For over a month now, leaders in the dairy industry have been providing testimony on how to update the Federal Milk Marketing Order. The American Farm Bureau (AFB) recently joined the chorus of voices, with AFB Chief Economist Roger Cryan testifying in favor of a significant change—the removal of Class One and Two milk from the advanced pricing formula.
The AFB’s argument revolves around the contention that advanced pricing has disrupted milk marketing and created unfair conditions for farmers. Their proposed solution involves announcing class prices simultaneously, aiming to bring greater transparency and fairness to the market.
Another group, Farm First, also testified during the proceedings, emphasizing the need to address manufacturing costs, often referred to as make allowances. This aspect plays a crucial role in the pricing formula, determining the value of milk components and, consequently, milk prices. Members of Farm First, including cooperative members and proprietary plants, have witnessed reductions in prices and premiums. These reductions are attributed to plants covering their marginal costs when procuring milk.
Jeff Lyon, the general manager of FarmFirst Dairy Cooperative, testified on manufacturing costs and the impact on farmers. He highlighted the price reductions resulting from plants covering their marginal costs when procuring milk.
The hearings, which began in late August, are expected to continue through the middle of October. Following the conclusion of the hearings, the USDA will compile all the testimony and make a recommendation sometime in the coming year.
