The Value of Federal Milk Marketing Orders
By Dick Bylsma
I’ve spent my life in the dairy business. I’ve worked as an auditor, managed a milk bottling and a cheese plant, and now I have the privilege to serve as your national sales director. My work in each of these positions, as different as they are, has had one thing in common—understanding the Federal Milk Marketing Order System is critical to business success.
Here at National Farmers, the Federal Milk Marketing Order System plays an important role in marketing your milk. Here’s a good example: FMMOs set the date that payments for milk must be made. Because of that, we hardly ever have to negotiate terms of payment with buyers because the industry standard is to pay on the FMMO due dates.
Our price negotiations with buyers are more efficient thanks to FMMO component and class pricing for milk. For instance, a 50,000-pound load of 4.5 percent butterfat milk will generate 6,140 pounds of cheese; the same size load of 3.5 percent milk will only generate 4,790 pounds. The necessary adjustments when loads are sold happen automatically because of FMMO pricing.
We also benefit from the FMMO system due to their audit verification work. FMMO staff verify all dairy sales on pooled milk and also check all payments to farmers and verify that the weights and test are accurate. Any disputes between buyers and sellers can therefore be resolved by impartial experts at FMMO offices.
I’m hearing all sorts of proposals to update and change the FMMO system. I’m sure you are too. As we evaluate those proposals, let’s not forget what is at stake. The FMMO system is, when you get right down to it, the set of rules that determine how well we can do in the dairy marketing game.
