FMMO Changes in Effect As Of June 1

June 1, World Milk Day and the start of National Dairy Month, also marked the end of a multi-year process NMPF initiated and led, with the official implementation of the Final Rule to update Federal Milk Marketing Order pricing formulas.

As of this month, the “higher-of” Class I price mover for most (non-ESL) milk has been restored; dairy product make allowances and Class I differentials nationwide are updated, and barrel cheese is no longer being used to determine the Class III price. A final part of the Rule, to increase the component composition factors for skim milk in all FMMO price classes, will be implemented Dec. 1 to avoid disrupting existing risk management positions.

NMPF successfully argued for these necessary updates in five specific proposals presented at a record-long FMMO hearing from late summer 2023 to early winter 2024. The arguments all flowed from the fundamental principle that FMMO product price formulas must evolve with the changing structure of the dairy industry to properly fulfil their role of accurately translating dairy product prices into milk values embodied in the orders’ classified prices.

USDA not only validated this principle in the Final Rule – it also established a blueprint that will make it much easier to keep the pricing formulas updated in the future, ensuring the FMMO pricing system will never again get as outdated as it has been prior to next week.

NMPF’s exhaustive efforts began in 2021 and included more than 200 meetings to formulate the proposal among NMPF leaders and experts, along with coalition building across agriculture.

A separate “15A” legal proceeding filed earlier this year against the FMMO system by several organic milk companies that are seeking to exempt organic milk from the system does not affect the implementation.