The dairy industry is changing rapidly, from consolidation among dairy farmers, dairy cooperatives and dairy processors, to shifts in consumer preferences from predominantly fluid milk to processed dairy products such as cheese, yogurt and butter. And if dairy policy is to evolve, dairy farmers need to be involved. The American Farm Bureau Federation released its final report on priorities for milk pricing reform, calling for more democracy and a more equitable program for dairy farmers.
Among AFBF’s priorities is amending the Agricultural Marketing Agreement Act to give dairy farmers an opportunity to directly vote on Federal Milk Marketing Order (FMMO) issues. Currently, only dairy farmers who are independent and not members of cooperatives may cast individual ballots. Cooperatives may allow their members to vote independently, but then lose their ability to bloc vote on behalf of their non-participating members. AFBF supports allowing modified bloc-voting, which would allow co-op members to vote independently and confidentially, while allowing cooperatives to cast ballots for farmers who choose not to cast an individual ballot.
A Farm Bureau Federal Milk Marketing Order Working Group, consisting of grassroot dairy farmer members, worked for a year to examine the system and develop recommendations to modernize the current FMMO system. Farm Bureau delegates voted to approve the group’s proposals.
“I appreciate all the work our members have done to give individual farmers a stronger voice in the milk pricing and pooling regulations,” said American Farm Bureau Federation President Zippy Duvall. “Farm Bureau has been outspoken on the disparities in the beef and hog markets, and we are just as concerned about the large imbalances in the pricing and pooling of milk — which ultimately cost dairy farmers hundreds of millions of dollars.
“Wild price swings during the COVID-19 pandemic have highlighted how important fair systems are to the well-being of America’s farmers and ranchers. By giving dairy farmers a seat at the table, we can begin addressing the challenges of the current FMMO system and work toward a more equitable compensation system for the hardworking men and women in the dairy industry.”
Although Federal Milk Marketing Orders have been a pillar of the dairy industry for more than 80 years, outside of the 2018 farm bill, the program has not undergone substantial change in almost two decades.
AFBF Chief Economist Dr. John Newton said, “COVID-19 has resulted in unprecedented volatility in agricultural markets, especially milk and dairy commodity prices. The price volatility, a record-large spread between prices for the various milk classes, mass de-pooling and record-large milk check deductions take money out of farmers’ pockets at a time when they desperately need it. Moreover, it highlights the urgent need for dairy farmers and the industry to collectively consider ways to modernize the FMMO system and improve prices paid to farmers.”
Other recommendations in the final report include expanding price discovery and examining alternative ways to price fluid milk and improve risk-sharing between farmers and processors.
To read a summary of the recommendations, click here. For a more in-depth look at recent disruptions to milk prices and record negative producer price differentials, click here for AFBF’s Market Intel.