Dairy Rule Changes Cost CA Farmers $55 Million in Three Months

If you’ve been following dairy policy, you know things have been quieter lately compared to last year’s big Federal Milk Marketing Order hearing. But the American Farm Bureau’s Market Intel just put out a new update, and it shows California farmers are definitely feeling the impact of USDA’s recent rule changes.

Since June 1, all but one of USDA’s amendments went into effect, and the early numbers are in. Higher make allowances, which are the built-in deductions for processing milk, have reduced what farmers take home. In just the first three months, dairy producers nationwide lost more than 337 million dollars in pool value. Here in California, that hit added up to about 55 million dollars, with class prices dropping around 85 to 92 cents per hundredweight.

While lower feed costs offered some cushion over the past year, the added pressure from these pricing changes could tighten margins if milk prices keep sliding. On the positive side, USDA’s return to the “higher-of” Class I mover offers better protection during volatile markets, and upcoming changes to milk composition factors are expected to add value back into the system.

You can find a link to the full Market Intel report at https://www.fb.org/market-intel/three-months-in-early-impacts-of-fmmo-amendments