Tackling school milk at state level: Rep Lawrence introduces whole milk bill, HB 2397, in PA House with 31 cosponsors

John Lawrence speaking to farmers at a winter meeting two weeks before he introduced HB 2397 Whole Milk for Pennsylvania Schools with 31 cosponsors.

By Sherry Bunting, Farmshine, March 25, 2020

HARRISBURG, Pa. — The Whole Milk for Pennsylvania Schools Act, H.B. 2397, has been officially introduced in the State House by author and prime sponsor State Representative John Lawrence (R-13th). 

Introduced with 31 cosponsors on March 17, the bill is now “pending” in the House Agriculture Committee. This is one of three dairy bills Lawrence has introduced this year.

The provisions of H.B. 2397 would become effective 30 days after passage and would include state notification of all Pennsylvania schools to alert them to the state’s provisions for the purchase and offering of whole milk and reduced fat milk to students, so long as this milk is produced by cows on Pennsylvania farms, bottled in Pennsylvania processing facilities and paid for with state or local funds.

According to Lawrence, there is broad support for the bill in the State House, and he has received favorable responses from members of the State Senate. He has heard from schools, organizations and individuals applauding the tenets of this bill over the past several weeks since circulating his cosponsor letter to colleagues.

When asked recently about the bill, Rep. Lawrence said he was tired of waiting for the federal government to act on this issue of ending the federal prohibition of whole milk in schools. 

After thinking about the dilemma for some time, he had what he described as divine inspiration a couple months ago to structure the bill as an “intra-state” jurisdiction under the 10th Amendment of the U.S. Constitution.

In fact, he thanks God for that inspiration to approach the bill as one that enables schools to voluntarily make choices and structure the voluntary provisions as being a wholly Pennsylvania deal.

“We have jurisdiction on this,” he states.

When milk produced on Pennsylvania farms and processed in a Pennsylvania plant is purchased by a Pennsylvania school with Pennsylvania or local funds, then the federal government has no jurisdiction over what can be offered to students, Lawrence explains.

Specifically, the bill would allow Pennsylvania school boards to utilize funds from state or local sources to obtain whole Pennsylvania milk or reduced fat Pennsylvania milk to provide or sell at a Pennsylvania school. 

In the bill, Pennsylvania whole milk is defined as at least 3% fat and Pennsylvania reduced fat milk is defined as 2% fat. They are further defined as “produced by the milking of cows physically located within the geographic boundaries of this Commonwealth, transported to a dairy processing facility located within the geographic boundaries of this Commonwealth, and processed as fluid milk into containers intended for distribution to consumers.”

The bill would also require the Secretary of Education to notify the superintendent or chief administrator of each Pennsylvania school to inform them of the provisions of the Act within 30 days of passage.

Further, the bill sets forth in Section 6 the right of civil action if any federal agency interferes by withholding or revoking school funds.

Specifically, this section would require the Office of Attorney General, on behalf of a Pennsylvania school, to bring a civil action against the federal government or any other entity to recover funds withheld or revoked as a result of an action taken by the school board to make Pennsylvania whole milk and 2% reduced fat milk available as choices under the “intra-state” — not interstate — provisions of the Act.

The bill also seeks a status report to the chairpersons of the House and Senate Ag Committees – no later than two years after passage. The report would be given by the Secretary of Education in consultation with the Secretary of Agriculture and the Pennsylvania Milk Marketing Board (PMMB).

This report would provide a list of Pennsylvania schools that have elected to provide or sell Pennsylvania whole milk and 2% milk, the approximate increase or decrease in the overall consumption of fluid milk at Pennsylvania schools after the effective date, and the actions taken by the Commonwealth to promote whole milk and 2% milk availability in Pennsylvania schools.

The Whole Milk for Pennsylvania Schools Act, H.B. 2397, includes an expiration section that would require the Secretary of Education to submit notice if/when Congress repeals sections of law pertaining to the National School Lunch Act that currently prohibit these milk offerings in schools or at such time that an update to the Dietary Guidelines has been published — that in either case would effectively end the federal prohibition of whole milk in schools and make these choices available nationally again.

