Tag: FMMO modernization

See You in Indiana!

Posted on by Theresa Sweeney

Indianapolis, Indiana may be best known for its famous road race. And though our journey toward Federal Milk Marketing Order modernization may at times feel like it’s already taken 500 miles, in reality the critical stretch begins this month with the hearing USDA is granting, beginning Aug. 23.

Our engines are revving, we have an expert pit crew in place, and with the turbocharge of support we’ve received from our members and across the dairy producer community, we’re confident we’re in pole position and determined to take the checkered flag.

OK, enough with the auto-race metaphors. The point is, we’re ready. This is an exciting moment for the future of our industry – and exciting moments are difficult to achieve at a time of low producer margins – with high input costs and poor milk prices.

But even as today holds challenges, we can achieve a better tomorrow through FMMO modernization, which is, and always has been, an attempt to update milk pricing to current needs, reduce economic distortions, encourage orderly markets and put dairy producers on firmer, fairer ground as they provide high-quality products consumers want. This once-in-a-generation opportunity has come from the leadership of dairy farmers and the cooperatives they own, who together have assembled a deep, truly comprehensive case for modernization and how it can be done, one that embraces all regions, sizes and business models found in the diverse dairy sector.

That work has already paid off through the scope of the hearing itself. The proposal we sent to USDA in May is the basis from which the department is proceeding. And while we look forward to the discussion and examination of other proposals, in the end we feel confident we’re in the driver’s seat of change. (Sorry. Another auto-race analogy.) We will be involved in the full range of proceedings with a cast of experts who will assist us in our case during the hearing, which is expected to last 6-8 weeks.

And once that is done, it will be time for USDA to consider all the testimony, as we prepare to advocate for what we hope (and expect) will be a producer vote on a plan next year.

This has been a long process, but one that’s critical to dairy’s future. For more information on our proposal, please visit our FMMO page here. We also plan to offer regular updates on the process itself,  so stay tuned – and keep your engines revving.

Also, even as FMMO consumes much of our focus, we’re moving ahead in another area that’s important to the future of dairy farming and consumer support for true dairy products: The fight against lab-based imposters that are adopting the plant-based playbook and sow marketplace confusion over what “milk” actually is.

Following on a letter we sent in late June, we’re urging FDA to take action to stop the “Bored Cow” brand peddled by a New York City-based foodtech company as “animal-free dairy milk” from illegally calling their product “milk.”

Unlike with plant-based beverages that have no dairy ingredients, Bored Cow includes one synthetically produced whey protein. But as every responsible scientist, marketer – and regulator – knows, one protein doesn’t make it “milk,” a biological product that is a complex interaction of literally hundreds of components, the qualities and characteristics of which we frankly don’t fully understand.

FDA, and the food industry as a whole, will need to get away from simplistic and convenient ideas that “equivalency” can be manufactured in a lab when a dairy product – and other animal products as well – are the result of thousands of years of natural development. Should FDA choose not to enforce its own rules in a timely manner, we will escalate our fight – and hope you can join us as this initiative develops.

Our industry is dynamic and complex, with ever-changing challenges. In both FMMO modernization and lab-based “dairy,” we’re trying to meet both the nearer and longer-term needs of dairy farmers. That’s what keeps us all moving forward. And with that, on to Indiana!

 

 

Jim Mulhern

President & CEO, NMPF

 

NMPF Statement on USDA Federal Order Announcement

Posted on by Theresa Sweeney

From NMPF Board Chairman Randy Mooney, a dairy farmer from Rogersville, MO:

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.

This recognition of NMPF’s consensus-based leadership allows us to continue the substantial momentum for change that we’ve achieved. 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 that begins next month. 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.

NMPF Eager for Next Steps in Milk Marketing Modernization with USDA “Action Plan”

Posted on by Theresa Sweeney

NMPF’s two-year effort toward Federal Milk Marketing Order (FMMO) modernization achieved a significant milestone June 1, when USDA released its proposed “Action Plan” to move toward a national hearing based on the organization’s proposal to update to FMMO system to benefit farmers, the cooperatives they own and the broader industry.

