Dairy Marketing Services (DMS), the marketing arm of Dairy Farmers of America (DFA), has given about 225 independent milk producers in the Mideast federal milk marketing order (FMMO) until Nov. 30, 2017 to decide on their future milk marketing options.
The Mideast FMMO covers all or large portions of Michigan, Indiana and Ohio, as well as western Pennsylvania, West Virginia and Kentucky.
The milk marketing options were outlined in a May 15 letter from DMS Mideast chief operating officer Bill Cummings to independent producers in the six states. Similar to provisions offered earlier this year to independent producers marketing milk through DMS in the Northeast FMMO, the Mideast producers will receive a six-month termination notice, during which time they can join DFA or seek alternative marketing options.
Read: DMS outlines 19-month ‘safe harbor’ for Northeast independent producers
Independent producers unable to find alternative markets by the end of the six-month period may join DFA for one year under two special terms:
• the producers have the option to not pay capital retain (equity).
• producers may terminate DFA membership at any time with a 30-day prior written notice.
As in the Northeast, a milk supply-demand imbalance in the Mideast order is driving the DMS relationship with independent producers. The trend is expected to continue into 2018.
Milk supplies in the Mideast order are growing at a rate ahead of the national average, with increases of more than 4 percent in some states, according to Cummings. This supply-demand imbalance has placed the entire milk marketing system in the eastern U.S. under processing capacity and marketing stress. The costs incurred in balancing surplus milk have skyrocketed while premiums received from customers have fallen and consumer demand, particularly for fluid milk products, has softened appreciably.
Under federal order payment rules, the balancing costs to move or dispose of pooled excess milk can only be spread across co-op members, while independent producers receive the full FMMO blend price.
Temporary milk dumping policy implemented
Earlier this spring, the Mideast became the second federal order to implement a temporary policy for pooling milk dumped at the farm or other non-plant location.
Pool handlers requested the policy for milk dumped during the spring flush and summer holiday period. The policy is in effect May 1 through July 31 to address surplus milk conditions.
Under the policy, milk must be picked up at the farm, measured and sampled for payment prior to being dumped. The Mideast market administrator must be notified as soon as practical when the milk is dumped. Milk handlers utilizing the temporary policy may not depool any of their milk for pricing reasons during the month of the request. 
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Dave Natzke
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- Progressive Dairyman
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