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National Milk Producers Federation Agrees on a Path Forward for Updating FMMO

Updated: Dec 1, 2022

Geoff Vanden Heuvel

Director of Regulatory and Economic Affairs

This past week National Milk Producers Federation, which represents most of the dairy farmer-owned cooperatives in the country, announced that its Board of Directors unanimously voted to propose a set of adjustments to the Federal Milk Marketing Order (FMMO) formulas. NMPF plans to submit these recommendations to USDA for consideration in a FMMO hearing sometime next year.

In a press release, NMPF noted it had conducted more than 100 meetings with its members and others in the industry as they developed this proposal. Milk Producers Council participated in a meeting in Chicago with more than twenty other state dairy associations in July where NMPF presented where they were at that time, which is consistent with what they announced this week.

These are the main points NMPF put forward:

· Returns to the “higher of” Class I mover;

· Discontinues including barrel cheese in the protein component price formula;

· Extends 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;

· Updates milk component factors for protein, other solids and nonfat solids in the Class III and Class IV skim milk price formulas;

· Develops a process to ensure make-allowances are reviewed more frequently through legislation directing USDA to conduct mandatory plant-cost studies every two years; and

· Updates dairy product manufacturing allowances contained in the USDA milk price formulas.

A couple of weeks ago the American Farm Bureau (AFB) hosted a national dairy meeting, and after that event, a joint statement from NMPF and AFB stated the following:

We support the federal milk marketing order (FMMO) system as key to fair market-based farmer milk pricing and recognize the importance of periodically updating the program to reflect changes in the dynamic U.S. dairy industry. With the last major update to the FMMO system occurring in 2000, we believe it is time to consider improvements that better reflect today’s milk markets.”

For California producers, the implementation of a Federal Milk Marketing Order has had a very significant and positive impact on mailbox milk prices in California as compared to the California mailbox milk prices under the previous State Order.

USDA Mailbox Milk Price Data Series Average California mailbox milk price since beginning of CA FMMO November 2018 to July 2022 (45 months) $18.63 per cwt. Average National FMMO mailbox milk price since the beginning of the CA FMMO November 2018 to July 2022 (45 months) $18.65 per cwt. Difference = $0.02 per cwt. Average California mailbox price in the last 45 months of the State Order February 2015 to October 2018 $15.29 per cwt. Average National FMMO mailbox price in the last 45 months of the State Order February 2015 to October 2018 $16.49 per cwt. Difference = $1.20 per cwt.

Over the 45 months since California implemented the FMMO, producers have seen a $1.18 per cwt. improvement in the California mailbox milk price. That is real money.

Clearly the FMMO program is of great benefit to California producers and we look forward to working with NMPF and AFB in consideration of improvements to strengthen the program to assure it continuance for the long-term.

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