USA – The United States Department of Agriculture’s Agricultural Marketing Service (AMS) has proposed significant updates to the pricing formulas for all 11 Federal Milk Marketing Orders (FMMOs). 

This announcement comes after a comprehensive review process that included a 49-day national hearing in Carmel, Indiana, and the examination of over 12,000 pages of testimony and 21 proposals.

The Recommended Decision introduces several fundamental changes to reflect current market conditions and ensure fair pricing. 

Among the proposed updates, milk composition factors have been adjusted, setting true protein at 3.3%, other at 6.0%, and nonfat at 9.3%. 

Additionally, the AMS recommends removing the 500-pound barrel cheddar cheese prices from the Dairy Products Mandatory Reporting Program survey and using only the 40-pound block cheddar cheese price to determine the monthly average cheese price. 

This change aims to simplify the pricing system and provide a more accurate reflection of market prices.

Manufacturing allowances for cheese, butter, nonfat dry milk (NFDM), and dry whey have also been revised. 

Furthermore, the butterfat recovery factor has been updated to 91%, and changes have been proposed for the base Class I skim milk price formula and Class I differentials to enhance pricing equity and better reflect the costs associated with serving the Class I market.

Industry leaders have reacted with cautious optimism. Gregg Doud, president and CEO of the National Milk Producers Federation, expressed satisfaction that the USDA’s proposal aligns closely with the industry’s policy development efforts over the past three years. 

Tim Trotter, CEO of the Edge Dairy Farmer Cooperative, acknowledged the need for a detailed analysis of the 332-page document but appreciated AMS’s thorough effort in consolidating the extensive data and testimonies.

The USDA’s Recommended Decision will be published in the Federal Register in early July 2024, opening a public comment period. This phase is crucial, as it allows stakeholders to provide feedback before making a final decision. 

Following the comment period, a farmer vote will be organized to determine the acceptance of the proposed changes, with the vote expected to occur in early 2025.

Lucas Sjostrom, Edge Managing Director, emphasized the importance of the upcoming publication and the subsequent feedback period, marking a critical timeline for the dairy industry to actively engage with the proposed changes. 

The industry is poised to enter a new pricing transparency and fairness era, provided the proposed updates receive broad support and are successfully implemented.

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