The next phase of creating a federal order system that better reflects today’s market conditions and dairy producer needs begins with an informational hearing June 16 that should serve as a prelude to a full formal hearing in late August, according to the plan. Should the entire process go smoothly, an updated FMMO system could be actively benefiting farmers in late 2024.

“We’re gratified that USDA recognizes the comprehensive nature of our proposal and are looking forward to it being considered in full, because the whole of our plan adds up to more than the sum of its individual parts,” said NMPF President and CEO Jim Mulhern. “We will bring the same level of dedication and preparation to this part of the process that we did in drafting our own plan, which included more than 150 meetings and wide consultation across dairy producers and the entire industry.”

NMPF’s Federal Milk Marketing Order proposal, detailed here, offers comprehensive solutions that recognize the needs of today’s dynamic industry. While the complexity of the process will require detailed discussions, the unity seen among dairy producers supporting NMPF’s proposal, which the organization’s Board of Directors approved unanimously, puts adoption on a positive path moving forward, since producers vote for Federal Orders, Mulhern said.

Randy Mooney, NMPF chairman and a dairy farmer near Rogersville, MO, called the proposal’s strong momentum a testament to the power of dairy farmers, through their cooperatives, to undertake bold initiatives that advance their industry. Farmers will continue to lead as modernization moves forward, Mooney said.

“Dairy producers have proven throughout this process that, with unity and careful attention to each other’s needs, we can achieve impressive things,” he said.  “Dairy’s strength comes from its farms, and producers ready to face challenges and seize opportunities. We’re excited to begin the formal hearing process.”

Co-ops Lead in Developing Milk-Pricing Consensus

Posted on by Theresa Sweeney

It would seem daunting that the highly diverse dairy community, which ranges from small, 20 cow farms to 20,000+ animal operations using state-of-the-art equipment for everything from housing to enhanced sustainability, would be able to reach a unanimous consensus on a comprehensive proposal to modernize milk pricing, which is both incredibly important and incredibly complicated for each of those farms.

But dairy farmers, as represented by the members of NMPF, have a mechanism that allows the industry to tackle complex issues and work on solutions that can make improvements for all: the cooperative. And after two years and more than 150 meetings on milk marketing orders, that structure again is proving essential to industry progress.

Even after decades of consolidation and increasingly sophisticated operations, the co-op remains the heart and soul of dairy. Cooperatives handle 85 percent of U.S. milk, produced on farms that are 97 percent family owned. By providing technical and risk-management support, economic expertise and most importantly, a guaranteed buyer for a perishable product, co-ops meet dairy needs – including the need to reach agreement on all-encompassing issues such Federal Milk Marketing Order modernization. Working together for mutual self-help is the cooperative spirit. It’s the engine that makes dairy move.

Though not every dairy cooperative is an NMPF member (although they should be, if they want to be engaged in building industry positions on critical issues such as FMMO modernization), the strength of its membership covers two-thirds of the U.S. milk supply –which enables us to solidly speak for dairy farmers in federal policy debates. That’s why NMPF became the natural place to craft an FMMO modernization proposal. Top economists and analysts from member cooperatives talked with the farmer-leaders of NMPF co-ops nationwide, arriving at solutions to thorny problems that respected the interests of all and, in total, achieves mutual benefits.

The result is the plan NMPF submitted to USDA last week. That’s how things should be done – and that’s how things will continue to be done as the Agriculture Department considers the plan and, assuming successful consideration, a federal order hearing takes place.

Not every dairy farmer is a co-op member, of course, and the industry includes other parts of the supply chain that have an interest in FMMO issues. That’s obvious, and the farmer-led plan NMPF has submitted wouldn’t have been as well-considered – and certainly not as likely to succeed – without the input and support from stakeholders across dairy.

But in the end, the vehicle driving the first major FMMO update in nearly a quarter-century is the farmer-owned cooperative. Co-ops are where the ideas come from, and where the initiative to realize those ideas come from as well. As the federal-order process continues, each will be important to success. Fortunately, supplies of both are ample.

