The USDA has finalized significant updates to the Federal Milk Marketing Orders (FMMO) that will affect dairy pricing nationwide. Dana Coale, Deputy Administrator of USDA’s Agricultural Marketing Service Dairy Program, emphasized the importance of these changes. She says, “This is a positive step forward in modernizing milk pricing to better reflect today’s market conditions.”
Key Updates
The updates focus on five main areas:
- Make Allowances: Adjustments were made to the allowances for processing costs in price formulas for Classes III and IV milk.
- Cheese Survey Adjustments: Barrel cheese was removed from the product formula used to calculate minimum prices.
- Class I Differentials: The pricing method for skim milk in Class I products returned to the “higher of” formula. For extended shelf-life products, the average price plus 74 cents will apply.
- Milk Composition Factors: Changes were made to better align formulas with the composition of milk.
- Industry Data Input: The changes were based on industry feedback, including over 12,000 pages of testimony and input from 65 producers.
“These updates reflect months of careful analysis and industry participation,” Coale explained. “They aim to enhance market stability and provide clarity for producers and processors alike.”
Impact on Dairy Farmers
The changes will take effect in two phases:
- June 1, 2025: Pricing updates, including make allowances, will be implemented.
- December 1, 2025: Composition factor changes will follow.
Dairy farmers are encouraged to review their risk management strategies ahead of these dates.
Market Stability and Next Steps
These reforms are expected to improve transparency and offer supply chain predictability. “The rulemaking process provides assurances for milk prices, which helps both producers and processors plan effectively,” Coale noted.
The USDA also recognizes the importance of ongoing industry dialogue. “We know this is not a perfect solution, and there are regional and national issues still to address,” said Coale.
Acknowledgment of Industry Participation
Coale concluded with gratitude for the industry’s input: “We appreciate the 65 producers who testified during the hearings. Their voices were crucial in shaping these updates.” She encouraged producers to stay informed by contacting their local market administrators.
