Tag: FMMO hearing

FMMO Modernization Needs to Move – And So Does the Class I Mover

Posted on by Theresa Sweeney

The long, patience-testing — and absolutely necessary – Federal Milk Marketing Order hearing is nearly over.

The longest-ever USDA federal order hearing ended last Tuesday, after roughly 12,000 pages of testimony and nearly two dozen separate proposals considered. Through it all, NMPF’s impressive unity never faltered – our plan remains the most comprehensive, coherent, and compelling plan for modernization of a system that’s showing its creaks after a generation.

Now, the next phase of the arduous process of amending federal orders begins, as USDA begins considering the hearing record and hearing participants have 60 days to elaborate and defend their positions. USDA, of course, will have the final say in crafting its own proposal, but we’re confident our plan will remain the basis of progress, and we look forward to adding information and reinforcing our own arguments in the weeks to come. It’s critical to keep in mind that any plan designed to have national support needs to address diverse interests. That’s why our comprehensive plan covers areas ranging from the Class I price surface and make allowances to component pricing formulas and forward contracting.

One area that’s so important that we’re seeking resolution in the quickest manner possible is the Class I mover, which sorely needs to go back to the “higher-of” formula that served farmers well before the current “average of” approach took effect in 2019.

Processor interests aggressively pushed for the change to the mover in the 2018 Farm Bill. At the time, the adjustment seemed reasonable for farmers too, based on data going back to 2000. However, the lessons of the COVID-19 pandemic, and the current prolonged spread between the Class III and Class IV prices, have shown how poorly the current mover works for farmers in today’s agricultural environment. Milk producer losses are growing, with the amount of money taken from their milk checks soon to surpass $1.2 billion by April – all because of a system that now limits risks for processors while putting potentially unlimited losses on farmer backs.

This is unacceptable, a reality the hearing only made more obvious. While processors continually talked about how important the current mover is for their risk management strategies, no one in months of testimony ever presented definitive proof that such risk management is occurring at any meaningful level. Meanwhile, the processors continue to rake in dollars that would have gone to farmers – and will keep raking it in, by the way, until the mover is changed, a potentially huge financial incentive to work against positive changes for dairy farmers.

Knowing that the current mover isn’t defensible, these groups have suggested a modification to the current approach that’s largely based on a proposal that NMPF developed in 2021 under dire straits, but processors rejected. Their plan would adjust the mover in a backward-looking fashion that would allow farmers to recoup losses years after the fact. That reduces losses over the long term, but it’s cold comfort to farmers whose operations are struggling to live month-to-month and don’t have two years to be made right again. Moreover, it’s now clear that the losses farmers suffered in 2020 were not a one-off fluke.

And thus, given the current difficult times on dairy farms, we’re now pushing hard for the return to the higher-of. It responds quickly to the marketplace, it helps farmer cash flow, it’s simple to understand, and it would have no real impact on processors who are using the formula to boost their immediate balance sheets, not manage future risk as they claim.

Dating to NMPF’s first internal discussion, our path toward FMMO modernization is now nearly three years old. This final year, which, should all required timelines be met, would result in a producer vote roughly one year from now, is the most critical. It’s when, after all the research and talking, USDA will propose a new approach – and farmers will decide. These decisions are likely to shape the future of dairy for the next generation. We are excited to continue our leadership in this critical area, and will, as always, fight for the best approaches to ensure that dairy farms prosper.

Gregg Doud

President & CEO, NMPF

 

NMPF Statement at FMMO Hearing Conclusion

Posted on by Theresa Sweeney

From Gregg Doud, President and CEO, National Milk Producers Federation:

“NMPF spent more than two years preparing for USDA’s Federal Order hearing, and that preparation paid off. Our proposals, unanimously supported by our Board of Directors, reflect farmer unity and a good-faith effort to build industry consensus. After five months, 12,000 pages of testimony, and almost two dozen separate proposals considered, our plan remains the most comprehensive, coherent, and compelling framework for modernizing a system that’s badly in need of improvement.  We look forward to working with USDA and the entire industry in the weeks and months to come, noting that any plan USDA designs will by necessity require complex analysis to result in a proposal that serves diverse farmer needs well.