Joining Pennsylvania State Rep. Lawrence as cosponsors of the Whole Milk for Pennsylvania Schools Act are Representatives Clinton Owlett (R-68th), Martin Causer (R-67th), Donald Cook (R-49th), Jim Cox (R-129th), Lynda Schlegel Culver (R-108th), Eric Davanzo (R-58th), Russ Diamond (R-102nd), Torren Ecker (R-193rd), Melinda Fee (R-37th), Nancy Guenst (D-152nd), Joe Hamm (R-84th), David Hickernell (R-98th), Doyle Heffley (R-122nd), Robert James (R-64th), Barry Jozwiak (R-5th), Robert Kauffman (R-89th), Ryan Mackenzie (R-134th), Steven Mentzer (R-97th), David Millard (R-109th), Brett Miller, (R-41st), Eddie Pashinski (D-121st), Tina Pickett (R-110th), Greg Rothman (R-87th), David Rowe (R-85th), Louis Schmitt (R-79th), Brian Smith (R-66th), Perry Stambaugh (R-86th), James Struzzi (R-62nd), Ryan Warner (R-52nd), and David Zimmerman (R-99th).

Lawrence said H.B. 2397 was intentionally numbered so that ‘97’ would be part of the bill number, reflecting the whole milk education efforts of the 97 Milk movement.

“I feel like we are going to see this bill get to the finish line for our Pennsylvania school children and our dairy farmers,” says Bernie Morrissey, chairman of the Grassroots PA Dairy Advisory Committee which organized petition drives with large numbers of  Pennsylvanians signing to support similar legislation at the federal level — Congressman G.T. Thompson’s Whole Milk for Healthy Kids Act.

“We can try to save everyone — and have been trying to do that for several years on this issue. But now, it’s time to focus on Pennsylvania. We can get this done in Pennsylvania and be a leader. This bill is brilliant, and a lot of people are grateful to John Lawrence for writing it,” Morrissey added.

“This is more confirmation of how important whole milk education is,” said 97 Milk chairman Gn Hursh, noting that as consumers have become aware of the benefits of whole milk and the federal prohibition in schools, they are joining farmers to seek these options for their children in schools.

In fact, two recent surveys show more parents choose whole milk and 2% milk for their families. A national Morning Consult survey for IDFA showed 78% of parents of school aged children believed whole milk or 2% milk to be most nutritious for their families. A national food preference survey for YouGov showed 53% of parents prefer whole milk for their children and only 23% preferred fat-free and 1%. 

USDA’s own data show a 24% decline in students selecting milk in the first year after the whole milk ban went into effect in 2012 and a 22% increase in discarded milk on top of that! It has only become worse since then. A recent school trial in Pennsylvania revealed a 52% increase in students selecting milk and a 95% reduction in discarded milk when students had an expanded choice that included whole milk. In that trial, students preferred whole milk 3 to 1 over the skimmed varieties.

Bottomline, milk’s unsurpassed nutritional benefits are only realized by students if they choose milk and actually consume it. 

Pennsylvania Farm Bureau is supporting H.B. 2397, according to Rep. Lawrence. “They called within an hour of seeing the cosponsor letter and said this has their full support,” he said.

PFB, along with members of the Grassroots PA Dairy Advisory Committee and 97 Milk, also testified in support of ending the federal prohibition of whole milk in schools during a Senate policy hearing in June 2021

Previously, the Pennsylvania Milk Dealers, Pennsylvania Dairymen’s Association and various other industry organizations have been on record supporting Congressman Glenn Thompson’s bill at the federal level, so the same should hold true for this bill at the state-level.

Stay tuned as the State of Pennsylvania buckles down to tackle the federal prohibition of whole milk in schools… let’s keep the momentum going.


