Bylsma on Federal Milk Marketing Order Hearings

At National Farmers Convene ’24, dairy consultant and authority on the Federal Milk Marketing Order System Dick Bylsma, updated members on the FMMO hearings that began last year. Changes are important to dairymen, because they set the stage for how milk is marketed well into the future.

Bylsma complimented the National Milk Producers Federation and its two years of work to develop proposals for USDA’s consideration. Many other organizations also submitted proposals.

There were 22 proposals that USDA allowed to be considered at the hearings, which essentially boil down to five areas: milk composition, surveyed commodity products, Class III and Class IV formula factors/make allowances, base Class I skim milk price, and Class I and Class II differentials.

“If all of National Milk proposals were implemented by USDA as they are proposed, it would add $1.7 billion to dairy farmer income,” Bylsma said. “I took an informal survey of six people who were involved in writing proposals for the hearing process, and virtually everyone agreed NMPF’s proposals are likely the direction USDA will take,” Bylsma emphasized.

The income increase for farmers is broken out in five following areas:

• • Milk composition adds $382 million to farmer income.
  • Surveyed commodity prices adds $687 million.
  • Class III and Class IV formula factors/make allowances takes $721 million.
  • Base Class I skim milk price adds $725 million.
  • Class I and Class II differentials adds $628 million under one proposal but decreases $656 million under another proposal.

Another proposed change is to revert back to using the higher of the Class III and IV milk prices to set the skim milk price, rather than using the average of the two. “Using the higher price, rather than the average, would have returned $2.7 billion to farmers over the last five years,” Bylsma noted.

Bylsma said the only bad news he could report is that it could be mid to late 2025 until USDA’s approved proposals may be implemented. “We need the Federal Milk Orders to evolve at the same rate as the industry,” Bylsma concluded.