“In the meantime, we’ll continue to advocate for badly needed changes in areas such as the Class I mover. The current formula has cost farmers $1.2 billion in losses since its implementation after the 2018 farm bill, with additional losses expected in the coming months. It needs to change back to the previous “higher-of’ formula that served farmers best. The higher-of responds quickly to the marketplace, it helps farmer cash flow, it’s simple to understand, and it would have no real impact on processors who are using the formula to boost their immediate balance sheets, not manage future risk as they claim.

“Dating to NMPF’s first internal discussions, our path toward FMMO modernization is now nearly three years old. This final year is the most critical. We are excited to continue our leadership in this critical area, and will, as always, fight for the best approaches to ensure that dairy farms prosper.”

FACTS ABOUT NMPF’s FMMO PROPOSAL:

 

NMPF supports the federal legislation that authorizes the FMMO system, as well as improvements that increase clarity and producer understanding of milk pricing and ensure an orderly market and fair prices for dairy farmers.

NMPF’s proposed changes to the Federal Milk Marketing Order System include:

  • Returning to the “higher of” Class I mover;
  • Discontinuing the use of barrel cheese in the protein component price formula;
  • Extending the current 30-day reporting limit to 45 days on forward priced sales on nonfat dry milk and dry whey to capture more exports sales in the USDA product price reporting;
  • Updating milk component factors for protein, other solids and nonfat solids in the Class III and Class IV skim milk price formulas;
  • Developing a process to ensure make-allowances are reviewed more frequently through legislation directing USDA to conduct mandatory plant-cost studies every two years;
  • Updating dairy product manufacturing allowances contained in the USDA milk price formulas; and
  • Updating the Class I differential price system to reflect changes in the cost of delivering bulk milk to fluid processing plants.

For more information, visit here.

FMMO Hearing Focuses on Price Surface, May End in February

Posted on by Theresa Sweeney

NMPF witnesses advocated for a fairer Class I price surface dominated testimony in USDA’s Federal Milk Marketing Order hearing, which resumed Nov. 27 in Carmel, IN. That’s critical for its contributions to the hearing record the Agriculture Department is building to craft a proposal to submit to farmers next year.

Economist Peter Vitaliano continued to anchor NMPF’s testimony, joined by multiple co-op experts explaining the effects of a modernized formula taking account of differing cost structures for milk production in various regions of the country. With NMPF’s Proposal #19 taking the bulk of the hearing time over a scheduled two-week period, the team effort highlighted the unanimous co-op unity that’s allowed NMPF to lead the discussion, aided by organizations such as the American Farm Bureau Federation and the Milk Producers Council that are aligned with NMPF positions and show broader farmer and industry support for the proposal.

The hearing itself, however, is becoming significantly delayed, with an original timeline of wrapping up in mid-October now being pushed as late as early February due to venue availability and delays for holidays. That potentially may cost millions of dollars to farmers who would not benefit from the improved component pricing, modernized Class I price surfacing and the return to the “higher of” Class I mover. NMPF continues its thorough preparation for all scenarios.

NMPF’s Chairman Mooney Spotlights Dairy Leadership

Posted on by Theresa Sweeney

The dairy sector has benefited from strong leadership, as farmers work together to meet today’s challenges, National Milk Producers Federation Chairman Randy Mooney said in a Dairy Defined podcast.

A new farm bill, a national hearing on modernizing the Federal Milk Marketing Order system, and ongoing challenges in sustainability and risk management have challenged dairy farmers, Mooney said in the podcast, taken from his remarks at the organization’s annual meeting in Orlando on Tuesday. Farmers have responded with their trademark resilience, uniting to advance their industry, he said.

“This year we came together as an industry to unite around a number of issues that helped build that resiliency. Together we worked to make every drop count, every meeting, count every call, every email, every handshake,” he said.

The full podcast is here. You can also find the podcast on Apple Podcasts and Google Podcasts. Broadcast outlets may use the MP3 file below. Please attribute information to NMPF.

In The “Eye of The Storm,” Dairy Farmers Stand Strong

Posted on by Theresa Sweeney

Next week, dairy farmers from across the nation are gathering in Orlando, FL, for NMPF’s annual meeting, with no shortage of important items to discuss.