The WHOLE story on IDFA’s school milk poll

The March 24 deadline is fast approaching to comment on future school lunch rules on milkfat and sodium. The dairy industry is focused on making sure 1% low-fat flavored milk is allowed after the next two years of ‘transitional’ flexibility. In fact, an IDFA poll of parents nationally and in New York City showed 85% of parents support the inclusion of 1% low-fat flavored milk as a school option. But here’s the WHOLE story from the poll — 78% of parents deem either whole milk or 2% as “most nutritious” for them and their families! But these were both dropped in 2008-10 as part of the meal and outright prohibited as an a la carte beverage in 2012. A 2020 paper in the Journal of Dairy Science reported just 66% of students chose milk in the 2014-15 school year compared with 75% in 2005. Low-fat 1% and fat-free milk were the rock-bottom vote getters among parents nationally and in New York City. So why in the world does USDA insist on maintaining its prohibition of whole milk and 2% milk? IDFA states that if all students were offered the type of milk they prefer, milk consumption might stop declining or increase. For a majority of Americans, the choice must include the whole milk option as well. Send your comment to USDA by https://www.regulations.gov/commenton/FNS-2020-0038-2936.

By Sherry Bunting, Farmshine, March 11, 2022

NEW YORK CITY – The International Dairy Foods Association (IDFA) announced “overwhelming support” by parents in New York City and nationally for the inclusion of 1% flavored milk in schools. But let’s look a bit deeper.

“Voters in New York City and across the country widely support offering low-fat (1%) flavored milk in public school meals,” the IDFA press release proclaimed about the new Morning Consult national tracking poll they commissioned.

“When asked about including low-fat flavored milk in school meals, parents with kids in public schools were supportive,” the IDFA press release states. “In New York, 90% of voters with kids in public school support including low-fat flavored milk in public school meals. Nationally, 85% of parents feel the same.”

But wait. Here’s the rest of the story… In the 5-part poll, parents in New York City and nationally nearly unanimously agreed that making sure meals are healthy and nutritious for children is a top or important priority.

Reading the full poll results at the link — https://www.idfa.org/resources/voter-polling-on-milk-in-school-meals-conducted-by-morning-consult, we find that nationally and in NYC, parents identified Whole and 2% milk as top choices for nutrition by a wide margin!

Nationally, a majority of parents with kids in school (78%) selected either Whole Milk or 2% reduced-fat milk as the most nutritious options for them and their families. Currently, USDA prohibits both of these choices — Whole (3.25%) and reduced fat (2%) milks — in schools.

Among the New York City school parents polled, 58% chose either Whole milk or 2% milk as most nutritious for them and their families.

Breaking this down, the national poll showed 43% believed Whole milk options to be the most nutritious for them and their families, while 34% of NYC parents chose Whole milk as most nutritious.

Nationally, 35% of parents believe 2% milk to be most nutritious, while among NYC parents that figure was 24%.

This means Whole and 2%, together, got the majority votes for NYC parents, and parents nationally.

How did fat-free and 1% low-fat milk rate above parents in the question about “most nutritious options”?

Of the parents polled nationally, 11% selected 1% low-fat milk and that figure was 12% in NYC.

The percentage of polled parents believing fat-free milk options were most nutritious was 7% nationally and 12% in NYC.

Author’s Note:

Schools should be allowed to offer children the preferred choices of parents by expanding offerings to include whole milk and 2% milk options!

Parents and other health advocates for children and teens know the powerhouse package that REAL WHOLE MILK delivers, and the benefits of milkfat in a healthy diet. But most parents still don’t know the federal government prohibits their kids from having this choice at school.

Bottomline: students (and their parents) should be able to CHOOSE whole milk for childhood nutrition at school. Read some of the big reasons why here: https://www.97milk.com/wp-content/uploads/Why-Whole-Milk.pdf

Send your comments asking USDA to end the whole milk prohibition by deadline of March 24, 2022 at this Federal Register rulemaking docket. https://www.regulations.gov/commenton/FNS-2020-0038-2936

Just keep it simple: Write who you are, why you care, and simply ask USDA to end the prohibition of whole milk in schools so children can choose the milk they love and that way consume it instead of discarding it, therefore receiving the 13 essential nutrients of concern, high quality protein, and other benefits we assume they are getting to be healthy, satisfied, and ready to learn.

Also, contact your Representative in Congress and ask him or her to cosponsor HR 1861, The Whole Milk for Healthy Kids Act, which is up slightly at 89 cosponsors from 31 states. This bill still has zero representation from the New England States as well as no Representatives yet from Delaware, South Carolina, West Virginia, New Mexico, Montana, North Dakota, Wyoming, Oregon, Colorado, Utah and Hawaii.

