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Impending changes to US dairy pricing stir concern

Impending changes to US dairy pricing stir concern


By Jamie Martin

The ongoing reform of the Federal Milk Marketing Order (FMMO) by the USDA is drawing to a close, with recent developments causing a stir among stakeholders in the dairy industry. The reform process, initiated over a year ago, aims to revise how dairy products are priced in the United States.

During a recent comment period, which was one of the last opportunities for public input, various dairy cooperatives and processors proposed changes to the pricing formulas. The USDA reviewed 21 proposals and released its recommendations, which have been met with mixed reactions.

Key among the proposed changes is an adjustment to the Class I pricing formula, which could lead to higher prices for bottled milk. However, the proposed increase in make allowances— the amount deducted from milk value for processing—has raised concerns.

Critics argue that the make allowances, which are intended to cover processing costs, are based on biased survey data from smaller, higher-cost processing facilities, which may not accurately represent the industry's cost structure.

The USDA's final decision on these changes is anticipated by mid-November, after which dairy farmers and cooperatives will vote on the implementation of the new price formulas. If two-thirds of farmers in a market approve, the changes will take effect; otherwise, the order may be terminated based on long-standing USDA practice.

These developments highlight ongoing challenges and debates within the dairy sector regarding fair pricing and market competitiveness.

Photo Credit: gettyimages-digitalvision


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