Milk-Pricing Modernization: Consensus Can Help Pick Up the Pace

Posted on by Theresa Sweeney

The thing about any long journey is, even after you’ve come a long way, you still more steps to take.

But with proper preparation and a clear plan, the rest of your journey may be smoother. That’s our hope now that we’ve submitted to USDA our comprehensive proposal for Federal Milk Marketing Order reform.

Without torturing the metaphor further by saying we have the wind at our backs, I will say that our disciplined approach has had encouraging results. More than 150 meetings over nearly two years, with many of the industry’s best minds, including producers of all sizes and in all regions of the country, as well as the cooperative-led processing community, has generated a strong consensus among producers that portends well for the proposal we’ve presented USDA. The Federal Milk Marketing Order system is, in the end, focused on farmers – and we’ve gained unanimity among our producer-leaders in backing this proposal.

And it’s not just us at NMPF. We deeply appreciate the collaborative spirit and helpful conversations we’ve had with numerous national, state and regional groups, including the American Farm Bureau Federation. Many of these groups have their own perspectives specific to their circumstances, and we’ve appreciated the good faith efforts to find consensus. Those conversations have made our proposal stronger as it’s deepened our producer support.

A lot of work has gone into this effort. We have examined the program in great detail and come up with a plan to modernize and update federal milk marketing orders so they can work better for today’s dairy industry. And it’s also important to note, to everyone involved, how much the elements of our proposal rely on one another to succeed.

Take the make allowance, for example – a key priority of our hearing request. That specific portion of federal orders, which helps cover processing costs, is of intense interest to some, but still needs to be addressed in a way that benefits all. The make allowance is important; it hasn’t seen a meaningful update in 15 years. But handling that issue in isolation would have the effect of reducing milk prices to farmers, a non-starter in a program that’s ultimately supported by a vote from producers.

And the make allowance is far from the only issue the USDA needs to address. That’s why we have the make allowance issue in our proposal, but as one of five provisions on which we’re seeking a hearing. Other necessary updates to milk pricing help economically offset our proposed make allowance adjustment, by bringing pricing formulas up-to-date and minimizing disruption to markets.

One example of a needed update is changes to formulas that are based on the composition of milk itself. Key pricing factors are tied to the protein, solids-not-fat and the other solids content of milk. The factors currently in use date to the late 1990s, before the last major change in the federal order program in 2000. A quarter-century later, the protein content, the solids-not-fat, and the other solids content of milk coming off the farm is higher. We need to adjust those factors, because they have an impact on the price that is reported and then, ultimately, paid to producers. That’s one issue.

Another example is Class I fluid milk pricing. Given the example of the pandemic, which showed how a change in the Class I pricing system we supported in the 2018 Farm Bill ended up placing too much price risk on farmers, we’re calling for a return to the “higher of” approach that priced milk off Class III and Class IV prices. While the pandemic exposed the problems with the new formula, the problems occurred last year as well, demonstrating the need to return to the “higher of.”

We’ve also updated the Class I differentials, a fixed price per hundredweight of milk, in each of the 11 federal orders around the country. The fluid market – the bottles of milk you see in the stores – is a higher-cost market to service, and farmers need a federal order system that more accurately reflects costs and manages risks than what we have today, rather than the environment of 2000, when the current Class I differentials were set. Updating differentials and returning to the higher of are key components of furthering the key purpose of the Federal Milk Marketing Order system – to ensure orderly milk markets nationwide.

Returning to the make allowance: While it’s clear that updates to make allowances are needed, it’s also become clear that a fair, lasting solution is going to require sound, higher quality data, from which we then can build producer consensus.

To move toward that outcome, we’re first proposing an interim increase in the make allowance of cheese, whey, butter and nonfat dry milk. This increase already has support from producers, who unanimously endorsed it at our NMPF annual meeting last October. But to go much  further on adjusting make allowances, we need to address the need for solid data, so we can make changes that reflect current conditions with greater certainty than what is now possible.

For that, we need to go to Congress to get authority for USDA to conduct a mandatory manufacturing cost survey. We are going to pursue that in the farm bill, through a provision from Congress that gives USDA the authority to do a mandatory, auditable survey of plants that are reporting their price information to USDA and get further information from them on their manufacturing costs.

