Following a 49-day hearing that wrapped up in January, the U.S. Department of Agriculture has announced its recommended changes to the federal milk marketing orders.
“Family dairy farms are an economic driver for New York’s upstate and rural communities, and in order to support the viability of the state’s dairy industry, fair and effective changes to the Federal Milk Marking Orders are necessary,” said Keith Kimball, chair of Northeast Dairy Producers Association in a statement.
Kimball, a dairy farmer in Genesee County, said these recommendations are a step in the right direction, but he looks forward to seeing the entire proposal.
The federal milk marketing orders establish monthly uniform prices paid to dairy farmers by classifying milk by its end use, according to the USDA.
The classes are as follows: Class I is fluid milk; class II is milk made into soft products like ice cream, cream cheese, yogurt; class III is milk used to make hard cheese products; and class IV is milk used to make butter and dry milk products.
The recommendations from the USDA include:
Updating milk composition factors to 3.3% true protein, 6% other solids, and 9.3% nonfat solids;
Removing 500-pound barrel cheddar cheese prices from the dairy product mandatory reporting survey and relying only on the 40-pound cheddar cheese price to determine average cheese prices;
Updating the manufacturing allowances to cheese, butter, NFDM and dry whey;
Updating the class I skim milk price;
Updating the class I differential values to reflect increased costs of servicing this market.
President and CEO of the National Milk Producers Federation Gregg Doug said the organization is heartened by the recommendations.
“Crafting an effective milk-pricing system for farmers is complex and requires careful balance. USDA’s plan acknowledges that complexity and while not matching our proposal in every detail, looks largely in keeping with the comprehensive approach painstakingly determined by the work of dairy farmers and their cooperatives over the past three years,” Doud said in a statement.
The American Farm Bureau Federation has been calling for reform to the federal milk marketing orders since 2021.
“We are pleased with the intent to return the Class I skim milk price to the ‘higher-of’ formula as we called for. That said, we’re disappointed in changes that will benefit processors without regard for producers at a time when dairy farmers are struggling, and many have gone out of business. USDA missed opportunities to improve and update price formulas,” Zippy Duvall, president of the American Farm Bureau Federation, said in a statement.
Duvall said the USDA should not change “make allowances” without a mandatory audited survey of processors’ costs. Make allowances are the approximate costs that processors collect to make dairy products like cheese and butter out of raw milk.
“Our dairy farmers deserve fairness in their milk checks and transparency in the formula, but the milk marketing order system can’t deliver that unless make allowances are based on accurate and unbiased data,” Duvall said.
The USDA will accept comments on the proposal before releasing their final draft. Dairy farmers and industry stakeholders will then vote on the final proposal, which is expected in early 2025.