Tag: federal order dairy

August Update: FMMO Hearing Underway; Margins Below $4

Posted on by Theresa Sweeney

NMPF capped an unusually busy August – traditionally a slower month in policy circles due to the congressional recess – with the beginning of the USDA Federal Milk Marketing Order hearing in Carmel, IN. The first comprehensive hearing on the FMMO system since 2000 is the result of more than two years of NMPF study, discussion and leadership, featuring more than 200 meetings and exhaustive, member-led examination of all issues as dairy farmers achieved overwhelming consensus behind its proposal.

That said, work is far from over. The first weeks of questioning and cross-examination have featured challenging questions regarding methodology, analysis and whether NMPF’s plan is best for the industry. Still, led by staff economists, cooperative efforts and dairy farmers, NMPF is entering September in a commanding position in a hearing that may last well into October.

“Thanks to the tireless efforts of dairy farmers and their cooperatives, this industry is poised for progress as Federal Milk Marketing Order modernization is now in sight,” NMPF President and CEO Jim Mulhern said in a statement on Aug. 23, the hearing’s first day. “NMPF’s comprehensive proposal for improvements to the system forms the basis of this hearing, and through our members’ depth of expertise and unmatched team of dairy farmers and cooperative analysts, we are prepared to advance our industry’s need for these updates.”

The FMMO hearing is occurring against a backdrop of the lowest producer margins since margin-protection insurance was introduced in the 2014 Farm Bill. The USDA announced that the July Dairy Margin Coverage margin dropped $0.13/cwt from June to $3.52/cwt. That will generate payments of $0.48/cwt payments for the free $4/cwt coverage level, and payments of $5.98/cwt for coverage the maximum $9.50/cwt Tier 1 coverage. The July all-milk price was $17.40/cwt, $0.50/cwt lower than in June, while the DMC July feed cost was $0.37/cwt of milk lower than June’s.

Available forecasts indicate the margin will increase rapidly during the following three months and stabilize around $9.50/cwt for the fourth quarter of this year.

In addition to FMMO activity, NMPF and the U.S. Dairy Export Council organized an Aug. 3 meeting for APEC agricultural officials as part of the larger APEC Food Security Ministerial session in Seattle as part of the federation’s ongoing engagement with the Asia-Pacific Economic Cooperation (APEC), an organization that includes 15 of the top 20 U.S. dairy export markets. Mulhern spoke to the value of an incentive-based, voluntary approach toward improving the sustainability of U.S. agriculture and highlighted the dairy sector’s leadership in implementing climate-smart solutions.

NMPF tangibly expanded U.S. dairy exports in August through the Cooperatives Working Together program. CWT member cooperatives secured 67 contracts, adding 6.3 million pounds of American-type cheeses, 2,000 pounds of anhydrous milkfat, 337,000 pounds of cream cheese and 137,000 pounds of whole milk powder to CWT-assisted sales in 2023. In milk equivalent, this is equal to 61.5 million pounds of milk on a milkfat basis. Sales for the year so far through August are the total milk equivalent of 610.5 million pounds on a milkfat basis.

NMPF’s regulatory team, meanwhile, noted progress in the Waters of the U.S. issue, with a new Biden Administration rule offered in line with a Supreme Court decision last spring that limited the reach of EPA’s regulatory authority. While the rule will almost certainly be subject to litigation, the approach is an improvement of the most recent changes to WOTUS, which created regulatory uncertainty for farmers and represented government overreach, a point regulatory staff have made in numerous meetings with and comments to EPA over more than a decade.

Finally, the final day of August saw USDA announce the fiscal year 2023 notice of funding for CIG On-Farm Conservation Innovation Trials, bringing to fruition an important win NMPF secured last year.

On-Farm Conservation Innovation Trials support widespread adoption of innovative approaches, practices, and systems on working lands. The Inflation Reduction Act, which Congress passed last year, doubled annual funding for this program from $25 million to $50 million for four fiscal years. NMPF won language in the law to target this new funding toward initiatives that use feed and diet management to reduce enteric methane emissions, which can comprise roughly one-third of a dairy farm’s greenhouse gas footprint and represent a major opportunity for dairy to lead the agriculture sector in making sustainability gains.

As Hearing Moves Forward, Dairy’s Path is Becoming Clearer

Posted on by Theresa Sweeney

USDA’s Federal Milk Marketing Order (FMMO) hearing is well underway, and thus far its progress is much as expected. With NMPF’s proposed modernization plan serving as its bedrock, the topics under discussion very much reflect the areas we identified as key areas of improvement to FMMOs. At the same time, cross-examination and counter-proposals from other parties have been thorough, and at times, off-base.

Unsurprisingly, those questions and perspectives reflect the vested interests of the questioners, with changes often presented as zero-sum games in which the questioner’s ideas and opinions just-so-happen to benefit its bottom line. Our position at NMPF is a little different. We recognize that any proposal USDA puts up to a producer vote will need to meet a balance of interests, as admittedly, some regions, sizes or business models may benefit more than others depending on the issue. That’s a simple fact of reality in the world of policy progress. In that sense, we’re not always arguing specifically for the benefit of one party – we’re defending the consensus we’ve crafted that provides the greatest benefit to the industry as a whole, dairy farmers, processors, and consumers alike, because that’s the only approach that will bring the lasting improvements for the entire dairy industry.

This is why we at NMPF can’t help but smile a bit when we hear someone bring up an idea that we considered – and discarded – as far back as two years ago, when we began holding more than 200 meetings among farmers, cooperative analysts and industry-leading economists that generated our comprehensive improvement plan. We’ve literally been there and done that. But interested parties must have their say, and differing proposals can be brought before USDA – and in fact, they should be, so as to serve the important interests of transparency and continued consensus.

This is where all those meetings, and the thorough preparation our cooperative-led team has made for this generational opportunity for improvement, reaps dividends. We’ve faced tough questions. We’ve developed industry-leading analysis. We’ve even “war-roomed” the hearing process itself, meeting to discuss anticipated critiques of our proposal and preparing authoritative responses. Our approach is exhaustive, but never exhausting, because we’ve always kept our eyes focused on the ultimate goal of a modernized, fairer, more robust system of milk pricing for dairy farmers. And with each step toward that goal, we feel we’re only gaining more momentum – one that in the end will benefit everyone, even those who, at this moment, are offering alternatives aimed at simply boosting their narrower self-interests.

Leadership isn’t easy. As this is being published, we still have several weeks of proposals to wade through, after which further discussion and USDA consideration begins. But thus far we’re gratified that our leadership on this issue has taken dairy thus far. We set out to modernize the system. We worked with USDA, which decided it was time to examine that modernization. Now we’re explaining and justifying our proposals, with dairy’s brightest and most articulate analysts, economists and farmers testifying to the value of what we painstakingly crafted and impressing upon all of agriculture just how seriously we’ve taken this mission. We look forward to showing why our comprehensive proposal – the unanimous choice of dairy cooperatives that produce more than two-thirds of the nation’s milk — is the best approach for dairy’s future.

This occasion is incredibly important, and we’re rising to it. We look forward to continued progress.

 

Jim Mulhern

President & CEO, NMPF