FMMO hearing concludes: What's next?

Trade bodies including the National Milk Producers Federation and the International Dairy Foods Association have reacted to the conclusion of the Federal Milk Marketing Order (FMMO) hearing, which was held from August 23, 2023 until January 30, 2024 in Carmel, Indiana.

Gregg Doud, president and CEO of NMPF, said the organization spent more than two years preparing for the hearing, and its efforts had paid off. “Our proposals…reflect farmer unity and a good-faith effort to build industry consensus. After five months, 12,000 pages of testimony, and almost two dozen separate proposals considered, our plan remains the most comprehensive, coherent, and compelling framework for modernizing a system that’s badly in need of improvement. We look forward to working with USDA and the entire industry in the weeks and months to come, noting that any plan USDA designs will by necessity require complex analysis to result in a proposal that serves diverse farmer needs well.

“In the meantime, we’ll continue to advocate for badly needed changes in areas such as the Class I mover. The current formula has cost farmers $1.2bn in losses since its implementation after the 2018 farm bill, with additional losses expected in the coming months. It needs to change back to the previous ‘higher-of’ formula that served farmers best. The higher-of responds quickly to the marketplace, it helps farmer cash flow, it’s simple to understand, and it would have no real impact on processors who are using the formula to boost their immediate balance sheets, not manage future risk as they claim. 

“Dating to NMPF’s first internal discussions, our path toward FMMO modernization is now nearly three years old. This final year is the most critical. We are excited to continue our leadership in this critical area, and will, as always, fight for the best approaches to ensure that dairy farms prosper.” 

Mike Brown, chief economist at IDFA, said pricing policies were ‘out of step with the modern marketplace’ which ‘is defined by robust, innovative supply chain that relies more and more on products like cheese, yogurt, dairy-based health beverages and powders, frozen treats, and value-added fluid milk’. “Forty proposals were submitted by stakeholders to USDA for consideration,” Brown explained. “Of those, USDA accepted 21 to be included in the hearing process, including two by IDFA - one requesting that USDA update make allowances which are woefully out of date after nearly 20 years of increasing manufacturing costs, and a second proposal on Class I milk pricing that puts more dollars into the pockets of dairy farmers than they would receive under the ‘higher of’ mover while allowing dairy processors to effectively manage price risk. Throughout the process, IDFA has remained constructive, offered fact-based testimony, and has continued to encourage USDA to make necessary reforms that allow US dairy producers and processors to compete and win in a global marketplace.”

The American Farm Bureau Federation (AFBF), in a letter addressed to agriculture secretary Tom Vilsack, urged policymakers to adopt emergency implementation of the previous higher-of Class I mover formula “to buffer dairy farmers from further losses during this comprehensive and extensive regulatory amendment process”.

AFBF said in a statement: “We support: revisions to the FMMO, including fluid milk pricing, progress through the normal channels at USDA that will provide thorough economic analysis and public hearings for producers to be engaged, rather than through legislative override. However, given the circumstances of the Class I mover changes in the 2018 farm bill, we support returning to the Class I milk mover formula to the higher of Class III or IV in the most expedient manner possible.”

What’s next?

Now that the hearing has concluded, interested parties have been given a deadline to file correction to the transcript of testimony.

After that, interested parties may file proposed findings and conclusions and written arguments or so-called brief, by 4:30pm Eastern Time on April 1, 2024.

No later than 90 days after that – which comes to June 30​ at the latest - USDA is expected to issue a recommended decision or ‘tentative final decision’, which will be published in the Federal Register.

Further comments and exceptions to the recommended decisions may then be filed with the USDA hearing clerk 60 days after the decision has been published in the Federal Register.

And 60 days after that deadline, the regulator will issue its final decision, then hold a referendum to allow producers to approve the Federal order or reject the proposed changes.

If approved by producers, the amendment(s) to the order(s) are published in the Federal Register as a final rule. The publication of the final rule announces when the amendment(s) become effective and concludes the rulemaking process.