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

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

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.