AFBF Urges USDA to Accept Petition for FMMO Hearing
The American Farm Bureau Federation is urging the U.S. Department of Agriculture to accept the petition of the National Milk Producers Federation for a long-overdue comprehensive Federal Milk Marketing Order hearing to ensure that consumers have access to fresh milk and dairy products while protecting dairy farmers from potentially harmful market conditions.
In a letter sent to USDA’s Agricultural Marketing Service, which oversees the FMMO program, AFBF President Zippy Duvall not only calls on USDA to hold a hearing on FMMO reform, but also asks the department to go further than a recent NMPF petition by asking for mandatory, audited surveys of dairy processors to be used when determining the make allowances factored into dairy pricing. The letter points out USDA’s authority to conduct a mandatory audit under the Agricultural Marketing Agreement Act.
This change and the need for additional reforms were part of a farmer consensus formed at the AFBF-hosted FMMO Forum held in Kansas City, Missouri, last October.
“We appreciate Secretary Vilsack’s call for industry to align around recommendations, and in direct response we gathered hundreds of dairy farmers from every corner of the country who were joined by cooperative leaders, processors, USDA and other active industry participants to discuss milk pricing issues productively and respectfully,” Duvall wrote in the letter. “Discussions spanned a wide array of topics including updating Class pricing formulas, reducing incentives to de-pool, adding transparency to payment methods, strengthening the farmer’s voice within referendums, and the general need to make the FMMO system operate effectively under current market conditions.”
The results of the FMMO Forum were used in the separate policy development processes of both NMPF and AFBF. In their petition, NMPF outlined four policy recommendations outside of make allowance updates, all of which are supported in principle by AFBF’s member-driven policy. The changes include the discontinuation of the use of barrel cheese in the protein component price formula, returning to the “higher-of” Class I mover, updating the 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 pricing surface throughout the United States.
A full hearing on FMMO reform would allow all parties with an interest in dairy pricing to come to the table and share ideas.
“Dairy farmers continue to face market challenges as part of the high-cost, high-risk times we live in,” Duvall wrote. “Trust is critical to maintaining an efficient and resilient federal order system that promotes orderly marketing of milk to consumers across the country. A comprehensive Class price hearing…could balance the needs of both the farmers who produce the milk and the processors who turn it into the dairy products we know and love.”
NMPF filed their petition on May 1. To read that petition, click here. To read the full AFBF letter, click here.
NMPF Proposal Highlights
- Return to "higher of" Class I mover
- USDA AMS data shows the current "average-of" mover underperformed the "higher-of" formula over the past 4 years by over $900 million.
- In September of last year, GMP's Board of Directors voted to support returning to the "higher-of" formula.
- Update skim milk component factors for protein, nonfat solids, and other solids
- NMPF Projected Impact: $0.55/cwt increase in Class I price
- Update make allowances for butterfat, nonfat solids, protein, and other solids
- NMPF Projected Impact: $0.50/cwt decrease in Class I Price
- Remove barrel cheddar from Class III pricing formula
- NMPF Projected Impact: $0.20/cwt increase in Class I price
- Update Class I Differentials
- Differential Increase of $2.15 in Atlanta, $1.9 in Orlando, $1.80 in Athens, TN, and $2.00 in Spartanburg
- *NMPF notes in its submission to USDA that most milk price increases or decreases would be seen in the short term and that market forces would eventually level out any changes in milk price.
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