Tag: Federal Milk Marketing Order

Cooperative Spirit Promotes Dairy’s Progress

Posted on by Theresa Sweeney

October is significant in the NMPF calendar. Many years, including this one, it features our annual meeting, when dairy farmers gather to share a common voice on important policies and represent the best practices and advances this industry has to offer. It’s also National Co-op Month, a time dear to our own hearts as the nationwide federation of dairy cooperatives. The principles of self-help and pursuit of common goals that cooperatives embody are core values of our organization, ideals we see lived by our members every day.

A very public example of how co-op leadership combined with sound public policy can advance dairy and serve broader communities came in September, as NMPF members received a significant portion of USDA’s $2.8 billion in funding for 70 projects in the first round of awards under the department’s Partnerships for Climate-Smart Commodities initiative. California Dairies Inc., Dairy Farmers of America, Land O’Lakes, and the Maryland & Virginia Milk Producers Cooperative Association are leading or partnering on specific projects that may receive up to $245 million in funding that will further industry goals on greenhouse gas emissions reductions, optimal resource use and sustainability.

These member cooperatives, along with others in dairy who are building a better future through climate-smart agriculture projects, should be commended for taking a proactive approach to continuing dairy’s leadership within all agriculture. Following on the heels of the Inflation Reduction Act — which promises more opportunities for solutions that create both a more sustainable planet and a sustainable future for many dairy farms — it’s a powerful investment, and a significant signal from USDA that co-ops have the tools to succeed in meeting 21st century challenges.

Speaking of challenges … anyone who has followed industry discussions since the 2020 pandemic knows of the need to modernize the Federal Milk Marketing Order system, as well as NMPF’s leadership in crafting a plan that can gain broad-based support from farmers across the country. After more than a year of examination of important and relevant issues by our Economic Policy Committee, along with a task force created to craft consensus on critical topics, and wide-ranging discussions with our leadership and throughout the industry, we’ve gained important insights into what changes are critical and which ones need extra attention to get right.

For example: Any solution that works for farmers and the entire industry needs to address FMMOs comprehensively. Milk-pricing formulas, to name one area, need to reflect milk component composition in 2022 – not the lower levels assumed by the industry experts of nearly a quarter century ago. Pricing formulas also should better reflect what dairy products are being sold in 2022 so that price reporting covers the right markets, in the right proportion for a fair price. At the same time, addressing make-allowances — which haven’t been adjusted in nearly 15 years and don’t fully reflect present-day manufacturing costs — is important.

It’s also clear that changes made to FMMOs must be implemented gradually enough to keep markets calm. Most importantly, solutions need broad buy-in from farmers first, closely followed by everyone else. Proposals that have advanced from our task force are ones that had strong support among many of the experts who crafted them, ensuring that a firm consensus stands behind our proposals.

To some, that may slow down progress; but proposed progress that ends up being eventually rejected leaves everyone back where they started. Our goal is to move forward and forge lasting solutions work for all regions of the country, all sizes of farms, and perspectives from across dairy.

We’ve come a long way toward meeting that goal, in no small part due to the ethic that we, as a federation of cooperatives, follow of making sure that our efforts benefit all. But our work is far from over: Any plan we advance will need to go before a USDA-directed federal order hearing – we’re aiming for next year – that would be subject to a producer vote on a modernized FMMO system, if USDA approves a plan. In the meantime, as our members create consensus, we’re also consulting with other farmer groups, other industry organizations, and experts from across dairy to make sure our proposal addresses widely shared concerns and attracts wide support.

As the largest dairy-farmer organization in the United States, as well as the one that, due to the structure of cooperatives, also represents farmers invested in their own milk processing capacity, we’re well positioned to lead Federal Milk Marketing Order system modernization, and we’re looking forward to discussions that yield a proposal that will nourish this entire industry for a generation, and potentially beyond.

That is how our members lead, and that’s what we will celebrate, both at our annual meeting, throughout National Co-op Month, and as we move forward on FMMO modernization. The work is never-ending. But neither is our progress.