No matter where you are located, ask your member of Congress to sign on as a cosponsor! This is a bipartisan bill for a bipartisan issue that benefits children and farmers — Win. Win.


PA State Rep. John Lawrence champions three dairy bills

“We have to get real. I want to drink fresh Pennsylvania milk. It’s long past time to stand up for our Pennsylvania dairy farmers who are producing it,” said Pennsylvania State Representative John Lawrence. He told the 300 dairy farmers attending Sensenig’s Feed Mill’s dairy conference about his package of three bills, including HB 2397, the Whole Milk for Pennsylvania Schools Act.

‘It’s time to take a stand for our dairy farmers’

By Sherry Bunting, Farmshine, March 11, 2022

EAST EARL, Pa. – Pennsylvania State Representative John Lawrence (R-13th) has been working on behalf of dairy farmers in what has

seemed like the wilderness in the past decade — representing Chester County and part of Lancaster County. He’s glad to see, in recent years, more of his colleagues are recognizing the situation.

“Pennsylvania dairy farmers are struggling, and we have a decision to make if we want to drink milk produced on Pennsylvania farms,” he said, speaking to farmers attending the customer appreciation dairy conference and luncheon of Sensenig’s Feed Mill. The event drew around 300 to Shady Maple in eastern Lancaster County in early March.

Lawrence has a slate of three bills in the State House — HB 223 would provide tax incentives for dairy processing in the Commonwealth; HB 224 would provide authority to the Pa. Milk Marketing Board (PMMB) to make changes to account for where all of the state-mandated over-order premium goes, which is paid by Pennsylvania consumers on every gallon of milk they buy; and HB 2397 is the new bill he is introducing to be intentional about allowing whole milk in Pennsylvania schools.

The latter is numbered 2397 for a reason, he said. The last two digits of the bill number, 97, coincide with the popular and progressive grassroots 97 Milk education effort, sharing the benefits and facts about whole milk and dairy, virtually 97% fat free.

“Whole milk was outlawed 10 years ago by the federal government. This is towards the top of what I would call the ‘ludicrous list,’” Lawrence said.

Tired of waiting for the federal government to act to correct this situation for schoolchildren and for farmers, Lawrence says the idea for how to approach it at the state level came to him two months ago. It just occurred to him as he thought about the dilemma. 

In fact, he thanks God for that inspiration — the inspiration to approach the bill from the state’s rights aspect of the U.S. Constitution.

“We have jurisdiction on this,” Lawrence explained. 

When milk produced on Pennsylvania farms and processed in a Pennsylvania plant is purchased by a Pennsylvania school with Pennsylvania or local funds, then the federal government has no jurisdiction over what can be offered to students.

That’s the gist of it. 

The federal government lays claim to interstate commerce, but if a school’s milk is supplied strictly through intrastate commerce (within-state commerce), then the milk offered to students comes under state jurisdiction, and the state can allow whole milk, according to Lawrence.

He said the bill is enjoying broad bipartisan support in the House and will be introduced officially very soon.

“We have a robust dairy industry in our Commonwealth. Pennsylvania milk delivered to Pennsylvania plants and offered for sale to Pennsylvania students paid for by state or local funds is intrastate commerce. Who regulates that? We do. The state does. So, the federal government has no say,” Lawrence related.

Under those conditions, “if a school wants to buy Pennsylvania whole milk, then they would have every right to do that and offer it to students,” Lawrence said. “If the federal government would try to withhold other funding from those schools because of it, then we go after them.”

Lawrence is counting on broad support in the State Assembly for the measure. By the amount of feedback he is getting from colleagues, organizations, schools and others, he believes it will pass.

“It’s time to take a stand for our dairy farmers,” he said. “We have lost a generation of milk drinkers getting skim milk and throwing it in the trash.” This bill — HB 2397 — would give Pennsylvania schools the opportunity to offer whole milk and it would support Pennsylvania’s dairy farms and processors at the same time.

As for HB 224 dealing with the PMMB over-order premium, Lawrence said it addresses transparency and accountability. 

