Wisconsin Dairy Farmers Urged to Caution Amid Proposed FMMO Changes
Source: DairyNews.today
The Wisconsin Farm Bureau is urging dairy farmers to exercise caution as the U.S. Department of Agriculture (USDA) considers adjustments to the Federal Milk Marketing Order (FMMO) that could significantly impact their financial stability.
Central to these proposed changes is an increase in the "make allowance," a key element in the dairy pricing structure that compensates processors for converting raw milk into consumable products such as cheese.
The proposed increase in make allowances is intended to help processors cover rising costs, but it could also result in lower payments to dairy farmers. This is because the higher make allowance effectively reduces the price farmers receive for their raw milk, exacerbating the already tight profit margins many small-scale dairy farmers operate under. For these farmers, who are already navigating volatile market conditions, rising operational costs, and unpredictable weather patterns, a decrease in milk prices could be particularly devastating, potentially leading to farm closures or consolidation within the industry.
The Farm Bureau highlights that while the return to the "higher of" pricing formula for class 1 mover might offset some of the financial impact on processors, it does not fully address the financial losses dairy farmers have incurred since the pricing formula change in the 2018 Farm Bill. The restoration of this pricing formula merely returns the system to its pre-2018 state, without compensating for the billions lost by dairy farmers during the interim period.
Furthermore, the Farm Bureau warns that reduced profitability due to increased make allowances could stifle investment in new technologies, equipment, and practices that are essential for enhancing farm efficiency and productivity. Without the ability to invest in their operations, dairy farms could become more vulnerable to external shocks, such as adverse weather conditions or fluctuating market prices, further threatening their long-term viability.
As the USDA’s proposed changes move forward, Wisconsin dairy farmers will be faced with a critical decision in December: whether to accept the new Federal Order or to dissolve it altogether. In the meantime, the Wisconsin Farm Bureau is encouraging farmers to submit their comments to the federal registry, urging the USDA to reconsider the proposed increase in make allowances and to ensure that profitability is returned to dairy farms of all sizes.
The Wisconsin Farm Bureau’s message to dairy farmers is clear: your advocacy is essential. By voicing your concerns, you can help shape policies that ensure fair prices, equitable market practices, and the continued vitality of the dairy industry. As the USDA's proposed changes loom, it is more important than ever for dairy farmers to stand firm in demanding fair treatment and sustainable practices that support both their businesses and rural communities.
The proposed increase in make allowances is intended to help processors cover rising costs, but it could also result in lower payments to dairy farmers. This is because the higher make allowance effectively reduces the price farmers receive for their raw milk, exacerbating the already tight profit margins many small-scale dairy farmers operate under. For these farmers, who are already navigating volatile market conditions, rising operational costs, and unpredictable weather patterns, a decrease in milk prices could be particularly devastating, potentially leading to farm closures or consolidation within the industry.
The Farm Bureau highlights that while the return to the "higher of" pricing formula for class 1 mover might offset some of the financial impact on processors, it does not fully address the financial losses dairy farmers have incurred since the pricing formula change in the 2018 Farm Bill. The restoration of this pricing formula merely returns the system to its pre-2018 state, without compensating for the billions lost by dairy farmers during the interim period.
Furthermore, the Farm Bureau warns that reduced profitability due to increased make allowances could stifle investment in new technologies, equipment, and practices that are essential for enhancing farm efficiency and productivity. Without the ability to invest in their operations, dairy farms could become more vulnerable to external shocks, such as adverse weather conditions or fluctuating market prices, further threatening their long-term viability.
As the USDA’s proposed changes move forward, Wisconsin dairy farmers will be faced with a critical decision in December: whether to accept the new Federal Order or to dissolve it altogether. In the meantime, the Wisconsin Farm Bureau is encouraging farmers to submit their comments to the federal registry, urging the USDA to reconsider the proposed increase in make allowances and to ensure that profitability is returned to dairy farms of all sizes.
The Wisconsin Farm Bureau’s message to dairy farmers is clear: your advocacy is essential. By voicing your concerns, you can help shape policies that ensure fair prices, equitable market practices, and the continued vitality of the dairy industry. As the USDA's proposed changes loom, it is more important than ever for dairy farmers to stand firm in demanding fair treatment and sustainable practices that support both their businesses and rural communities.