By reporting that every two years to the industry, we then can have a mechanism to more regularly update make allowances going forward. That’s important for a truly modernized system. It’s also critically important to get it right, which is why we’re taking the path we’ve chosen.

Modernization of the Federal Milk Marketing Order system has been due for some time, and the pandemic experience, which exposed disorderliness in the system, underscored just how overdue this effort has been and created the necessary momentum for change. Yes, we’ve been deliberate – but we wanted solutions that had benefits for everyone, and we wanted to make sure that we addressed the concern that Agriculture Secretary Vilsack had stated, well over a year ago, when he said it was important to have consensus within the producer community.

We have achieved that consensus. I’ve been very heartened by the strong degree of support for the proposal that we submitted to USDA on Monday. To keep this momentum going, we now need to prepare to make the best case possible before USDA. And we’ll need to maintain the strong consensus we’ve achieved. That’s important for the best outcome, and it’s important for keeping the pledge we made at the outset to pursue modernization that leaves this industry better positioned to meet today’s – and tomorrow’s – challenges.

The key to a successful journey is to prepare well, anticipate the challenges in advance, go in with a plan, and execute that plan without wasting energy. We’ve been dedicated to those principles so far, and they will continue to guide this process. That’s not just how you reach a destination. It’s how you succeed – and in less time than others may have thought possible.

Thank you to everyone who has helped bring us this far. It’s time now to move forward.

 

Jim Mulhern

President & CEO, NMPF

 

NMPF Co-op Leader Supports FMMO Modernization, Touts DMC’s Benefits at Senate Hearing

Posted on by Theresa Sweeney

Second-generation New York dairy farmer Blake Gendebien championed NMPF’s Federal Milk Marketing Order (FMMO) modernization petition and advocated for a strong dairy safety net at a Senate Agriculture subcommittee hearing held today to review commodity programs in the farm bill.

“We are heartened by the strong support among dairy farmers from coast to coast for this broad proposal,” Gendebien said of NMPF’s FMMO proposal, which the organization submitted to USDA yesterday. “We are hopeful that this comprehensive, thoughtful, measured approach to modernizing the program will be considered as the foundation for a national federal order hearing.”

Gendebien, vice chairman of Agri-Mark, an Andover, MA-based NMPF member cooperative, testified on NMPF’s behalf at the hearing of the Subcommittee on Commodities, Risk Management and Trade, held on Capitol Hill in Washington.

The hearing, titled “Producer Perspectives on the Farm Safety Net,” kicks off Senate consideration of this year’s farm bill reauthorization, due Sept. 30. The measure includes programs important to dairy farmers such as the Dairy Margin Coverage (DMC) safety net and supports risk management programs such as Dairy-Revenue Protection (Dairy-RP) and Livestock Gross Margin-Dairy (LGM-Dairy).

DMC, which Gendebien lauded in his testimony, offers effective margin protection for small and mid-sized farms and affordable catastrophic coverage for large farms. Risk management programs including Dairy-LP and LGM-Dairy give all farmers the ability to tailor risk management to their specific needs.

“DMC has provided important security to my family’s farm, given the volatility that persists in dairy markets,” Gendebien said in his testimony. “Since the program was implemented in 2019, we have consistently purchased the maximum available DMC coverage at a margin of $9.50 per hundredweight, knowing that it may not pay out every year, but is intended to serve as a safety net when needed.”

The upcoming farm bill still presents an opportunity for improvements, Gendebien said, highlighted NMPF’s work to vet and review potential improvements to the dairy safety net and risk management programs, including a further update to DMC’s production history calculation.

“Dairy farmers need the opportunity to update their production history to reflect more current on-farm production levels,” Gendebien said. “Other farm safety net programs do not use such an outdated production reference.”

On marketing orders, Gendebien supported NMPF’s plan in this year’s farm-program reauthorization to pursue reinstating the previous “higher of” Class I mover, given the asymmetric risk borne by farmers under the current mover.

