By Jamie Martin
Starting June 1, long-awaited updates to the Federal Milk Marketing Orders (FMMO) are now in effect. These changes are designed to modernize how milk prices are calculated and better reflect today’s dairy market.
The FMMO system exists to ensure fair payment for dairy farmers by setting minimum prices that milk handlers must pay. It was originally created to prevent unfair pricing practices and stabilize milk markets across 11 regional orders in the United States.
The newly adopted reforms include a return to the “higher-of” formula to calculate Class I milk prices.
This means farmers will now receive the higher value between Class III and Class IV milk prices, helping to protect against fluctuating market conditions.
Additionally, Class I differentials have increased in most regions to account for higher transportation and service costs, providing better local support for fluid milk production.
Another key change is the removal of barrel cheese from the protein pricing formula, which is expected to help correct long-standing discrepancies in how protein values are calculated for dairy producers.
These reforms reflect the industry’s need for a more accurate and relevant pricing system. The outdated formula no longer matched the realities of current dairy production and trade.
The revisions aim to bring more balance and fairness to milk pricing across all regions.
Some unknown factors could influence the full impact of these reforms, especially given ongoing global trade and supply challenges. While the updates are a positive step, market dynamics may still affect how much farmers benefit in the short term.
These changes mark a significant effort by the USDA to support dairy producers and ensure stable, fair milk pricing moving forward.
For more information, the USDA website offers detailed guidance on the new FMMO framework.
Photo Credit: gettyimages-dimasobko
Categories: National