The National Milk Producers Federation (NMPF) submitted its comprehensive proposal for modernizing the Federal Milk Marketing Order (FMMO) system, May 1.
“Dairy farmers and their cooperatives need a modernized Federal Milk Marketing Order system that works better for producers,” said NMPF President and CEO Jim Mulhern. “By updating the pricing formulas to better reflect the value of the high-quality products made from farmers’ milk, by rebalancing pricing risks that have shifted unfairly onto farmers, and by creating a pathway to better reflect processing costs going forward, we are excited to submit this plan as a path toward a brighter future for dairy.”
Upon official acceptance, USDA’s Agricultural Marketing Service (AMS) will have 30 days to review the plan and decide whether and how to move forward with a federal order hearing to review the plan. Mulhern urged the USDA to grant a hearing on the entire NMPF proposal, noting how the effectiveness of some components are dependent on the inclusion of others.
Highlights of the plan include:
- Updating dairy product manufacturing allowances (the “make allowance”) contained in the USDA milk price formulas
- Discontinuing the use of barrel cheese in the protein component price formula
- Returning to the “higher-of” Class I mover
- Updating milk component factors for protein, other solids and nonfat solids in the Class III and Class IV skim milk price formulas
- Updating the Class I differential price system to reflect changes in the cost of delivering bulk milk to fluid processing plants
Read also: USDA seeks more information on processor FMMO petition; NMPF proposal expected soon
NMPF will pursue two other components of its FMMO proposal outside of the federal order hearing process, as they don’t involve changing federal order regulations. The recommendations, which remain essential parts of NMPF’s modernization plan, are:
- Extending the current 30-day reporting limit to 45 days on forward-priced sales on nonfat dry milk and dry whey to capture more exports sales in the USDA product price reporting, which can be implemented through federal rulemaking
- Developing legislative language for the farm bill to ensure the make allowance is regularly reviewed by directing the USDA to conduct mandatory plant-cost studies every two years
Long process ahead
Although the NMPF proposal has been nearly 18 months in the making, there’s still a long process ahead. The potential timeline is laid out in the Agricultural Adjustment Act (see “Hearing timeframes,” beginning on page 458 [7 U.S.C. 608c]).
Under those guidelines, the AMS has not more than 30 days to either deny, issue an action plan or request additional information on the NMPF petition. If AMS issues an action plan, it must complete a hearing within not more than 120 days (early October). Interested parties then have up to 60 days after the hearing (early December) to file post-hearing briefs. After reviewing the hearing and post-hearing testimony, the AMS has not more than 90 days to issue a recommended decision (early March 2024).
Interested parties then have 60 days (early May 2024) to file comments on the recommended decision. After reviewing comments, AMS has 60 days (early July 2024) to issue a “final” decision and schedule a producer referendum. However, there’s no specific timeline or deadline for a referendum.
If approved in a referendum, AMS then announces when the FMMO amendments are effective. Based on the timeline summarized above, that could be late summer or early fall of 2024.