“There’s a ceiling on how much better the new mover can perform than the old mover,” Gendebien said in response to a question from Sen. Kirsten Gillibrand, D-NY, who chairs the Senate Agriculture Committee’s Dairy Subcommittee. But because the new mover is capped at 74 cents per hundredweight but has no floor, “it really causes a problem,” he said. “In 2020 and in 2022, the divergence in III and IV cost farmers about $900 million. We’d like to go back to the original “higher of,” which would eliminate those massive losses.”

Gendebien at the hearing also supported increased resources for farmer mental health services. “We need to remove the stigma around mental health,” he said, responding to a question from Gillibrand.

NMPF Submits Milk-Pricing Plan to USDA, Moving FMMO Modernization Forward

Posted on by Theresa Sweeney

The National Milk Producers Federation (NMPF) today submitted to USDA its comprehensive proposal for modernizing the Federal Milk Marketing Order (FMMO) system, the product of two years of examination and more than 150 meetings held to build consensus behind updates to a program that last saw significant changes in 2000.

“Dairy farmers and their cooperatives need a modernized Federal Milk Marketing Order system that works better for producers,” said NMPF President and CEO Jim Mulhern. “By updating the pricing formulas to better reflect the value of the high-quality products made from farmers’ milk, by rebalancing pricing risks that have shifted unfairly onto farmers, and by creating a pathway to better reflect processing costs going forward, we are excited to submit this plan as a path toward a brighter future for dairy.”

Upon official acceptance, USDA will have 30 days to review the plan and decide whether and how to move forward with a federal order hearing to review the plan. Highlights include:

  • Updating dairy product manufacturing allowances (the “make allowance”) contained in the USDA milk price formulas;
  • Discontinuing the use of barrel cheese in the protein component price formula;
  • Returning to the “higher of” Class I mover;
  • Updating milk component factors for protein, other solids and nonfat solids in the Class III and Class IV skim 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.

NMPF will pursue two other components of its Federal Order proposal, approved unanimously by the organization’s Board of Directors in March, outside of the federal-order hearing process, as they don’t involve changing federal order regulations. The recommendations, which remain essential parts of NMPF’s modernization plan, are:

  • 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, which can be implemented through federal rulemaking; and
  • Developing legislative language for the farm bill to ensure the make allowance is regularly reviewed by directing USDA to conduct mandatory plant-cost studies every two years.

Mulhern urged USDA to grant a hearing on the entire NMPF proposal, noting how the effectiveness of some components are dependent on the inclusion of others. Mulhern also thanked other organizations that have helped NMPF forge necessary producer consensus by sharing views and insights throughout the process, saying that spirit of unity and good-faith discussion will help FMMO modernization move forward more quickly.

“From state and regional dairy associations to the American Farm Bureau Federation, dairy farmers have had many allies and friends throughout this process,” Mulhern said. “As Secretary Vilsack has stated, consensus is necessary to successful modernization. We have that producer consensus, and we look forward to working together toward adoption and implementation of our plan.”

Dairy Leaders Unanimously Endorse NMPF Milk-Pricing Plan at March Meeting

Posted on by Theresa Sweeney

NMPF’s Board of Directors unanimously endorsed March 7 a proposal to modernize the Federal Milk Marketing Order (FMMO), a milestone that caps more than two years of discussion and more than 130 meetings on different aspects of the proposal.

The plan approved at NMPF’s March board meeting would reinvigorate the FMMO system, which guides milk pricing, to reflect an industry that’s evolved significantly since the last comprehensive revamp in 2000. It’s a proposal all dairy can get behind, said Randy Mooney, chairman of NMPF’s board of directors and a dairy farmer from Rogersville, MO.

“After gathering dairy’s best minds and consulting with partners across the industry, today we are moving forward with a comprehensive FMMO proposal the entire industry can get behind,” Mooney said. “We look forward to leading a thorough, deliberative process as we submit this proposal to USDA and partner with our allies to modernize milk pricing in ways that serve dairy farmers and the entire industry.”

