(WASHINGTON D.C.) — On Thursday, the U.S. Department of Agriculture (USDA) Agricultural Marketing Service (AMS) announced a final rule amending the uniform pricing formulas applicable in all 11 Federal milk marketing orders (FMMOs). The final rule was made available for viewing on Jan. 16, 2025, in the Federal Register and on AMS’s National Federal Milk Marketing Order Pricing Formula Hearing webpage. It will be published in the Federal Register on Jan. 17.
The final rule follows a 49-day national hearing held from Aug. 23, 2023, to Jan. 30, 2024, in Carmel, Indiana, where AMS heard testimony and received evidence on 21 proposals from the dairy industry. AMS issued a recommended decision on July 1, 2024, followed by its publication in the Federal Register on July 15, 2024, which began a 60-day public comment period.
Gregg Doud, President and CEO of the National Milk Producers Federation thanked USDA and the dozens of farmers and cooperative leaders who successfully steered Federal Milk Marketing Order modernization to a successful conclusion.
“Dairy farmers and cooperatives have done what they do best – lead their industry for the benefit of all,” said Doud. “This final plan will provide a firmer footing and fairer milk pricing, which will help the dairy industry thrive for years to come. We appreciate the monumental contributions across government and the dairy industry that made this happen. The industry, and all dairy consumers, owe all of you a debt of gratitude.”
The rule will be effective June 1, 2025 (which is actually World Milk Day) for all changes, except for changes to the skim milk composition factors. The amendments to skim milk composition factors will be implemented Dec. 1, 2025. These changes will apply to milk marketed on and after these dates, as applicable, and those changes will be reflected in both the advanced prices and pricing factors released before the start of the month and the class and component prices announced after the close of the month.
This final rule announces that producers in each of the 11 FMMOs approved the following pricing formula amendments:
- Updating the skim milk composition factors to 3.3 percent true protein, 6.0 percent other solids and 9.3 percent nonfat solids, with a six-month delayed implementation.
- Removing 500-pound barrel cheddar cheese prices from the Dairy Product Mandatory Reporting Program survey.
- Updating the Class III and Class IV manufacturing allowances to $0.2519 for cheese, $0.2272 for butter, $0.2393 for nonfat dry milk and $0.2668 for dry whey, all on a per pound basis, and the butterfat recovery factor to 91 percent.
- Returning the base Class I skim milk price formula to the higher-of the advanced Class III or Class IV skim milk prices for the month. In addition, adoption of a Class I extended shelf life (ESL) adjustment for all ESL products equal to the average-of mover plus a 24-month rolling average adjuster with a 12-month lag.
- Updating the Class I differential values to reflect the increased cost of servicing the Class I market.
NMPF has more resources to understand FMMO modernization and the road taken to get there. Farmers and cooperatives will have opportunities to learn more about the new system through webinars and other materials offered in coming weeks. NMPF will also continue pushing for elements of its proposal that require congressional authorization, including mandatory dairy manufacturing cost reporting to provide accurate, transparent data to inform future milk pricing discussions.