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  • ZISK

Alternative Proposals to the Higher-of Are a Win for Dairy

In the analysis of the recent Federal Milk Marketing Order (FMMO) hearing, one major piece of information has been overlooked: the Class I Mover proposals submitted by the Milk Innovation Group (MIG) and International Dairy Foods Association (IDFA) would have paid dairy farmers on average between 35-40 cents more per cwt than the National Milk Producers Federation “higher-of” proposal over the past two years. Over time, the NMPF, IDFA, and MIG proposals result in roughly equal payments to dairy farmers.

For years, dairy producers and processors have been discussing proposed regulatory changes to ensure the FMMO system better reflects contemporary market realities. Since the last major FMMO changes implemented in 2000, American consumer preferences have shifted to the point where total cheese consumption has increased by 58% while fluid milk consumption has declined by 23%. Other major shocks including COVID-19, supply chain challenges, fuel prices, and high inflation have impacted all of dairy from the farmer and processor to the end customer, whether retail or wholesale, foreign or domestic.

To prepare for the FMMO hearing, dairy stakeholders conducted market and economic research and developed proposals to improve the current system. During the hearing itself, USDA examined that data and analysis with the assistance of witness testimony under oath and before an Administrative Law Judge. Years ago, Congress established this legal procedure to ensure USDA sets FMMO regulations based on thoroughly reviewed facts, economic data, and market principles that would best serve the dairy industry and their consumers. At the direction of the Secretary, the USDA considered six different proposals to update the base Class I skim milk price, or the Class I mover. The dairy processors submitted two proposals, and both suggested changing the mover. Dairy processors agree with farmers that the Class I mover needs updating.


February 26, 2024



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