The board reviewed a package of changes initially developed and proposed by a task force of NMPF cooperative experts and later approved by the organization’s Economic Policy Committee. The adopted changes, listed here, reflects the industry’s evolution while benefiting the farmers who form the bedrock of U.S. dairy.

With the board’s approval, NMPF’s next step is to move toward submitting the proposal to USDA as the basis for a federal order hearing while continuing conversations with other dairy stakeholder partners, a move expected in late April. NMPF President and CEO Jim Mulhern said the organization stands ready to assist farmers, the dairy industry and federal officials in any way it can as the process unfolds.

“We believe in a better future for this industry, and this proposal will help build that future,” he said.

NMPF’s board also welcomed new directors — Jacob Larson of Southeast Milk Inc., and Michael Lichte of Dairy Farmers of America – and released its annual report, highlighting the activities and accomplishments of the past year.

NMPF is the only nationwide organization devoted to advancing the interests of all dairy farmers of all sizes in all regions. A federation of dairy cooperatives, NMPF embodies the spirit of farmer self-help and community leadership.

Board members also discussed:

  • The need to build upon an FDA proposal on plant-based beverage labeling that doesn’t go far enough to end the mislabeling of imitation products using dairy terms;
  • Industry leadership in animal care, environmental stewardship, and workforce development through the National Dairy Farmers Assuring Responsible Management (FARM) Program;
  • How sound policy can contribute to another record year of U.S. dairy exports; and
  • Potential farm-bill priorities.

Milk Pricing Modernization Now at a Pivotal Point

Posted on by Theresa Sweeney

After more than 150 meetings of our dairy farmer members and co-op technical experts. After extensive outreach and consultation with national organizations, including the American Farm Bureau Federation and state and regional dairy associations. And after multiple unanimous votes at all levels of our organization, NMPF this month will submit to USDA our proposal for the first significant update of the Federal Milk Marketing Order system since 2000.

All those meetings, as well as the preparation and examination that accompanies them, add up to many hours and an incredible amount of analysis on Federal Milk Marketing Orders. But by doing the heavy lifting – one that understands and accounts for the reality that a change to one part of the system affects other important parts — we at the National Milk Producers Federation feel confident in the comprehensive proposal our Board of Directors unanimously approved last month.

While the process of a USDA FMMO hearing and a referendum vote by producers will take some time, we’ve already come a long way toward achieving improvements to milk pricing that will modernize this important program. Through our proposal, dairy farmers have found common ground, and we believe the broader dairy sector can rally around these efforts to strengthen our industry. Important components of our proposal include:

  • A return to the “higher of” Class I mover that’s fairer for farmers than the current system that seemed reasonable when it was included in the 2018 Farm Bill, but which the COVID-19 pandemic showed exposes farmers to disproportionate price risks during market disruptions;
  • Updated milk component factors for protein, other solids and nonfat solids in the Class III and Class IV skim milk price formulas, recognizing that these components have increased in the U.S. farm milk supply since the current formulas were established;
  • Specific make allowance adjustment numbers for the four products contained in the Class III/IV pricing formulas – cheese, dry whey, butter and nonfat dry milk – to help address increases in processing costs, as well as creating a mechanism to keep those calculations up-to-date; and
  • Updated Class I differential prices that reflect changes in the cost of delivering bulk milk to fluid processing plants.

This is difficult work, and at times it’s involved difficult conversations. But the alignment we’ve achieved among farmers, cooperatives and the cooperative-owned processing community has been one of the most critical, and gratifying, parts of the process.

An important principle we’ve followed is that, while building consensus, we’ve recognized that we can’t craft solutions that are one-size-fits all, nor can any proposal succeed when it’s narrowly tailored to what amounts to one-size-fits-one. What do I mean by that? As we quickly learned when we first started looking at federal reform in 2021 with a re-examination of the Class I Mover, a narrowly targeted approach doesn’t work when there are other major imbalances in the system.

In the end, we didn’t pursue Class I alone because we found serious modernization required a serious look at all aspects of federal milk marketing orders and their complex interactions. Now that we’ve done exactly that, we are hoping the industry can broadly rally around the conclusions at which we’ve painstakingly arrived. We owe it to this industry – and especially to the farmers who are at the heart of it – an honest, deliberative, thorough approach that creates opportunities for everyone to thrive.

