A task force created by the largest U.S. farm group called on Wednesday for more democracy in the federal milk-marketing orders that guide dairy sales throughout the United States and for greater equity between producers and processors in a system that dates from the Depression. “All farmers should have a voice — and a vote — on changes to milk-pricing regulations,” said that the task force in recommending the elimination of bloc voting by the dairy cooperatives that dominate milk marketing.
The American Farm Bureau Federation organized the task force because of members’ concerns about low milk prices and dairy farms being forced out of business. Voting delegates will decide at the AFBF annual meeting in January whether to pursue marketing order reform with Congress and the USDA. The last major reform of marketing orders was nearly two decades ago.
By coincidence, the AFBF released its report a day after Agriculture Secretary Sonny Perdue said that dairy farms may have to get bigger to survive. Speaking at a dairy show in Wisconsin, Perdue said he believes the new Dairy Margin Coverage (DMC) subsidy “will help stem the flow” of farm closures. More than 22,000 farms are enrolled in the program. The National Milk Producers Federation said DMC payments have totaled $302 million so far this year. “That’s $302 million more than what farmers would have received under the MPP, which would have actually cost farmers money in 2019,” said the producers’ group, referring to the Margin Protection Program, the DMC’s predecessor and one of the failures of the 2014 farm law.
“We welcome the expression of all views on the Federal Milk Marketing Order program, an important program that helps provide orderly marketing of milk to advance producer and consumer interests,” said Jim Mulhern, chief executive of the National Milk Producers Federation.
Congress authorized the marketing order system in 1937 in one of the statutes that created the farm program. Marketing orders set a minimum price for raw milk in each region of the country. The system’s goals include assuring an adequate supply of milk for consumers at reasonable prices while supporting farm income and fair bargaining between producers and processors.
Currently, cooperatives — formed by groups of dairy farmers — can cast a bloc vote on behalf of members, which means individual farmers do not get a ballot. “The elimination of bloc voting will provide an opportunity for dairy farmers to vote on proposed changes to milk pricing and pooling provisions,” said the AFBF report. The working group said the threshold for passing a change in rules should be a two-thirds majority of farmers voting in the referendum and a two-thirds majority of the “voting milk volume.”
To improve risk sharing, the task force said the “make allowance,” a credit to processors for converting raw milk into a finished product such as butter or cheese, should be set as a percentage of the value of various dairy products. At present, it is a fixed amount, such as $2.67 per 100 pounds of “fresh” milk destined for grocery sales.
In addition, the task force said the USDA should expand its data collection efforts so that it will have more accurate information when determining the regulated value of milk and milk components. It also endorsed simpler milk-pricing rules in the U.S. Southeast.
Since the last major reforms to marketing orders took effect in 2000, the number of dairy farms has fallen by half and the number of cows per farm has doubled. During the same period, per capita consumption of dairy products has risen by 10 percent, thanks to demand for butter, cheese, and other products and ingredients, though milk consumption has plunged by nearly 30 percent, and exports, which had averaged 5 percent of annual production, have soared, reaching nearly 16 percent last year.
The report, “Priorities, Principles and Policy Considerations for FMMO Reform,” is available here.