Last week, the U.S. Senate Agriculture Committee Dairy Subcommittee held a hearing that was called by chair Sen. Kirsten Gillibrand (D-NY). The hearing focused on issues related to milk pricing and the Federal Milk Marketing Order system, which has shown strains during the COVID-19 pandemic due in large part to flaws in the current Class I mover and its ripple effects through dairy revenues.
National Milk Producers Federation (NMPF) Senior Vice President of Membership Services and Strategic Initiatives, Chris Galen, discusses dairy farmer losses during the pandemic caused by the Class I Mover formula change in the 2018 Farm Bill
NMPF notes that Congress must do additional work to ensure dairy farmers are fairly compensated for losses rooted in a change to the pricing formula for Class I milk. The 2018 Farm Bill changed the Class I mover, which determines the price of fluid milk under the Federal Milk Marketing Order system, at the urging of dairy processors who sought greater price predictability. The change contributed to substantial market volatility last year and has led to an estimated $750 million in losses for farmers compared to the previous Class I formula. Without a fix, dairy farmers will permanently bear unfair and unnecessary price risk compared to processors during times of unusual market volatility.