“Right now, every gallon of milk sold in Pennsylvania is assessed the over-order premium,” he said. “Pennsylvania consumers are paying this in the price of their milk. That money should all be coming back to you, the Pennsylvania farmers. This bill would account for that.”

He noted that this bill is also finding broad bipartisan support.

HB 223 is the third bill, and straightforward. Lawrence patterned it off the Keystone Opportunity Zones, using the tax credit idea for attracting new businesses and jobs to the Commonwealth. 

“In this case it’s focused on dairy,” he said.

This bill would make those tax credits available to new processing on a large or small scale, including expansion of existing facilities and even on-farm processing.

The stipulation is the entity receiving the tax credits must source 75% of their milk supply to Pennsylvania farms.

“This way we create markets for dairy farms in the Commonwealth. We have to keep our farmers alive because we also have to eat,” Lawrence stated matter-of-factly. “We have to stop taking it for granted.

“We have a choice to make about where we will lay our priorities. We have to get real. I want to drink fresh Pennsylvania milk,” he said. “It’s long past time to stand up for our Pennsylvania dairy farmers who are producing it.” -30-

Advocating strongly for the Whole Milk for Pennsylvania Schools Act are (l-r) Bernie Morrissey, Ken Sensenig, Representative John Lawrence, Mike Sensenig, Devin Shirk and Kyle Sensenig. 

‘Going for the Gold’ – Dairy farmer and Olympian shares values that carry over to both

Joining over 300 attendees virtually from her home on the dairy farm in Vermont, Olympic mid-distance runner Elle Purrier St. Pierre brought an energizing, uplifting and practical message to the 2022 Pennsylvania Dairy Summit in Lancaster, where the theme was “Going for the Gold.” 

By Sherry Bunting

LANCASTER, Pa. — Being a dairy farmer with a nutrition degree from the University of New Hampshire — and a Team USA mid-distance Olympic runner — Elle Purrier St. Pierre sees the similarities in the two passions of her young life.

“In both, you’re so involved in it. It’s a lifestyle. It’s what you do — you’re completely obsessed with it — it’s who you are,” she said. “It’s crazy to win a race one day and be home working with cattle in my barn boots the next. The two are completely different but those values carry over to both. It’s the passion you have.l for it. I’m just lucky to have the opportunity to do both.”

Elle kicked off the 2022 Pennsylvania Dairy Summit on Feb. 2 at the Marriott Convention Center in downtown Lancaster. The theme of the two-day event was “Going for the Gold.” The leadoff with Elle — joining the over 300 attendees virtually from her home in Vermont, where she and her husband Jamie are part of his family’s 2000-cow dairy farm – was energizing, uplifting and so practical.

Elle shared with Summit attendees how growing up on a small dairy farm near Montgomery Center, Vermont, gave her the physical and mental training for her calling today as an Olympic athlete.

“Those hay bales helped get me here,” she said. “And there’s something to be said for genetics, for heritage, your background and how you train. I come from a long line of dairy farmers who worked hard all of their lives.”

Describing her grandfather hoisting milk pails in the days before pipeline, she said she figures the strength is in her DNA, and what the farm life has encouraged her to do with it.

Running 80 miles a week and training off site at different times of the year, Elle’s schedule can be crazy, but she’s been home enough before the season begins again to get on the farm payroll with regular jobs at the dairy. One day she can be found sorting dry cows, another helping preg-check heifers, moving heifers, helping with herd checks – filling in wherever she is needed.

On the larger dairy with her husband’s family, just like the small farm she grew up on, Elle finds structure in her day. She says structure, routine, strength, passion — these are all farming traits that have served her well as an athlete.

The routine of chores, growing up, is something that fostered her dedication, but she says her parents also made sure she had balance in her life, not to feel pressured, that there is more to life, to explore it.

Today, on the larger farm, Elle said “there is so much opportunity for me to be involved.”

While they milk mainly Holsteins and some Jerseys, it’s her Brown Swiss, Rita, due very soon with her first calf, that’s pretty special.

Rita is a pretty special cow for Olympian Elle Purrier St. Pierre. Her husband Jamie proposed marriage with a ring and Rita, the Brown Swiss calf. Today, Rita is due to calve soon. Instagram photo @Elleruns_4_her_life 

“Jamie proposed (marriage) with a ring and that Brown Swiss calf,” she said as the audience laughed knowingly.

