Tag: milk prices

Dairy Will Seize Generational FMMO Opportunity

Posted on by Alan Bjerga

USDA has moved forward on our request by announcing an “action plan,” and we at NMPF are pleased that the formal process of modernizing Federal Milk Marketing Orders is now officially underway.  The department’s plan announced last Thursday moves us toward the national federal order hearing we’re seeking, giving dairy a generational chance to update this important program to better reflect today’s market conditions and dairy producer needs.

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. That’s a testament to the careful work put into this effort over two years and more than 150 meetings. But it also means that the next steps will require the same level of dedication and preparation, if not even more.

Once USDA conducts some preliminary steps (providing opportunity for additional proposals; holding a pre-hearing workshop) and sends out its hearing notice – likely late July – the stage is set for the hearing, which could begin as early as August and take 6-8 weeks. Once all the testimony is considered, USDA would be on track to put forward a final plan for a producer vote in 2024. Assuming that’s successful, implementation would begin late next year.

That’s assuming everything goes smoothly, which, in this broad and varied industry, is always a big assumption. But as dairy producers have proven throughout this process, with unity and careful attention to each other’s needs, impressive things can be done.

To work through this next stage as smoothly as possible, we plan to stick with the formula for success that’s served us well since the beginning. The principles we’ve followed include:

  • An approach grounded in thorough research and deliberation. Our meticulous, consensus-driven efforts allowed us to craft a proposal that comprehensively addresses today’s milk-pricing needs. As we prepare for a USDA hearing, that same commitment to substantive research over mere posturing will be critical. Fortunately, we’ve been working with many of the industry’s top economists and analysts to guide our approach. Their work will be key in the hearings to addressing complex issues such as Class I differential pricing, the make allowance or the return to the “higher-of.”
  • A devotion to consensus. We’ve focused on measures that unite the nation’s producers, and we will continue to advocate for solutions tailored to broad benefit rather than narrow, specialized self-interests. When disagreements have arisen, we’ve invariably worked toward, and achieved, consensus among producers. During our many meetings, if a proposal couldn’t attract a strong majority of support, we dropped it and moved on, always making sure that our members were lined up behind anything that moved forward. While this meant no one likely got exactly what they wanted, in the long run our proposal is stronger because it reflects the collective consensus of dairy producers serving markets nationwide.
  • An understanding that failure – or a focus on one single aspect of the program— is not an option. The need to comprehensively update a system built for the dairy industry of 23 years ago has always been obvious. Now that we’re moving toward a hearing, giving anything less than maximum attention and support is not an option either; nor is arriving at a final decision that producers won’t approve, a case we will make clearly and cogently in the hearing process. At this point the need for program modernization isn’t only established: a comprehensive approach to meeting it has been unanimously adopted by representatives of two-thirds of the nation’s milk supply and the added support of numerous other state, regional and national organizations with dairy producer members. This effort can’t, and won’t, be thrown into reverse. It needs to be brought to a successful conclusion, with the same spirit of consensus that brought us here.

With these principles in mind, we are about to embark on the next phase. This has been a heavy lift, and it’s far from complete. But we’re excited for the formal hearing process to begin. Deep thanks and appreciation to everyone who has contributed to and supported this journey so far. Additional opportunities to advance this effort and successfully see it through will be plentiful in the months ahead.

 

Jim Mulhern

President & CEO, NMPF

 

NMPF’s Bjerga on Growing Momentum for FMMO Modernization

Posted on by Alan Bjerga

 

NMPF Senior Vice President of Communications Alan Bjerga discusses how the support of the American Farm Bureau Federation is a powerful statement of farmer consensus for NMPF’s Federal Milk Marketing Order modernization plan currently before USDA. Bjerga also talks about the industry’s active discussions on fighting misinformation about dairy, in an interview with RFD-TV’s Christina Loren.

A Critical Moment Arrives on the FMMO Scene

Posted on by Alan Bjerga

By Jim Mulhern, President and CEO, NMPF

Jim Mulhern, NMPF President and CEO

The march to milk-pricing modernization reached another milestone this month, as the National Milk Producers Federation (NMPF) submitted to USDA our comprehensive proposal for Federal Milk Marketing Order (FMMO) reform.

After more than 150 meetings over nearly two years, a strong consensus has emerged among producers and our allies for changes that hold benefits for farmers of all sizes, in all regions, and for the broader industry that, together with producers, serves wholesome, nutritious products to consumers 24 hours a day, seven days a week.

