On Jan. 30, the Federal Milk Marketing Order (FMMO) public hearing came to a close.
The national hearing, which took place in Carmel, Indiana, began back on Aug. 23, 2023, and included 12 weeks of testimony and cross-examination as the USDA considered proposals seeking to amend the uniform pricing formulas applicable in all 11 FMMOs.
The previous revisions to the uniform FMMO pricing formulas were made in the early 2000s, and proponents contend they should be amended now to reflect the significant changes that have occurred in the dairy industry and milk marketing in the last two decades.
“Today’s pricing policies are out of step with the modern marketplace. As our industry continues to evolve and become more efficient, we must have policies in place that position U.S. dairy for the future without being hamstrung by outdated regulations,” said Mike Brown, chief economist, International Dairy Foods Association (IDFA) in a statement released this week.
In total, 40 proposals to modernize milk pricing were submitted by industry stakeholders, and the USDA accepted 21 of those proposals for consideration during the hearing.
Since August, more than 50 dairy producers testified either in person or virtually, and many more cooperative and industry representatives were involved in what became the longest-running hearing in USDA history.
What’s next?
After the hearing concluded on Tuesday, the judge has two weeks to review and certify the record. Once certified, the transcript of everything said on record will be made available by the USDA.
Then, the industry will be granted 30 days or less to submit corrections to the transcript of testimony and 60 days to file post-hearing briefs.
Following that, the USDA has 90 days to issue a recommended decision in the Federal Register. That’s followed by a 60-day comment period and another 60 days for the USDA to develop their final decision.
Combined, the steps listed above add up to 270 days between when the hearing transcript is published and when a referendum may occur.
The referendum process is when producers are able to approve the federal order(s) as amended or reject the proposed changes.
To modify a FMMO, at least a two-thirds majority of the eligible producers voting in the referendum, or the eligible producers who supply more than two-thirds of the milk represented in the referendum, must vote in favor of the order as amended.
If producers reject the final rule, the USDA has a precedent of terminating the order completely. This means instead of returning to the order regulations that were in place before the hearing, the order and its regulations cease to exist altogether.
If approved by producers, the amendment(s) to the order(s) is published in the Federal Register as a final rule. The publication of the final rule announces when the amendment(s) become effective and concludes the rule-making process.
The schedule puts any likelihood of milk pricing regulatory changes into 2025.
Final plea for urgent Class I mover updates
As the last witness of the hearing process, American Farm Bureau Federation (AFBF) economist Danny Munch read a letter sent to USDA Secretary of Agriculture Tom Vilsack urging the agency to issue a final decision on an emergency basis to speed the implementation of the “higher-of” Class I mover formula.
“The comprehensive process of amending federal orders, though important, means dairy farmers remain stuck with current pricing regulations until USDA publishes a final rule,” Sam Kieffer, AFBF vice president of public policy, said in the letter.
Kieffer added, “The current Class I mover was a well-intentioned policy misstep that has reduced dairy farmers’ checks, with little relief in sight. Emergency implementation of the ‘higher-of’ Class I mover formula will help buffer against persistent losses associated with mistaken and outdated policies that have left dairy farmers struggling to make ends meet.”
Gregg Doud, president and CEO, National Milk Producers Federation, acknowledged the necessity of complex analysis by the USDA and industry groups to develop a proposal that serves diverse farmer needs well, but echoed the need for Class 1 mover changes.
“We’ll continue to advocate for badly needed changes in areas such as the Class I mover,” Doud said in a statement. “The current formula has cost farmers 1.2 billion dollars in losses since its implementation after the 2018 Farm Bill, with additional losses expected in the coming months. It needs to change back to the previous ‘higher-of’ formula that served farmers best.”
Farm bill implications
With the next farm bill still in development, it should be noted that any language passed in a future farm bill related to FMMO pricing regulations will supersede the hearing process (i.e., if a switch back to the higher-of was included in the farm bill).
IDFA’s Brown noted the future of these pricing formulas is now up to the USDA.
“After weeks of testimony and cross-examination, USDA must now follow through on its mandate to update a federal order system that serves a diversifying and integrating dairy supply chain without putting these complex issues on the shoulders of legislators, which would unnecessarily complicate efforts to pass a new farm bill and create significant uncertainty for dairy businesses,” Brown said.
