NMPF calls for modernizing federal milk pricing formulas

By Andi Anderson

The National Milk Producers Federation (NMPF) emphasizes the urgency of modernizing federal milk pricing formulas to align with the current realities of the dairy industry. Established in the 1930s, the Federal Milk Marketing Order (FMMO) system aimed to incentivize farmers to produce higher-quality milk. Over time, advancements in animal care, science, and technology have significantly improved milk quality and nutritional value.

While the adoption of multiple component pricing in 2000 rewarded farmers for milk protein content, many federal order pricing formulas have remained unchanged since then. This stagnation fails to reflect the structure of today's dairy industry, disrupting incentives crucial for dairy's success.

For instance, Class I differentials, designed to ensure processors receive fresh milk for fluid milk products, have not been updated nationwide since 2000. Similarly, make allowances in federal order product price formulas, intended to cover the cost of converting raw milk components into finished products, have gone unadjusted for a generation. This lack of updates hampers both farmers and processors, hindering the industry's growth.

The dairy industry has evolved significantly, with nearly all milk production meeting Grade A standards. However, outdated federal formulas fail to adequately reward farmers for their efforts and investment in quality improvement.

NMPF stresses the importance of updating federal milk pricing formulas to reflect current industry dynamics. The enhanced quality and availability of American milk are the result of farmers' hard work, deserving recognition and fair compensation.

As dairy continues to evolve, it's crucial that federal pricing mechanisms adapt to support farmers and ensure the industry's sustainability. Learn more about NMPF's efforts to modernize milk pricing formulas and support dairy's success.

Photo Credit: National Milk Producers Federation