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Federal Milk Marketing Order Hearing Report -- Week 8

The proposal to update and raise Class I differentials in all 3,100 counties of the continental United States by National Milk Producers Federation (NMPF) was the topic consuming the three full days of testimony this week. The hearing is now on pause until Monday afternoon, November 27, when it will pick up right where it left off and continue for another two weeks (providing there is not a government shutdown). NMPF’s line up of witnesses includes separate testimony from nearly 20 people, all of whom have some expertise on this issue. The way this works is that witnesses read prepared testimony, and then are subjected to cross examination on their testimony from anyone in attendance.

As you might imagine, the processors do not want to pay any more for milk and their attorneys are grilling a number of the cooperative witnesses. Jeff Sims from Lone Star Milk Producers was the chairman of the NMPF task force that developed the Class I differential proposal, and he had the responsibility to give the introduction and justification of the proposal. His prepared testimony was 51 pages, which you can read here.

After he read his prepared testimony into the record, he was cross examined for 6 hours by one processor attorney alone. Mr. Sims spent nearly 12 hours on the witness stand over the better part of three days. Mr. Sims held up well, as did the other NMPF witnesses this week.

Calvin Covington again testified on the specifics of the Florida and Southeast market. Dr. Eric Erba, from Dairy Farmers of America in Ohio, someone who we know well from the 10 years he spent as a dairy economist for the California Department of Food and Agriculture and 10 years he spent as a senior Vice President for California Dairies, Inc., testified about proposed changes in the Mideast part of the county. He also had the task of detailing producers’ costs to create and maintain a Grade A permit for their dairy. Federal Milk Marketing Orders only cover Grade A milk and the cost to maintain a Grade A license is relevant to the establishment of an appropriate Class I Differential. He testified with detailed justification that the ongoing cost to maintain a Grade A license is $1.46 per cwt. As you can imagine, Eric was cross examined for hours as well, including being quizzed on the cost of maintaining a toilet facility for the milking barn, which is part of the Grade A requirement. Dr. Erba did a great job under intense pressure. You can read his testimony here.

Rob Vandenheuvel, Senior Vice President of Member and Industry Relations at CDI (and former General Manager of Milk Producers Council), also testified. He covered the specifics of the Class I differential changes being proposed for the Western U.S. He too was subjected to cross examination, but was able to finish before the end of the day on Wednesday. Rob also made his father proud. You can read his testimony here.

There are still about a dozen NMPF witnesses to go with this proposal. Then there will be rebuttal witnesses. Following that will come Proposal 20 by the Milk Innovation Group to reduce all the current Class I differentials by $1.60. And finally, Proposal 21 by the American Farm Bureau, which seeks to raise the Class II differential from $0.70 cents to $1.56, will be heard.

USDA has indicated that they have facilities lined up for two weeks of testimony when the hearing resumes. They would like to get finished by then. If they don’t get finished, they will recess again and start back up in 2024.

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