USA 05.02.2024

Federal Milk Marketing Order Hearing Concludes with Urgent Plea for Class I Mover Adjustment

Source: The DairyNews
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The Federal Milk Marketing Order (FMMO) public hearing, which began on August 23, 2023, in Carmel, Indiana, wrapped up on January 30. This extensive national hearing spanned 12 weeks, featuring testimony and cross-examination as the U.S. Department of Agriculture (USDA) considered proposals to amend uniform pricing formulas across all 11 FMMOs.
 Federal Milk Marketing Order Hearing Concludes with Urgent Plea for Class I Mover Adjustment
Proposed amendments seek to update pricing formulas that have remained unchanged since the early 2000s, with advocates arguing for adjustments to reflect the evolving dynamics of the dairy industry over the past two decades. Mike Brown, Chief Economist of the International Dairy Foods Association (IDFA), emphasized the need for pricing policies that align with the modern marketplace.

In total, 40 proposals were submitted by industry stakeholders, with the USDA accepting 21 for consideration. The hearing, the longest-running in USDA history, featured over 50 dairy producer testimonies and extensive involvement from cooperative and industry representatives.

The next steps involve a two-week review period for the judge to certify the record, followed by the release of the transcript. Industry participants will then have 30 days to submit corrections and 60 days to file post-hearing briefs. The USDA will subsequently issue a recommended decision in the Federal Register within 90 days, initiating a 60-day comment period and another 60 days for the USDA to make a final decision.

If the proposed changes are approved, a referendum process will take place, requiring at least a two-thirds majority of eligible producers voting in favor. The entire process, from transcript publication to a potential referendum, spans 270 days, pushing any regulatory changes into 2025.

In a final plea, the American Farm Bureau Federation (AFBF) urged the USDA to expedite the implementation of the "higher-of" Class I mover formula on an emergency basis. The current Class I mover formula, implemented after the 2018 Farm Bill, has reportedly cost farmers significant losses. The urgency for Class I mover changes was echoed by Gregg Doud, President and CEO of the National Milk Producers Federation.

As the future of pricing formulas now rests with the USDA, industry stakeholders are hopeful for adjustments that align with the evolving dairy supply chain while avoiding unnecessary legislative complications. The implications of FMMO pricing regulations may also be influenced by the upcoming farm bill.
Aaron Smith
Aaron Smith
Professor of Agricultural and Resource Economics at the University of California
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Dr. Sylvain Charlebois
Dr. Sylvain Charlebois
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February 2024
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