Dairy Organizations Call for Changes to the Federal Milk Marketing Order System

Thursday, April 29th, 2021 -- 8:00 AM

(Wisconsin Ag Connection) Those negative producer price differentials that cut into dairy producers' profits last year when milk prices were on the rise are prompting a number of dairy organizations to call for changes to the Federal Milk Marketing Order system.

According to the Wisconsin Ag Connection, on Tuesday, the Dairy Business Association, Edge Dairy Farmer Cooperative, Minnesota Milk and Nebraska State Dairy Association held a press conference to explain the proposed Class III Plus concept, which aims to build upon the current pricing system.

"Our proposal looks to the future. It would make lasting changes to the milk pricing system that will limit negative PPDs in the future and the possible negative effects from future crises," said DBA President Amy Penterman.

The revised order would tie the Class I fluid skim milk price to the Class III cheese skim milk price, and do away with advanced pricing. The proposal is also revenue-neutral, making it more equitable among farmers, processors and customers.

Penterman says the recent call by cooperatives within the National Milk Producers Federation for an emergency FMMO hearing includes a proposal that improves a few components of the current pricing structure, but largely focuses on the short term and revenue that farmers did not earn in 2020.

"They said Class III Plus provides a way for farmers to recoup, over the next four years, some of the revenue they might have missed out on in 2020, and also creates stability going forward, including protection from negative PPDs and better risk management ability," she said.

Meanwhile, the groups also say NMPF's proposal would likely result in requests for additional FMMO hearings and more changes just two years from now, causing further disruption and potentially jeopardizing the entire order system.

Other elements of the Class III Plus concept include improving risk management and hedging for dairy farmers and processors, stops the disassociation of advanced pricing that can cause negative producer price differentials, does not increase prices to customers in the long term, and focuses on being a long-term fix to several existing milk pricing problems, and not just correcting issues of the past 24 months.

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