Member Update: Milk Pricing Committee & FMMO Modernization

In 2020, the ODPA Board of Directors activated a Milk Pricing Review Committee to address the faults of the current milk pricing system and seek solutions that are acceptable industry wide. This has been no small task! The Board immediately recognized that for any Federal Milk Marketing Order (FMMO) changes to take place, the dairy cooperatives, representing nearly 80% of the milk marketed in the US, must be in agreement.  

With similar goals in mind, the National Milk Producers Federation (NMPF) – who represents dairy cooperatives across the nation – formed a FMMO Modernization Task Force. ODPA is grateful that NMPF leadership has openly shared their efforts and engaged with us along the way. In fact, NMPF staff and consultants shared their committee’s deliberations with the ODPA Board on October 10, 2022.

As a significant action toward achieving unity among dairy farmers and cooperatives, ODPA was pleased to participate in a Federal Milk Marketing Forum hosted by the American Farm Bureau Federation on October 14-16, 2022 in Kansas City. The forum brought together numerous voices who have often held conflicting opinions on what meaningful solutions should be to fix the current milk pricing system. Discussions focused on Class price formulas and de-pooling, among other topics.

Karl Wedemeyer, ODPA Board Member and Milk Pricing Review Committee Chair, attended the forum to represent Ohio’s dairy farmers. Karl stated:

“I believe that farmers came together in Kansas City to start moving the industry forward with changes that need to be made. There was a lot of agreement on moving back to the higher of Class I mover and keeping the federal orders in place. I was proud to help be the voice of Ohio dairy farmers at the meeting. I want to thank the American Farm Bureau Federation for holding the conference and for bringing farmers and industry leaders from across the industry to hold these tough but important conversations as we look to make changes to milk pricing.”

Last week during their annual meeting, NMPF leadership unanimously endorsed a proposal to modernize the FMMO milk pricing system. Their Marketing Order Modernization Plan is a proposal that:

•  Returns to the “higher of” Class I mover
• Discontinues including barrel cheese in the protein component price formula
• Extends the current 30-day reporting limit to 45 days on forward priced sales on Nonfat Dry Milk and dry whey to capture more exports sales in the USDA product price reporting
• Updates milk component factors for protein, other solids and nonfat solids in the Class III and Class IV skim milk price formulas
• Develops a process to ensure make-allowances are reviewed more frequently through legislation directing USDA to conduct mandatory plant-cost studies every two years
• Updates dairy product manufacturing allowances contained in the USDA milk price formulas

NMPF continues to work on the Class I milk price surface as it examines information on county-level Class I price differentials. That work is expected to be completed later this year. Any final proposal will be reviewed by the organization before it’s submitted to USDA to be considered for a federal order hearing.

ODPA will continue to participate in the dairy community’s ongoing FMMO modernization deliberations. We will also be hosting information sessions to give Ohio dairy farmers the opportunity to hear about the proposals and ask questions of milk pricing experts, NMPF and American Farm Bureau Federation representatives, and ODPA board members.

Once the dairy community has achieved unity on what updates must occur, ODPA will advocate to USDA leadership and US Congress to seek immediate FMMO modernization.

If you have questions, please contact Scott Higgins, ODPA CEO, at 614-560-5991.