The nation’s largest farm group is throwing its weight behind a petition the National Milk Producers filed with USDA to reform the federal milk marketing orders that regulate returns to processors and producers. 

American Farm Bureau Federation President Zippy Duvall said in a letter to USDA’s Agricultural Marketing Service Tuesday supporting NMPF’s May 1 petition that the “modernization of outdated elements of the FMMO system is long overdue to maintain confidence and trust by its participants.”

AFBF differed with NMPF on one issue having to do with updating estimates of processor costs. 

NMPF and AFBF both billed the former’s petition as a more comprehensive look at FMMO reform than the proposals submitted by the International Dairy Foods Association, which represents dairy processors, and the Wisconsin Cheese Makers Association. The processors’ petitions focused on the make allowances, the calculations of the costs to convert raw milk into finished products sold at grocery stores and restaurants.

The NMPF petition is a broader call for reform. In addition to make allowances, the 51-page document also calls on USDA to look into other pricing changes as well as changes to the nutrient components used to determine certain pricing formulas.

The Farm Bureau previously came out against the processor petitions, saying it had “grave concerns” with the narrow proposals. IDFA and NMPF, as the two lead dairy processor and producer groups in the country, have led much of the FMMO reform dialogue, but AFBF has also been active, including by convening a meeting of dairy industry stakeholders last fall in Kansas City.

Duvall, in his letter, said AFBF supports the bulk of NMPF’s petition, but believes that USDA already can act on its own to conduct necessary surveys of processor costs. 

Both IDFA and NMPF have pointed to a need for better data to determine make allowances, including through surveys of processors. NMPF said its petition "a more regular and systematic method for updating the make allowances" is needed and the organization planned to work with Congress to give USDA the authority to mandate “auditable cost and product yield data.”

Farm Bureau believes USDA already has the authority to do that without relying on voluntary surveys. 

“Fair and market-reflective make allowances are needed to effectuate the policy under which the federal order system operates; therefore, we believe, USDA currently has the ability to collect necessary cost and yield information needed to ultimately revise make allowances,” Duvall wrote.

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“The data collection process can begin concurrently with a comprehensive federal order proceeding on milk prices, and as part of the ultimate result of this proceeding,” he added.

Farm Bureau is leery of relying on voluntary surveys, Duvall noted, because “large efficient processors may decline to participate, which would bias the cost survey results upward.”

In a statement to Agri-Pulse, NMPF President and CEO Jim Mulhern said the group appreciated Farm Bureau's endorsement of its proposal.

“We have worked hard over the past 18 months to build consensus in the dairy producer community on the need for positive change to the FMMO system, and we are pleased to have the support of Farm Bureau in these efforts,” Mulhern said. “Their letter provides additional momentum to our proposal, which proposes needed updates in areas ranging from Class I fluid milk pricing to component calculations, all critical for the success of dairy farmers. We are looking forward to its full acceptance by USDA and the opportunity to proceed to a federal order hearing.” 

Once USDA receives a petition, it has 30 days to either deny the petition, request more information, or initiate an action plan that could include an eventual FMMO reform hearing.

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