The dairy industry has attracted more attention lately thanks to variable milk prices brought on by market disruptions and supply-chain challenges. Meanwhile, higher feed and transportation costs continue to make it harder to remain profitable.

But not all the attention is bad.

USDA will probably hold a hearing next year focused on reforming the Federal Milk Marketing Order (FMMO). Dairy-related farm bill programs will also be considered as the next farm bill is developed. In preparation, dairy farmers should engage in conversations to help develop ways to improve price discovery, program clarity and support for producers.

Illinois Farm Bureau leaders and staff recently attended the American Farm Bureau Federation’s FMMO Forum in Kansas City, Missouri. The first-of-its-kind, industry-wide event provided a platform for farmers’ voices to be heard while also answering the call from USDA Secretary Tom Vilsack to bring the dairy producer community together to discuss FMMO modernization. Discussions at the forum focused on class price formulas and de-pooling, among other topics. The consensus among attendees was to return the Class I mover to a higher-of formula.

Now, as dairy leader attendees from across the country have returned home, they are discussing the ideas and solutions generated at the forum. County Farm Bureau delegates will consider dairy-related policy changes next month during the IFB Annual Meeting. Proposed resolutions about dairy policy focus on increasing Dairy Margin Coverage (DMC) in Tier I and studying the potential of changing the milk formula to a two-class system versus the current four-class system.

Many dairy farmers are interested in updating DMC options to better serve current production systems since farms have continued to increase their milk production. In 2002, 29% of the U.S. dairy cow inventory was on farms with more than 999 cows. In 2017, this increased to 55% of U.S. farms, drawing attention to the fact that a 5-million-pound limitation in Tier I enrollments may not provide adequate assistance to the modern dairy farmer. Likewise, a nearly 10-year-old production history baseline is not reflective of a farm’s current operation.

Many farmers feel increasing the Tier I insurable milk limit and moving to more current production history will more appropriately protect farmers in times of price volatility.

Also, dairy farmers are questioning the structure of FMMO’s class system. FMMO is designed to address classified pricing and pooling of milk through class utilization reports. There has been considerable discussion on the appropriateness of a four-class system when a simplified version could be more fitting for today’s consumption trends. Delegates will be asked to consider studying and implementing a system with fewer classes in an effort to modernize milk pricing.

Other state Farm Bureau organizations are considering policy recommendations addressing a variety of factors that include cost and yield factor reporting for the make-allowance formula, reverting back to the “higher of” to determine the Class I milk mover until an improved method is developed, and standardization of milk checks.

Illinois farmers should consider the impacts to their farms if various changes to FMMO and farm bill programs are implemented. For more information on dairy policy or discussions on pricing, please email me at tbunting@ilfb.org.

Tasha Bunting serves as IFB associate director of commodities and livestock.