Kevin Krentz, President of the Wisconsin Farm Bureau, is calling for reform of the Federal Milk Marketing Order (FMMO) system. Krentz believes that the current system is unfair to dairy farmers and is leading to the consolidation of the industry.
Krentz is specifically calling for three changes to the FMMO system:
- Reform the dairy pricing formula. Krentz wants to see the pricing formula changed back to the "higher of" system, which was in place before the 2018 Farm Bill. The current system, which uses an average of Class III and IV milk prices, has led to lower prices for dairy farmers.
- Reduce economic incentives for de-pooling. De-pooling is when a milk handler removes its milk from the FMMO pool and sells it directly to a processor. This can lead to lower prices for dairy farmers, as the handler does not have to share the revenue from the higher-priced milk with the other farmers in the pool.
- Eliminate advanced pricing of Class I milk and Class II skim milk. Advanced pricing is when the price of milk is set in advance of the month in which it is produced. This can lead to lower prices for dairy farmers, as the price may be set below the actual market price.
Krentz believes that these changes would help to level the playing field for dairy farmers and make the FMMO system more fair. He is hopeful that USDA will take his proposals into consideration as it considers changes to the FMMO system.
In addition to the three specific changes that Krentz is proposing, he also believes that the FMMO system needs to be more transparent. He wants to see more information available to dairy farmers about how the system works and how their milk is being priced.
Krentz is a dairy farmer himself, and he understands the challenges that dairy farmers are facing. He is committed to fighting for policies that will help dairy farmers stay in business. He believes that the FMMO reform proposals he is making are a step in the right direction.
Impact of the Proposed Changes
The proposed changes to the FMMO system could have a significant impact on dairy farmers. If the pricing formula is changed back to the "higher of" system, dairy farmers could see higher prices for their milk. This would help to offset some of the costs that dairy farmers are facing, such as rising feed prices.
Reducing economic incentives for de-pooling would also benefit dairy farmers. De-pooling can lead to lower prices for milk, as the handler does not have to share the revenue from the higher-priced milk with the other farmers in the pool. By reducing economic incentives for de-pooling, dairy farmers would be more likely to receive the full value for their milk.
Eliminating advanced pricing would also benefit dairy farmers. Advanced pricing can lead to lower prices for milk, as the price may be set below the actual market price. By eliminating advanced pricing, dairy farmers would be more likely to receive the full value for their milk.
The proposed changes to the FMMO system are complex and would have a significant impact on dairy farmers. It is important to carefully consider all of the potential impacts before making any changes.
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Categories: Wisconsin, Livestock, Dairy Cattle