The USDA held a 49-day Federal Milk Marketing Order hearing and listened to hundreds of hours of testimony, which resulted in reform proposals released last week. Roger Cryan, chief economist with the American Farm Bureau, says the changes have some positives.
“It increases the value returned to farmers for bottling milk through increases in the location values and some formula adjustments, but most important, it restores the higher of the cheese or butter powder values in the bottling milk price instead of the average plus price formula that was used since 2019. And there’s some not so good stuff. The biggest issue is there’s substantial reductions in all the class prices to allow for higher processing costs, and the problem with that is that we don’t really have good data to demonstrate higher processing costs.”
Cryan says a couple of key Farm Bureau ideas didn’t make it into the USDA proposal.
“We thought there was a really good argument to increase the differential on the Class Two milk, which is the milk used to produce a whole variety of products, and that would have meant millions of dollars for farmers. USDA disagreed with that. We thought it was important to add 640-pound blocks of cheddar cheese to the product price survey that sets the cheese milk price, because in five or 10 years, there won’t be enough 40-pound blocks to set a fair price. And USDA disagreed with that.”
A comment period is open on the final rule, and Cryan said Farm Bureau will be submitting a number of ideas.
“Those will be due probably by the middle of September. The USDA will put out a rule probably in the middle of November, and that’ll be voted on by producers and co-ops. In the meantime, farmers can call their members of Congress to get a new farm bill as soon as possible, because every version of the Farm Bill that we’ve seen includes an audited mandatory survey of processors costs, and that data could help us get these make-allowances straight, and hopefully get some of that money back to farmers.”