Proposed Changes Threaten Fairness in Dairy Policy

Changes to Federal Milk Marketing Orders being considered by USDA could hurt farmers the FMMO system is designed to protect. The American Farm Bureau Federation delivered that message in comments sent today to Agriculture Secretary Tom Vilsack. Farm Bureau President Zippy Duvall emphasized the analysis in a follow-up letter to Mr. Vilsack as well.

“The FMMO system relies on fairness and transparency, and we fear some of these changes could disrupt the balance that ensures producers and processors both benefit from the system,” wrote President Duvall. “Producer trust in this system depends on its fairness and the help it provides in balancing the terms of trade between farmers and processors. If the system does not reward that trust, it is at risk.”

Proposed changes that present serious concerns include the lack of an adjustment to the Class II differential, the introduction of a new milk class for extended shelf life (ESL) milk, and the delayed implementation of updated milk composition factors, which would undermine the economic viability of dairy farmers nationwide.

Of most concern are the large recommended increases in make allowances. “We understand that price formulas should allow for the true costs of dairy manufacturing, but the current proposals are based on biased, voluntary and incomplete survey data. They do not provide a reliable foundation for such significant changes,” Duvall wrote.

AFBF is encouraged by several of the proposed recommendations including the return to the “higher-of” Class I base price, increases in Class I differentials, updates to milk composition factors, and the removal of 500-pound barrels from the National Dairy Products Sales Report.

To read AFBF’s comments on proposed amendments to Federal Milk Marketing Orders, click here.

To read President Duvall’s letter to USDA, click here.