Benefits and Consequences of Raising "Make Allowances" for Milk Processors

Sunday, August 18th, 2024 -- 9:00 AM

(Blake Jackson, Wisconsin Ag Connection) The new Federal Milk Marketing Order's proposal to raise "make allowances" for milk processors sounds good on the surface.

According to Blake Jackson with the Wisconsin Ag Connection, these allowances compensate processors for converting raw milk into cheese, yogurt, and other products. However, the potential consequences for dairy farmers, particularly small-scale ones, are concerning.

Higher make allowances could translate to lower milk prices for farmers. This adds another layer of stress to an already challenging profession. Farmers grapple with volatile markets, unpredictable weather patterns, and ever-rising operational costs.

Reduced milk prices due to increased make allowances could push many farms to the brink, potentially leading to closures or further industry consolidation. This not only harms farmers and their families, but also weakens rural communities by decreasing food security and causing agricultural land loss.

he financial strain doesn't stop there. Lower profits also limit farmers' ability to invest in new technologies and practices that could improve efficiency, productivity, and overall farm sustainability. This lack of investment hinders long-term growth and makes farms more vulnerable to future shocks, like extreme weather or fluctuating market prices.

While it's important for processors to receive fair compensation to remain operational, a balance needs to be struck. Higher allowances create market imbalances and threaten the very viability of dairy farms.

The USDA's Order 30 should strive to ensure a fair and equitable distribution of profits across the entire dairy industry. This fosters a healthy and sustainable agricultural sector that benefits both farmers and processors alike. Wisconsin dairy farmers have a critical decision to make in December.

They can either accept the proposed changes or dissolve the Federal Order altogether. Additionally, Wisconsin farmers should actively voice their concerns by submitting comments to the federal registry, urging the USDA to lower the make allowance and prioritize farm profitability across all sizes.

Feel free to contact us with questions and/or comments.