Our proposal has come after discussions that reflect the great diversity of this industry. We’ve been transparent, driven by an interest in the industry’s overall success, and we aren’t afraid to lay our cards on the table with specific numbers and forecasted impacts. On the make allowance, for example, the majority of our farmers are members of cooperatives that own dairy processing plants; therefore, they have a vested interest in setting the make allowance at the right level — from both the producer and processor perspective. That balance, which runs throughout our proposal, is what is needed to modernize this important program.

After leading the most comprehensive discussion of federal orders this industry’s seen in the past quarter-century, we’re confident we’ve crafted solutions that all of dairy should get behind – with the unanimous approval our board gave to it in March as evidence of our hard work and dedication to consensus. We are heartened by the strong support among dairy farmers from coast to coast for this proposal. A comprehensive, thoughtful, measured, farmer-centric approach to modernizing the program is exactly what USDA should consider as the basis for a national federal order hearing, and we are proud to offer it.

To better understand our proposal, please explore our website at www.nmpf.org. We of course encourage feedback and any helpful comments that should be considered when finalizing our submission, which is currently under way. To reach out to us with questions as we move toward a federal hearing, feel free to write us at info@nmpf.org.

We’re looking forward to advancing this industry in collaboration and partnership. As the national organization representing most of the dairy producers who, in the end, are the ones voting on any changes to the FMMO system, we take our responsibilities seriously. And we look forward to discussing and advocating for our proposal as this critical next phase begins.

Jim Mulhern

President & CEO, NMPF

 

 

Milk-Pricing Proposal Moves Forward as Dairy Leaders Unanimously Endorse NMPF Plan

Posted on by Theresa Sweeney

The National Milk Producers Federation’s (NMPF) Board of Directors unanimously endorsed a proposal to modernize the Federal Milk Marketing Order (FMMO) system today at its March meeting, a milestone that caps more than two years of discussion and more than 130 meetings on different aspects of the proposal.

The plan to reinvigorate the FMMO system that guides milk pricing reflects an industry that’s evolved significantly since the last comprehensive revamp in 2000. It’s a proposal all dairy can get behind, said Randy Mooney, chairman of NMPF’s board of directors and a dairy farmer from Rogersville, MO.

“After gathering dairy’s best minds and consulting with partners across the industry, today we are moving forward with a comprehensive FMMO proposal the entire industry can get behind,” Mooney said. “We look forward to leading a thorough, deliberative process as we submit this proposal to USDA and partner with our allies to modernize milk pricing in ways that serve dairy farmers and the entire industry.”

The board reviewed a package of changes initially developed and proposed by a task force of NMPF cooperative experts and later approved by the organization’s Economic Policy Committee. The adopted changes, listed here, reflects the industry’s evolution while benefiting the farmers who form the bedrock of U.S. dairy. With the board’s approval, NMPF’s next step is to move toward submitting the proposal to USDA as the basis for a federal order hearing while continuing conversations with other dairy stakeholder partners. NMPF President and CEO Jim Mulhern said the organization stands ready to assist farmers, the dairy industry and federal officials in any way it can as the process unfolds.

“We believe in a better future for this industry, and this proposal will help build that future,” he said.

Also speaking at the conference is House Agriculture Committee Chairman Glenn “GT” Thompson, R-PA, speaking on the farm bill expected in 2023 and other federal issues. NMPF looks forward to working closely with Chairman Thompson, a staunch ally of dairy farmers, to complete work on the 2023 farm bill and other matters.

NMPF’s board also welcomed new directors — Jacob Larson of Southeast Milk Inc., and Michael Lichte of Dairy Farmers of America – and released its annual report, highlighting the activities and accomplishments of the past year.

NMPF is the only nationwide organization devoted to advancing the interests of all dairy farmers of all sizes in all regions. A federation of dairy cooperatives, NMPF embodies the spirit of farmer self-help and community leadership.