Jim Mulhern

President and CEO, National Milk Producers Federation

Task Force Recommends Next Steps in FMMO Modernization Work

Posted on by Theresa Sweeney

The task force of milk marketing experts from across NMPF’s membership met May 12 to review and approve a series of recommendations about how to improve the Federal Milk Marketing Order program.

The meeting at NMPF’s office was the next step in refining proposals to modernize and improve the price determination under the FMMO system. The Task Force reached unanimous agreement on a number of recommendations for improving our current pricing system and is expected to make several more recommendations before its work concludes.

The full NMPF Economic Policy Committee will review the Task Force’s proposals at their next meeting on June 6th, followed by a Board of Directors review of the proposals at their meeting June 7-8. NMPF will conduct additional member and industry stakeholder outreach over the summer.

NMPF’s Bjerga on the Dairy Economy, FMMO Modernization and Fake Milk

Posted on by Alan Bjerga

 

NMPF Senior Vice President for Communications, Alan Bjerga, discusses dairy issues ranging from pricing to fake milk with KASM radio of Albany, MN, at the National Association of Farm Broadcasters Issues Forum in Washington, DC. Record milk prices are coming with higher costs as well; meanwhile, NMPF is positioned to lead on Federal Milk Marketing Order modernization, a farmer-led process.

NMPF Advances Marketing Order Discussions at March Board Meeting

Posted on by Theresa Sweeney

NMPF celebrated strong global demand for U.S. milk in a time of turmoil and asserted leadership in its efforts toward Federal Milk Marketing Order modernization during its Board of Directors meeting March 8-9.

High on NMPF’s list of priorities for 2022 is leading discussions on updating the Federal Milk Marketing Order system, the bedrock of orderly milk markets in the U.S. NMPF is taking a deliberate approach toward meaningful modernization, crafting consensus among all sizes and regions, said Jim Mulhern, president and CEO of NMPF.

“We may take the rest of this year to get this all done and get it right,” Mulhern said. “If we can keep a spirit of collaboration going throughout the process, we’re going to end up in a very good place. I’m confident that we’ll have a national federal order hearing proposal that reflects the consensus of our membership and reflects the needs of dairy producers across the country.”

NMPF’s Economic Policy Committee since last fall has been conducting analysis and engaging with farmers on the FMMO system, created in the 1930s and last updated in 2000.

NMPF’s board also discussed the response of agriculture and dairy to the humanitarian crisis in Ukraine and potential resulting volatility in agricultural markets. Board members pledged to seeks ways to assist Ukrainian families and farmers as the fast-developing situation evolves. The board unanimously adopted a resolution calling on policymakers “to immediately take the steps necessary to facilitate increased domestic energy production of all forms” to avoid agricultural supply disruptions at a time of already high and rising input costs.

Other topics ranged from sustainability to supply chains during the meeting, which also featured remarks from Rep. Glenn “G.T.” Thompson, R-PA, ranking member of the House Agriculture Committee. Valerie Lavigne, a dairy farmer from Schaghticoke, NY, and a member of Agri-Mark, also spoke in her new role as chairwoman of NMPF’s Young Cooperators.

New directors welcomed to NMPF’s board included:

  • Rob Byrne, Dairy Farmers of America
  • Chris Sukalski, Land O’Lakes
  • Andy Mason, Land O’Lakes
  • Frank Doll, Prairie Farms

FMMO Modernization Must Be Done Right

Posted on by Theresa Sweeney

For all of the positive developments we are seeing in dairy, from record exports to much improved prices, this industry always faces challenges. Some are short-term (high input and energy costs), and some develop over longer periods. A top priority at the National Milk Producers Federation, as we emerge from a pandemic that placed unusual pressures on the Federal Milk Marketing Order system, is an in-depth review and modernization of that system.

NMPF has been deeply involved in this process for the better part of the last 18 months. And coming off a very successful March meeting of our Board of Directors, we’re determining what issues demand closer examination, the process we will follow going forward, and the paths we can chart toward crafting improvements to an FMMO system that addresses needs of producers in all regions.

Work on FMMO modernization – in some ways an outgrowth of our work on the Class I mover earlier in 2021 – began last year as our Economic Policy Committee met to share expertise and perspectives. It became clear to us that a lot of technical nitty-gritty detail in this program that we need to get into requires the expertise that we have resident in our co-ops — folks who are working on the program every day to facilitate orderly marketing of milk for our co-ops and our producers.

