Federal Milk Marketing Order: Impact on Dairy Industry

The Federal Milk Marketing Order (FMMO) plays a pivotal role in the regulation of milk prices across the United States, influencing the economic landscape for dairy producers nationwide. Established to stabilize market conditions, the FMMO sets guidelines that determine how milk is priced and classified, affecting both producers and buyers within the industry.

Financial Indicators

For November 2025, the FMMO reported a notable decrease in Uniform Milk Prices (UMP), dropping below the $20 per hundredweight mark in several regions. This decline is a continuation of a pattern observed throughout the year, challenging the profitability and financial stability of dairy producers. The primary factor behind this drop is the interaction between component values and inter-class differentials, specifically the negative or narrowing Producer Price Differential (PPD), which has contributed to the reduced prices in the market.

Significant Events

The decline in milk prices is significant for the dairy industry, as it directly impacts the financial health of producers. The ongoing adjustments in component values and PPDs underscore the complex nature of milk pricing under the FMMO system. A critical development in this context is the sharp decrease in the Class I base milk price. The FMMO announced that, starting in 2026, the Class I base milk price would be set at $16.35 per hundredweight, marking a $1.86 drop from December 2025 and a $4.03 decrease compared to the same period the previous year.

Modified: 2026/01/08

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