Board members are also discussing:

  • The need to build upon an FDA proposal on plant-based beverage labeling that doesn’t go far enough to end the mislabeling of imitation products using dairy terms;
  • Industry leadership in animal care, environmental stewardship, and workforce development through the National Dairy Farmers Assuring Responsible Management (FARM) Program;
  • How sound policy can contribute to another record year of U.S. dairy exports; and
  • Potential farm-bill priorities.

The two-day conference concludes tomorrow.

NMPF Board Unanimously Backs Milk Pricing Package

Posted on by Theresa Sweeney

NMPF’s Board of Directors unanimously endorsed a proposal to modernize the Federal Milk Marketing Order system Oct. 25 at its annual meeting in Denver, following months of extensive deliberation on the future of federal milk pricing..

The Board reviewed a package of changes that were initially developed and proposed by a task force of NMPF cooperative experts and later approved by the organization’s Economic Policy Committee. The key recommendations are the result of more than 100 meetings of member and industry experts during 2022. The changes 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; and
  • Updating dairy product manufacturing allowances contained in the USDA milk price formulas.

The NMPF task force working on these issues still has to finalize certain pricing data involving an examination of Class I price differentials at the county level, work that’s expected to be completed later this year. A final proposal will be reviewed again by the organization before being submitted to USDA as the basis for a federal order hearing.

Economics: Advancing FMMO Modernization Through Analysis, Discussion

Posted on by Theresa Sweeney

Highlights

  • Provided backbone of FMMO economics analysis as NMPF guides industry to modernized pricing system
  • Focused industry communications to build consensus as FMMO modernization moves forward

Federal Milk Marketing Order modernization is a critical goal for NMPF members in 2022, with NMPF asserting leadership through its discussions with members and stakeholders on how to best craft solutions for farmers and the industry.

Economic analysis and guidance is the backbone of successful FMMO changes. The focus of FMMO modernization is the dairy product pricing formulas, which determine the federal order component and Class prices and thus constitute the foundation of the entire order system. The formulas need to provide accurate reflections of the real-world conditions under which the components of dairy farmers’ milk are actually transformed into such products, via such factors as producer milk composition, manufacturing costs, and product yields. These formula factors mostly have not been updated since 2000, while the dairy industry has evolved significantly.

About 20 federal order and milk marketing specialists from the staffs of NMPF member cooperatives, led by including Chief Economist Peter Vitaliano and Jim Sleper, a consultant and FMMO expert, are actively participating in this extensive effort, which so far has involved over 60 virtual and in-person meetings, with a goal of having a complete package of all pertinent recommendations for consideration and approval by the NMPF Economic Policy Committee and the Board of Directors at the annual meeting this fall. After that, NMPF will offer a comprehensive proposal to USDA to amend the orders, potentially leading to a national hearing on these issues in 2023.

In tandem with the policy analysis meeting, NMPF experts have worked with its member services staff on a series of hour-long Zoom webinars for membership to reviewed FMMO issues, giving participants the opportunity to pose questions, offer input and understand how task force recommendations may affect their respective cooperatives. NMPF staff also provided customized webinars to three cooperative members.

In addition to those virtual sessions, NMPF created a structured dialogue among state dairy organizations about major policy issues, including milk pricing, by organizing a state dairy association summit meeting on July 11-12 that gathered 45 farmers and executives from 22 state organizations in Chicago. Participants gained a deeper understanding of pressing public policy challenges affecting other regions and learned more about how national issues are being handled at the local level, in milk pricing and in areas both within and outside economics.

While FMMO work continues, the economics team continues to oversee the administration of the Cooperatives Working Together (CWT) program, a voluntary, marketing-focused export program, helping member cooperatives gain and maintain market share in the international market. The team’s work in administering the program includes recommending assistance levels, providing market insight and managing the dispersal of funds.

Finally, the team, which in July merged with USDEC economics staff to provide comprehensive analysis across the dairy spectrum, offered its economic and market insight through engaging with farmers, cooperatives, processors and the broader industry, through August delivering nearly 40 speaking engagements and 42 market publications in addition to many telephone conversations, Zoom meetings and in-person conversations throughout the year.