From there we have created task forces and working groups that have also been meeting to address specific areas, helping us delve deeply into these issues, so we can make meaningful progress on recommendations. That process is going very well, aided by expertise of Jim Sleper, an FMMO expert with decades of experience with its complexities through his work with several of our member cooperatives.

Given the complexity and interconnectedness of all these issues, careful consideration is critical to successful solutions that have the necessary widespread support from dairy farmers and the broader industry. We’re trying to move as quickly as we can. But we also have to move deliberately and take the time to get this right. The task force is working through a series of issue-specific working groups. When they get done, they’ll report their findings to the Economic Policy Committee, which will make recommendations to the Executive Committee and the NMPF Board.

Along with our own efforts, we’re engaging in dialogue with other interested parties as well. I’m in communication with Michael Dykes, my counterpart at the International Dairy Foods Association, which also has a group working on some of these same issues. A number of our member cooperatives are also members of IDFA, which should help facilitate consensus development. My sense is that we may be more deeply “in the weeds,” if you will, in examining some of these issues, and that’s to be expected given the FMMO system is a producer focused program.

We are also working closely with USDA, talking with them in a collaborative fashion, asking questions and gathering feedback.

We also want to solicit input from other relevant groups whose views are important in these discussions. This is an issue that will affect all producers. We want to make sure that producers are informed and understand as best they can how this program functions, because it is very technical, as you all know. There is lots of misinformation, lots of misunderstanding. And frankly, FMMO discussions need to focus on seeking solutions rather than on posturing for undefined “change” that doesn’t materialize when it’s time to make complex decisions.

In the past year, a few industry observers have talked up the need for “reform” or “simplifying” federal orders without offering specifics of what that means. If the net effect of federal order modernization is simplification, there is nothing to suggest that will benefit producers. This is where NMPF and its members, as representatives of the bulk of U.S. milk, become indispensable to any solution.

Once we are further along in this process, we will share additional information and provide opportunities for dialogue. Everybody should clearly understand what the issues are that we’ll be trying to address when we eventually get to a national federal order hearing. When you think about all that, it’s going to take time; in fact, it may take the rest of this year to get all this done and get it right.

If we can keep the spirit of collaboration I have seen so far going throughout this process, I’m confident that we’ll have a national federal order proposal that reflects the consensus of our membership and the needs of dairy producers across the country. This may be a multi-year process when all is said and done, but there is a reason we don’t have national federal order hearings very often. It’s tough to develop consensus on issues that require give-and-take across the country.

But our work so far has all been positive. As long as we keep that going – and maintain the consensus that’s the hallmark of dairy’s progress — we’ll be in good shape in finding solutions we all can stand behind. And all of dairy will owe a debt of gratitude toward everyone who is making this long-term, but critical for our industry, priority a success.

NMPF Statement on the Dairy Pricing Opportunity Act

Posted on by Theresa Sweeney

From NMPF President and CEO Jim Mulhern:

“Sen. Gillibrand’s legislation, cosponsored by Sens. Leahy and Collins, adds bipartisan momentum to a range of critical milk pricing discussions that dairy farmers are having through NMPF’s Economic Policy Committee. NMPF is continuing to work with USDA and Congress on how best to remedy deficiencies in the Class I mover formula and fully recoup $750 million in unintended losses felt by farmers of all sizes. NMPF also is leading discussions on a broad range of Federal Milk Marketing Order reform issues important to producers in all regions of the country. We look forward to pursuing policy improvements that will serve all dairy producers more equitably and effectively.”

NMPF’s Mulhern Speaks at Annual Meeting

Posted on by Alan Bjerga

 

NMPF President and CEO Jim Mulhern speaks at the organization’s annual meeting in Las Vegas, NV on Nov. 16.

NMPF Cooperative Leader Spotlights Need for Class I Pricing Changes at Senate Hearing

Posted on by Theresa Sweeney

Congress must do additional work to ensure dairy farmers are fairly compensated for losses rooted in a change to the pricing formula for Class I milk, a leader of Agri-Mark Cooperative and a member of NMPF’s Economic Policy Committee said today in a hearing called by Senate Agriculture Committee dairy subcommittee chair Sen. Kirsten Gillibrand (D-NY).

