Pierre, SD, USA / DRGNews
May 19, 2021 | 9:00 AM
Five Midwestern dairy groups evaluating solutions to federal milk pricing issues recently sent their comprehensive focus to Agriculture Secretary Tom Vilsack.
The groups seek a broad scope of focus should there be a Federal Milk Marketing Orders emergency hearing about reform. In April, the groups announced a proposal called Class III Plus, aimed at creating long-term stability in fluid milk pricing and reducing the likelihood of negative producer price differentials. Class III Plus would tie the Class I price to the Class III skim milk price plus an adjuster and do away with advanced pricing.
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Marin Bozic, a University of Minnesota dairy economist, holds a glass representing Class I, or fluid, milk. In the Federal Milk Marketing Orders, high-value fluid milk is generally used to subsidize pay to farmers in the other three milk classes, represented by the other three glasses. But as fluid milk consumption declines, there s less milk to pour into the other cups, causing problems for the producer price differential.
Screenshot by Philip Gruber
Midwest dairy groups are calling out a national proposal for updating the federal milk pricing system after the COVID-19 pandemic wreaked havoc on farmers’ milk prices in 2020.
Last week, the National Milk Producers Federation called on the U.S. Department of Agriculture to hold an emergency hearing to adopt their plan for changing the pricing formula for beverage milk.
The national cooperative group said the current formula contributed to disorderly marketing conditions last year during the height of the pandemic and cost dairy farmers over $725 million in lost income.
But the Dairy Business Association and Edge Dairy Farmers Cooperative, both based in Green Bay, teamed up with Minnesota Milk Producers Association and the Nebraska State Dairy Association this week to release their own proposal for pricing under Federal Milk Marketing Orders, or FMMOs.
4 hours ago in Agriculture Photo: WNAX
Four Midwest Dairy groups are offering an alternative proposal to a change to the Federal Milk Marketing Orders. That’s in contrast to one proposed by the National Milk Producers Federation. John Holevoet, Government Affairs Director for the Dairy Business Association says their Class III plus plan ties the Class 1 milk price to the Class 3 milk price.
He says their Class III plus plan calls for a set adjuster and an end to advance pricing.
Minnesota Milk Producers Association Executive Director Lucas Sjostrom says by tying Class 1 to Class 3 price, that’ll also be beneficial for cheese plants.