, which just concluded Oct. 23, reviewed NMPF’s work this year on FMMO modernization, the farm bill, and dealing with HPAI in dairy cows.
How the World Dairy Expo Shows NMPF’s Breadth
Alan Bjerga, NMPF Executive Vice President of Communications, discusses how NMPF’s strong presence at the World Dairy Expo shows the breadth of the organization’s service to its members in an interview with WEKZ, Janesville, WI. NMPF-affiliated offerings include a panel on Federal Milk Marketing Order modernization, a seminar on succession planning, a look at women’s leadership in dairy and H5N1 biosecurity management on dairy farms. The National Dairy FARM Program will also be out in full force, Bjerga noted.
FMMO Persistence Pays off for Farmers
- USDA’s recommended FMMO decision incorporates NMPF proposals
- Economics team member provided market outlooks and FMMO process updates across the country
NMPF’s Joint Economics Unit saw intense Federal Milk Marketing Order modernization in 2024, especially in the year’s earlier months. NMPF submitted its final legal brief to USDA in March, emphasizing that farmers are the reason the order system exists and that they should be the priority as USDA considers its final decision.
USDA released its recommended FMMO modernization plan July 1, agreeing in large part with the underlying principles of NMPF’s proposal. USDA’s biggest difference with NMPF was its establishment of a Class I mover for extended shelf-life products, which consists of the average of with an adjustable mover, even as most of the U.S. milk supply would revert to the “higher-of” formula in effect until 2019, as NMPF and its members advocated. NMPF-USDEC Joint Economics team members explain USDA’s recommended decision here.
Members of NMPF’s FMMO task force have reconvened to write comments on the recommended decision, which will be handed in by the Sept. 13 comment deadline for all stakeholders. USDA will review submissions and issue a final decision in November, followed by a producer referendum likely near the end of the year. Any changes will be implemented in early 2025, ending the formal FMMO modernization process.
Even as FMMO consumed team energy, members of the economics team traveled the country in 2024, providing expertise on changing market conditions throughout the year and updates on the FMMO modernization process.
Stephen Cain, senior director of research and economic analysis for NMPF, and Dr. Peter Vitaliano, vice president for economic policy and market research for NMPF, presented updates on the federal order modernization efforts to the NMPF Young Cooperators in February, the Southeast Milk Inc., Leadership Experience (SMILE) in May, and to the NMPF Board of Directors periodically. In August, Cain travelled to Detroit to update Michigan Milk Producers Association on the next steps in the process.
Producers were also updated on current and changing market conditions through 2024. Will Loux, senior vice president of global economic affairs for NMPF and USDEC, presented a domestic and export market outlook to South Dakota Dairy Producers in January and Dairy Farmers of America in July, as well as an update on the state of the dairy industry to the Idaho Milk Processors Association in August.
The economics team also met with the boards of United Dairymen of Arizona, Agri-Mark, Land O’Lakes, and Michigan Milk Producers Association to provide an update on Cooperatives Working Together renewal and modernization efforts. Cain and Dr. Vitaliano also provided outlook presentations for the National Ice Cream Mix Association annual meeting in January and to the American Butter Institute in April. Dr. Vitaliano also gave a butter-specific presentation to the joint American Dairy Products Institute-American Butter Institute annual conference in April.
Amid this backdrop, the dairy economy itself showed signs of improvement. The Dairy Margin Coverage Program, the main federal safety net for U.S. milk producers, saw its fourth highest ever margin in July, at $12.23/cwt, with the all-milk price at $22.80/cwt. End of August dairy and grain futures indicated that the DMC margin would average around $12.25/cwt for all of calendar year 2024.
Much Good, Some Surprises in FMMO Plan, NMPF’s Cain Says
Stephen Cain, senior director of economic research and analysis for the National Milk Producers Federation, said NMPF is “very pleased with the recommendation that USDA has come up with” for Federal Milk Marketing Order Modernization. “Fundamentally, USDA agreed with our premise and methodology for all the changes we were asking for,” said Cain in an interview with the National Association of Farm Broadcasters.
Economists Find Much to Like in USDA Pricing Plan
USDA’s plan for modernizing the Federal Milk Marketing Order system aligns well with the principles outlined in NMPF’s own proposals, NMPF economists Peter Vitaliano and Stephen Cain said in a Dairy Defined Podcast released today. Still, analysis is ongoing, and NMPF will be suggesting improvements during a public comment period that lasts through mid-September.
“It’s important that we have a national system that helps level the playing field across the country,” said Cain, NMPF’s senior director for economic research and analysis. “We do not want regulation to create winners and losers or incentivize actions that distort the marketplace or market dynamics in any way.
More on NMPF’s federal order efforts can be found on nmpf.org. You can find and subscribe to the Dairy Defined podcast on Apple Podcasts and Spotify under the podcast name “Dairy Defined.”
Media outlets may use clips from the podcast on the condition of attribution to the National Milk Producers Federation.
FMMO Recommendations Build on NMPF Success
USDA’s proposed plan for Federal Milk Marketing Order (FMMO) modernization release July 1 reflected years of painstaking NMPF efforts in crafting a comprehensive plan and building consensus across dairy, leading to recommendations that will set dairy up for success.
The proposal, which is open for comment through August, comes after USDA examined hearing briefs submitted by participants in 2023’s record-long federal order hearing. NMPF again led with its comprehensive approach to improved milk pricing, offering the department detailed proposals that worked to ensure benefits for farms in all regions, of all sizes.
“NMPF is heartened that much of what we proposed after more than two years of policy development, and another year of testimony and explanation, is reflected in USDA’s recommended FMMO modernization plan,” NMPF President and CEO Gregg Doud said in a statement the day the plan was released.
“Crafting an effective milk-pricing system for farmers is complex and requires a careful balance. USDA’s plan acknowledges that complexity and, while not matching our proposal in every detail, looks largely in keeping with the comprehensive approach painstakingly determined by the work of dairy farmers and their cooperatives over the past three years,” Doud said. “We look forward to examining this proposal topic-by-topic, gathering input regarding the various needs of our members nationwide, and adding their insights as this process moves toward a vote of producers.”
Doud elaborated on USDA’s plan, and its relationship to proposals by NMPF and others, in NMPF’s monthly CEO’s Corner column.
The proposal is now in a 60-day comment period. NMPF’s member-led task force on FMMO is meeting July 11 to discuss the plan and offer member input, while the following day NMPF’s Co-op Communicators Committee is discussing publicity and farmer-communications efforts to educate the industry on the proposal. After USDA reviews public comments, a final plan will be put to a vote of producers, likely in the early months of 2025.
Dairy Farmers See Advances in USDA’s FMMO Plan, NMPF’s Bjerga Says
Dairy farmers have reasons to be pleased with the draft proposal for Federal Milk Marketing Order modernization, NMPF Executive Vice President Alan Bjerga said in an interview with Dairy Radio Now. That said, the process isn’t complete. Farmers still have a 60-day comment period and a final producer vote before any final proposal is implemented. NMPF is ready to lead, as it has throughout, Bjerga said.