The hearing focused on issues related to milk pricing and the Federal Milk Marketing Order system, which has shown strains during the COVID-19 pandemic due in large part to flaws in the current Class I mover and its ripple effects through dairy revenues.  The pandemic “has created an even greater urgency to revisit orders,” said Catherine H. de Ronde, vice president for economic and legislative affairs for Agri-Mark, based in Andover, Massachusetts, in her testimony. “Negative PPDs had milk checks looking incredibly bizarre, de-pooling at a level never-before seen became a new phenomenon for many. The change to the underlying Class I mover was a key catalyst of these outcomes.”

The 2018 Farm Bill changed the Class I mover, which determines the price of fluid milk under the Federal Milk Marketing Order system, at the urging of dairy processors who sought greater price predictability. The change contributed to substantial market volatility last year and has led to an estimated $750 million in losses for farmers compared to the previous Class I formula. Without a fix, dairy farmers will permanently bear unfair and unnecessary price risk compared to processors during times of unusual market volatility.

USDA plans to mitigate last year’s losses somewhat through its Pandemic Market Volatility Assistance Program, which will reimburse farmers for $350 million of those losses. But that initiative distributes payments unevenly, requiring further remedies to equitably fill the gap for producers of all sizes.

“The National Milk Producers Federation appreciates the work of Senators Gillibrand and Hyde-Smith for today’s initial examination of crucial milk pricing issues,” said Jim Mulhern, president and CEO of NMPF. “Dairy farmers have done their best to navigate this ongoing crisis, aided in part by necessary disaster assistance. But without equitable assistance, many family dairy farmers across the nation will needlessly struggle from the effects of the Class I mover change they’ve already felt. And without a change in the mover, we can only expect these struggles will recur.”

Gillibrand leads the Subcommittee on Livestock, Dairy, Poultry, Local Food Systems, and Food Safety and Security. Sen. Cindy Hyde-Smith (R-MS) serves as the subcommittee’s Ranking Member.

NMPF Offers Webinar on 2021 Dairy Economy as DMC Deadline Approaches

Posted on by Theresa Sweeney

With deadlines for the Dairy Margin Coverage program and Coronavirus Food Assistance Program signups approaching on Dec. 11, the National Milk Producers Federation is offering dairy farmers, cooperative members and state dairy associations a free webinar Dec. 2 to help them develop effective risk management plans that can protect them in what’s predicted to be a volatile year in 2021.

NMPF Chief Economist Peter Vitaliano, creator of the monthly Dairy Market Report released earlier today, will be discussing the dairy price outlook for next year, and the value of risk management tools including Dairy Margin Coverage, in a webinar moderated by Chris Galen, NMPF’s Senior Vice President for Member Services, at 1:30 p.m. EST on Wednesday, Dec. 2. Participants will be able to ask questions about the year ahead and learn more about how farmers can manage their risk through expected turbulence.

The webinar will examine the milk and feed price forecast, forecast margins, and analyze how the Dairy Margin Coverage program will offer farmers protection against price volatility. To register, click here: https://us02web.zoom.us/webinar/register/WN_yr4QZ8HhSc-zdvujrg_zBA

Current USDA calculations predict that the DMC, adopted with NMPF’s leadership in the 2018 farm bill, will offer payments averaging $1.05 per cwt in the first eight months of next year for those at the maximum $9.50 coverage level. That vastly outstrips program premiums, making coverage for a farm’s first 5 million pounds of milk production a no-brainer, Vitaliano said. The DMC also offers affordable protection to all producers against price catastrophes and can be used in tandem with other risk management tools, such as the Dairy-Revenue Protection and the Livestock Gross Margin programs.

To determine the appropriate level of DMC coverage for a specific dairy operation, producers can use the recently updated online dairy decision tool offered through the USDA’s DMC informational page. Dairy producers can also visit NMPF’s page on risk management to learn more about DMC, CFAP and other tools to promote financial security for dairy operations.