Dairyman says Organic Doesn’t Fit Well Under the FMMOs

Modernizing the Federal Milk Marketing Orders is an important topic of conversation in the U.S. dairy industry. However, the organic dairy industry says the FMMOs are in desperate need of changes. Adam Warthesen, director of government and industry affairs for the Organic Valley Cooperative in Wisconsin, says organic milk doesn’t fit into the four classes of milk listed under the FMMOs.

“Organic, we’re highly-indexed in Class One, so we end up paying into that pool every year, and sometimes that ranges from a couple million to several million. The challenge for a cooperative like us is that we’re already paying farmers the organic premium, which kind of nationwide looks at about $31. So, the fact that there are regulated minimums that move up and down and that they require a co-op like us that is owned by farmers to pay into an obligated fund that has draws in the Class Three or Two or even Four doesn’t quite square because our farmers never taking advantage of that. And they’re being paid above those minimum pricing requirements that are captured in the orders.”

Organic milk also lacks another advantage under the system.

“The grand bargain for processors to be part of this – if you’re a mandatory prisoner of Class One – is that you can call on the orders for milk if you’re short, and the market administrator will divert it from going to a Class Three to you then, a Class Three processor of cheese, for instance. It would then come to bottling. But in organic, we can’t call on the orders ever to service a short that we might have. We’re not well-fit to take advantage of that grand bargain. We have to be doing our own balancing and our own management in that way.”

He says the co-op is in a tough financial position because it already pays farmers above the regulated minimums mandated by the FMMOs.

“For us, it feels like we’re subjugated to a tax. Those are resources we’d rather pay to our own dairy farmers or investments we’d make into our own business operations to help position us all for the future of my owners.”