Federal Milk Marketing Order Hearing Contention

In part two of the dairy industry check-in with National Milk Producers Senior Vice President of Membership Services and Governance, Chris Galen- he gives an update on the federal milk marketing order system reform process. Currently, USDA is holding a hearing in Indiana.

“Since they started, they have looked at the composition of milk and how to calculate that and the pricing formulas. They've looked at the various cheese products that are being included in assessing what is class three price which is based on cheese. And then right now what they're looking at are what's called make allowances or manufacturing allowances. And this is basically how much a processor keeps have a certain milk price to allow for the cost of turning raw milk into things like cheese, and it affects farmers checks. And so processors to no great surprise are arguing for larger make allowances in the future, that would give them a better margin. A lot of the farm groups are arguing against that.”

Another issue that is showing up as a point of contention is class one differentials.

“This is the amount of extra money that farmers get in their checks when they sell milk that gets bottled and the class one market and so we are advocating for higher class one differentials was really hasn't been changed in 20 years. I know that fluid milk processors are opposed to that quite severely.”

The hearing is expected to end in early October. However, Galen says if there is a government shutdown, that means a hearing would come to a pause.