Home News Ag Economics USDA Issues Recommended Decision Proposing Amendments to All Federal Milk Marketing Orders

USDA Issues Recommended Decision Proposing Amendments to All Federal Milk Marketing Orders

On July 1st, the U.S. Department of Agriculture (USDA) issued a Recommended Decision on its website proposing to amend the uniform pricing formulas applicable in all 11 Federal milk marketing orders (FMMOs). The Recommended Decision follows a 49-day national hearing held from August 23, 2023, to January 30, 2024, in Carmel, Indiana, where USDA heard testimony and received evidence on 21 proposals from the dairy industry.

The Recommended Decision puts forth a package of amendments to update formulas and factors based on the evidentiary record of the proceeding. More specifically, this decision recommends the following:

1) Milk Composition Factors: Update the factors to 3.3 percent true protein, 6.0 percent other solids, and 9.3 percent nonfat solids.

2) Surveyed Commodity Products: Remove 500-pound barrel cheddar cheese prices from the Dairy Product Mandatory Reporting Program survey and rely solely on the 40-pound block cheddar cheese price to determine the monthly average cheese price used in the formulas.

3) Class III and Class IV Formula Factors: Update the manufacturing allowances to: Cheese: $0.2504; Butter: $0.2257; NFDM: $0.2268; and Dry Whey: $0.2653. The Recommended Decision also proposes updating the butterfat recovery factor to 91 percent.

4) Base Class I Skim Milk Price: Update the formula as follows: the base Class I skim milk price would be the higher-of the advanced Class III or Class IV skim milk prices for the month. In addition, adopt a rolling monthly Class I extended shelf life (ESL) adjustment that would provide for better price equity for ESL products whose marketing characteristics are distinct from other Class I products. .

5) Class I differentials: Update the Class I differential values to reflect the increased cost of servicing the Class I market. The county-specific Class I differentials are specified in the decision.

Regarding this announcement, Greg Doud from the National Milk Producers Federation reflected, “An effort that took more than three years, more than 200 meetings, 49 days of a record-long Federal Order hearing, and countless hours of analysis and discussion were reflected in a recommended USDA plan for Federal Milk Marketing Order modernization that incorporates much of the comprehensive approach to improvements we advocated throughout. Yes, not every detail is exactly as we would have had it – we always knew that would be the case. And USDA’s plan isn’t set in stone – we take very seriously the comment period we will soon be in and plan a detailed response to this proposal. Our FMMO task force is meeting to discuss the plan next week; even as we speak, our staff and cooperative experts are putting pen to paper to better understand how various parts of the USDA plan will interact to affect dairy farmers and the cooperatives they own, as well as the broader industry. That’s all to say our work is far from over. But Monday’s decision was arguably the critical milestone in this process. And this industry – led by the member-owners of the nation’s leading dairy cooperatives – has many reasons to be heartened by the improvements USDA has proposed to the nation’s Federal Milk Marketing Order system.”

Looking ahead, Laurie Fischer from the American Dairy Coalition shared some concerns with the recommended decision. “Even though the draft decision appears to be responsive to dairy farmers, it does not treat all Orders fairly and could result in farmers voting “no” to the changes, only to discover that they’ve unintentionally voted out the individual Order in which they vote,” Fischer suggests. “We will take time to fully digest the draft decision and economic impacts and will be working to educate farmers on what the voting process is, who is eligible to vote, and what their vote means.”

Publication of the Recommended Decision in the Federal Register is anticipated in early July 2024, and will invite public comments on the recommended proposals. Once it is published, comments may be submitted at the Federal eRulemaking portal: http://www.regulations.gov. Comments may also be filed with the Hearing Clerk, U.S. Department of Agriculture, Room 1031-S, Washington, DC 20250-9200, fax number (202) 720-9976. All comments should reference the docket number and the date and page number of this issue of the Federal Register. All comments will be made available for public inspection in the Office of the Hearing Clerk during regular business hours or can be viewed at: http://www.regulations.gov.

Copies of the hearing notice may also be obtained from USDA/AMS/Dairy Program; STOP 0225 – Rm. 2530; 1400 Independence Avenue, S.W., Washington, D.C. 20250-0225.

Leave a Reply

Your email address will not be published. Required fields are marked *