  • America is currently without a farm bill — a circumstance that’s not unheard-of given the usual lapses in legislation, but one that inevitably raises uncertainty and questions of strategy.
  • USDA’s Federal Milk Marketing Order hearing is in a temporary pause before resuming Nov. 27. Thanks to years of painstaking preparation and an unshakable consensus among our members, we at NMPF feel very good about our hearing proposals. But the hearing’s final major issue, the Class I price surface, is still under consideration. And even after the hearing concludes, several steps remain before a successful producer vote will take place, likely late next year, on a USDA plan we hope will be largely modeled on our own.
  • The dairy economy continues to be challenging. Prices and margins are now rising, but only after producers experienced their lowest margins since the current USDA safety-net system began. Meanwhile, dairy producers continue to experience bad-faith attacks from outside activists over their animal care stewardship, environmental and climate leadership, and workforce management. And exports continue to suffer because of unfair trade policies. And so on.

So, while our conversations will be cordial and collegial, in the cooperative spirit that defines our industry, our challenges are real. And, as usual, we will meet those challenges.

  • On the farm bill, we have crafted board-approved positions that will both preserve the safety net successfully established in the now expired 2018 law while improving meaningful risk management for farms of all sizes, in all regions, while positioning our industry to utilize financial incentives that support our Net Zero Initiative. Dairy farmers are speaking with one voice on these issues, which is always when we are most effective. And the relationships we’ve built on both sides of the aisle allow us to move ahead with confidence.
  • On FMMO, I can’t speak enough about how our comprehensive, farmer co-op-led approach to modernization has impressed the logic and necessity of our plan upon USDA. Through weeks of testimony and dozens of dairy farmer and cooperative expert witnesses, the intellectual rigor and on-farm passion has made a compelling case for our plan – which should carry significant influence with USDA in developing a final proposal. There isn’t enough space in this column to thank everyone who deserves our gratitude, and the honor roll will only grow as we continue to move this process forward.
  • On other issues, some shorter-term and others longer, we have our own record of resilience on which to fall back. When the economy stalls, we innovate, adjust, survive, and thrive. When our naysayers proclaim the “Death of Dairy,” we’re the ones who show life, fighting those messages with the most compelling counter we have – the truth. And we continue to show the world just how compelling and critical our products are, building global market share and our reputation for global leadership, as we did at last month’s successful International Dairy Federation World Dairy Summit in Chicago.

From one perspective, given the moment during which we’re meeting, it could be said that we’re gathering during the eye of a storm – not a bad metaphor for a meeting in Florida. But really, I think of it more like the moment before a dawn, when the new day is about to reveal itself and you’re ready to take it on. We never lack for challenges in dairy, and we never lack for solutions. In Orlando, we’re ready to convene. And nationwide, as always, we’re ready to lead.

Jim Mulhern

President & CEO, NMPF

 

USDA Sets Aug. 23 FMMO Hearing, NMPF Plan as Basis

Posted on by Theresa Sweeney

The U.S. Department of Agriculture’s (USDA) announced plan for a hearing beginning this month on modernizing the Federal Milk Marketing Order (FMMO) system reflects the comprehensive approach to improvement carefully crafted by the National Milk Producers Federation (NMPF), an emphatically positive development for dairy farmers.

“Dairy farmers nationwide are grateful that USDA is moving forward by including the full scope of NMPF’s proposal to guide the dairy industry forward as it modernizes the Federal Milk Marketing Order system,” said Randy Mooney, a dairy farmer near Rogersville, MO, and chairman of NMPF’s Board of Directors, in a statement released July 21, the day plans for the hearing were announced.

The hearing will begin on Aug. 23 in Carmel, IN, and is expected to last several weeks. NMPF’s cooperative-led effort will be involved in every significant topic, reflecting its detailed proposal and the nationwide scope of its effort.

“This recognition of NMPF’s consensus-based leadership allows us to continue the substantial momentum for change that we’ve achieved,” Mooney said in his statement. “Each piece of our proposal, from returning to the “higher-of” Class I mover as soon as possible, to updating both Class I price differentials and manufacturing cost allowances, has been crucial toward building that consensus, and all components of our plan are critical to a successful update to this important program.

“There is still a long journey ahead toward a modernized federal order system that works better for farmers, but NMPF is ready, with co-op led efforts well under way to ensure that we are well-prepared for the FMMO hearing,” Mooney said. “We’re excited to lead this industry toward solutions that will offer benefits for everyone, and we are gratified that USDA is showing thoughtful leadership through its responsiveness and support for dairy.”