A Long Way to Go: Ag industry takeaways from the Federal Milk Marketing Order hearings

The American Farm Bureau Federation (AFBF) Economist Danny Munch explains why the group requested an emergency implementation of the switch back to the higher-of Class 1 formula.

After more than 40 days of testimony, the Federal Milk Marketing Order hearings have wrapped up in Carmel, Indiana.

The American Farm Bureau Federation (AFBF) offered the final piece of testimony. AFBF Economist Danny Munch shared why the group requested an emergency implementation of the switch back to the higher-of Class 1 formula:

“Back in the 2018 Farm Bill, there was a stipulation that included a switch from the higher-of Class Three and Four skim milk price to the average-of Class Three and Four skim milk price. What that’s done in the recent years is — to move the benefit between two prices, and in times where the price spread is less than $1.48, it benefits producers. But, in periods where the spread is more than $1.48, it creates negative pool losses which results in lower milk checks.”
AFBF Economist Danny Munch

Munch says farmers have seen significant pool losses recently due to high spreads between the Class Three and Class Four prices.

The National Milk Producers Federation is also pushing for the previous system to go back into effect, or really any vehicle that can help get this changed for dairy producers.

As far as the federal order, Munch says there is still a long way to go in the reform process.

“This is only step five in a 12-step process, so we still have a lot of days left in this process. Stakeholders still have to submit post-hearing briefs, so we’re looking at months and months until a chance for any changes for dairy farmers to see will come into fruition.”
Danny Munch, AFBF Economist

The Farm Bureau says, each month the process goes on will open up farmers to more negative pool losses due to the average of Class 1 mover formula.

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