USDA has issued its Recommended Decision on amendments to the Federal Milk Marketing Order (FMMO) pricing formulas. According to the complete document, USDA recommends the following proposals be adopted:
1. Milk Composition Factors: Adjust the factors to 3.3 percent true protein, 6.0 percent other solids, and 9.3 percent nonfat solids.
2. Surveyed Commodity Products: Eliminate the 500-pound barrel cheddar cheese prices from the Dairy Product Mandatory Reporting Program survey and use only the 40-pound block cheddar cheese price to determine the monthly average cheese price in the formulas.
3. Class III and Class IV Formula Factors: Revise the manufacturing allowances to: $0.2504 for Cheese; $0.2257 for Butter; $0.2268 for NDM; and $0.2653/lb. for Dry Whey. Also, update the butterfat recovery factor to 91 percent (currently 90 percent).
4. Base Class I Skim Milk Price: Return to the “higher of” the advanced Class III and IV skim milk pricing factors in the base Class I skim milk price. Further, implement a rolling monthly Class I extended shelf life (ESL) adjustment to ensure better price equity for ESL products.
5. Class I Differentials: Update the Class I differential values to reflect the increased cost of servicing the Class I market. The county-specific Class I differentials are detailed in the decision.
What does this mean? While the proposed changes are not definite, the Final Decision is expected to closely resemble this Recommended Decision. After its official publication in the Federal Register, the industry has 60 days to submit comments. After that, USDA has another 60 days (likely November 1, 2024) to release the Final Decision, which producers will vote on in a referendum.
Be on the lookout for HighGround Dairy’s in-depth analysis of the proposed ruling, including direct price impacts and USDA’s justification, coming soon.
The post Breaking News: USDA Issues Recommended Decision Proposing Amendments to Federal Milk Marketing Orders appeared first on HighGround Dairy.