As dairy producers, we make dozens of decisions all day, every day. From products and protocols to capital investments and new hires, everything has an impact. At Professional Dairy Producers (PDP), we believe lifelong learning includes gleaning information and insights from peers and experts – and that these habits are key to making decisions that boost your operation’s productivity, profitability and peace of mind for the future.

One of the biggest decisions in decades is on the horizon for U.S. dairy producers. The USDA released its recommendations to change pricing provisions in the 11 Federal Milk Marketing Orders (FMMOs) in July, with a potential producer vote on these changes later this year or early 2025. These recommendations mark the first update in product price formulas since 2008, so it is as critical a decision as any other change one might choose to make on their farm. Staying informed on the process and its potential implications will be paramount.

The USDA announced a review of FMMO in spring 2023, and the recommendations were released after months of input and 49 days of hearings with witnesses and experts from across the industry. The official version of the recommended decision was published July 15, 2024 in the Federal Register. The deadline for comments was Sept. 13, 2024. After the comment period, the USDA will have 60 days to develop the final rule, which dairy producers will vote on in a referendum.

The recommended decision proposes amendments to five categories of milk pricing, including milk composition factors, surveyed commodity products, Class III and Class IV formula factors, base Class/skim milk price, and Class I and Class II differentials, with the intention of updating formulas and factors in response to industry changes over time.

“Changes are being made in response to the overall changes we’re seeing in the industry and the costs of transforming milk into different products. This is not a small thing for people to consider,” says Dr. Charles Nicholson, associate professor in the department of animal and dairy sciences and agricultural and applied economics at the University of Wisconsin – Madison.

PDP is working with leading experts in dairy pricing and policy to provide opportunities for everyone in the dairy industry to learn about the recommendations and their potential impact.

“Dairy’s pricing system and the milk marketing orders can be complicated and overwhelming, which is why PDP is working to bring some of the leading experts together to answer questions and share information in a variety of ways,” says Shelly Mayer of Slinger, Wisconsin, dairy producer and executive director of PDP. “Our goal is to ensure that producers have all the information they need to make informed decisions for the future of their operation and the industry that we all love.”

The final referendum will not be a vote between accepting the recommended changes or staying with the current system. Instead, it will be a vote to either accept the recommended changes or completely eliminate the FMMO of which each producer is a member.

Dr. Mark Stephenson, retired from UW – Madison as director of dairy policy analysis, emphasized that the pricing changes are the most pressing considerations for producers, but they should also consider all the additional aspects of what FMMOS do within the pricing and marketing system.

In addition to establishing minimum regulated milk pricing, the FMMOs are also responsible for verifying tests of milk components to ensure farmers are paid for the proper component levels in milk, for auditing milk and components received, providing market information and administering the Producer Settlement Fund and Somatic Cell Count Adjustment. The FMMOs also take in the funds for the dairy checkoff programs.

“Make sure you ask yourself, ‘Even if I don’t like some of the changes, am I better off with the Federal Order or without it?’” Stephenson says. “That is the simple vote: ‘Do I want to go out and market that milk by myself?’”

Dairy cooperatives also play a critical role, as many dairy producers are represented in the voting process by their cooperative. Understanding how members of your cooperative will be reviewing the final referendum and how your voice can be heard is also important.

“This is an opportunity to get involved in your co-op’s process,” Nicholson says.

To stay informed about the implications of the proposed FMMO changes, take advantage of opportunities to learn more:

• Watch the two-part series of The Dairy Signal webinar featuring Dr. Charles Nicholson, associate professor, department of animal and dairy sciences and agricultural and applied economics, University of Wisconsin – Madison; Dr. Christopher Wolf, E.V. Baker professor of agricultural economics, director of land grant programs, Cornell University; and Dr. Mark Stephenson, retired from UW – Madison as director of dairy policy analysis.
• Tap into recorded sessions of the Sept. 18 National Summit on the USDA's Proposed Changes to Milk Pricing under Federal Milk Marketing Orders. See PDP's website for more details.
• Read informational letters written by Nicholson, Wolf and Stephenson about key elements of the proposed changes online.

This column is contributed by Professional Dairy Producers (PDP), the nation’s largest dairy producer-led organization of its kind. PDP focuses on producer professionalism, stakeholder engagement and unified outreach to share ideas, solutions, resources and experiences that help dairy producers succeed.