A lot of work has gone into this effort. We have examined the program in great detail and came up with a plan that modernizes and updates Federal Milk Marketing Orders so they can work better for today’s dairy industry.

Some key highlights:

  • Returning to the “higher of” Class I mover.
  • Discontinuing the use of barrel cheese in the protein component price formula.
  • Updating milk component factors for protein, other solids, and nonfat solids in the Class III and Class IV skim milk price formulas.
  • Updating the Class I differential price system to reflect changes in the cost of delivering bulk milk to fluid processing plants.
  • Updating dairy product manufacturing allowances contained in the USDA 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.
  • Extending the current 30-day reporting limit to 45 days on forward-priced sales on nonfat dry milk and dry whey to capture more export sales in the USDA product price reporting.

The first five of these are part of our proposal before USDA. We’re seeking the make-allowance review via the farm bill and the forward-pricing plan through separate federal rulemaking.

The components work together

It’s important to note how much the elements of our proposal rely on one another to succeed. Take the make-allowance, for example. It hasn’t had a meaningful update in 15 years. It’s a key priority of our hearing request, and it’s of intense interest to some. But it still needs to be addressed in a way that benefits all. 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.

That’s why we have the make allowance issue in our proposal, but one that’s included along with 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.

Modernizing the Federal Milk Marketing Order system has been due for some time; the pandemic experience, which exposed fault lines in the system, underscored just how necessary this effort has been and created the impetus for change. We’ve been deliberate in our approach because we wanted to make sure that we addressed the concern that Agriculture Secretary Vilsack stated well over a year ago when he said it was important to have consensus within the producer community.

We have achieved that consensus, and we believe we have sent USDA a strong signal — both in the thoroughness of our proposal and our depth of support among producers — that our comprehensive proposal is the proper basis for FMMO hearings and a path toward modernization.

And we’ll need to maintain that consensus throughout the process. As we move forward toward a hearing, we’ll continue listening to any concerns and providing any information that’s helpful for progress. Please don’t hesitate to write to the special address we’re using so that staff can respond to your questions. Thank you for your help and support.

This column originally appeared in Hoard’s Dairyman Intel on May 11, 2023.

New FMMO Will Work Better for Farmers, Mulhern Says

Posted on by Alan Bjerga

 

NMPF President and CEO Jim Mulhern says the industry need a modernized Federal Milk Marketing Order that works better for dairy farmers, in an interview with the National Association of Farm Broadcasters. “We’re really excited that is a plan that will point a way toward a much brighter future for us dairy industry,” Mulhern said.

NMPF’s Mulhern Explains FMMO Modernization

Posted on by Alan Bjerga

NMPF President and CEO Jim Mulhern explains the importance of modernization to the Federal Milk Marketing Order system and the benefits it hold from farmers to consumers in an interview with AgriTalk, a daily national conversation about the latest issues impacting agriculture and rural America. NMPF’s proposal to update the system, which governs milk pricing, is currently before USDA.

 

NMPF’s Bjerga Discusses Benefits of Milk-Price Modernization

Posted on by Alan Bjerga

 

NMPF Senior Vice President of Communication discusses how the Federal Milk Marketing Order Modernization plan the organization submitted to USDA this week would create a firmer foundation for the U.S. dairy industry, with farmers being paid a price that better reflects the quality of their milk and sharing their price risk more equitably with processors. Ultimately, once needed updates are fully in place, everyone will benefit from milk that’s valued appropriately across the industry, he said. Bjerga speaks with Mike Pearson on the Agriculture of America podcast.

DMC Margin Posts Another Sizeable Drop in February

Posted on by Theresa Sweeney

The Dairy Margin Coverage (DMC) program will pay $3.31/cwt for $9.50/cwt coverage in February, based on a margin of $6.19/cwt that month. This was $4.70/cwt less than the margin last November. A milk price drop of $1.50/cwt from a month earlier and a $0.25/cwt rise in the DMC feed cost formula combined to lower the February margin by $1.75/cwt from its level in January.

Available forecasts currently indicate that the monthly DMC margins are close to bottoming out for the year, at around $6.00/cwt in a month or two, followed by a slow rise that will not likely top $9.50/cwt until the fourth quarter. This year will return many times the cost of this very affordable means of managing margin risk.