Competing for Team USA at the Tokyo Olympics last summer was also pretty special.

“It’s something I have dreamed about for so long, to represent my country is one of the highest honors of my life,” Elle said. Her journey to that point really began when a high school coach ‘discovered’ her, and she went on to compete in college.

Elle has over 72,000 followers on instagram at @elleruns_4_her_life. The 2020 1500-meter finalist at the Tokyo Olympics was also the trials champion and currently holds the American indoor mile and two mile records. A member of Olympic Team USA, Elle is also a member of the New Balance Boston team and a member of the home farm team with husband Jamie on the dairy in Vermont. Photo courtesy Flynn Sports

On Feb. 8, 2020, she set the American record for the indoor mile, with a time of 4:16.85 at the Millrose Games. A year later on Feb. 13, 2021, she ran a time of 9:10.28 to break the American indoor 2-mile record, a time that was also lower than the outdoor 2-mile record.

She said the mid-distance races are her niche, where she feels most comfortable and does her best.

Many attendees had questions for her about what she encounters among trainers, peers and fans in terms of milk and dairy products. What does she hear? What pressure does she get?

It’s all good. Elle said her team and coaches, trainers, even fans, for the most part, understand why milk and dairy are so important.

“Our coach understands the body and the science, the importance of animal protein,” she said, noting that she did get an offer to try a plant-based product, but turned it down — of course. “I told them I’m an animal protein girl. It’s more bioavailable nutrition from the animal source. You can’t really argue with my results, right?”

All of her teammates also drink milk.

“At this level, people realize the importance. In the running world, you’re bringing that nutrition with you for right after your work out. Milk, chocolate milk, it’s got that nutrition, everything you need. It’s hydration. It’s electrolytes. It’s the perfect carb to protein ratio,” Elle explained, although she admitted that sometimes she’ll opt to put extra milk protein in the milk. “We call that the more-milky-milk.”

She also likes to try different brands of milk when she’s traveling. Training in Arizona recently, she discovered Shamrock, and is obsessed with their strawberry milk.

Bottom line, she said, when you run 80 miles a week, it’s essential to always be refueling.

“Dairy is that resource we look to, naturally,” said Elle. “As I get older, I realize even more what a great resource dairy really is.”

On social media, her main platform is Instagram @Elleruns_4_her_life. She gets a few critics on the anti-animal side, but never in person.

“I try to pick my battles,” she said. “I only see the extremists on the internet, but I feel they don’t have a sense of reality, so it’s easy to ignore the crazy comments. I look more for the opportunities in the middle, to talk about farming, to have a productive conversation.”

With ‘Going for the Gold’ being the theme of the Summit, Elle touched on what it takes to turn passion and values into goals through competition. How do you make it happen?

Whether preparing for a race or looking at something on the farm — like milk quality or SCC levels, Elle has found what works is to set weekly goals to get to the bigger goals.

“That translates to the farm also, to take it day-by-day, step-by-step. What do I need to do this week to get to where I want to be next month,” she said.

Elle loves being part of the team, training with other athletes who are her competitors, but also her friends.

“It’s about respect,” she said. “We work toward our own goals, but at the same time each of us brings something to the table that makes us better together.”

“In the same way, Jamie and I talk about it all the time, how there are fewer and fewer farms, so we need to work together,” Elle related. “I have gained so much respect for our neighbors, for other farms, just like my teammates. We need to compete to do better, but we also need to unite on some things and share that passion, together.”


New ‘cost of processing’ report could boost make allowances by almost $1.00 per cwt

By Sherry Bunting

WASHINGTON, D.C. — The USDA released the long-anticipated study on milk price ‘make allowances’ recently. These are embedded in the end-product pricing formulas.

Make allowances are processor credits for transforming raw milk into the four base commodities – cheddar, butter, nonfat dry milk and dry whey that are used in end-product pricing formulas for Federal Milk Marketing Order (FMMO) Class and Component prices as well as the Class I Mover price.

During ADC’s Future of Federal Milk Pricing Forum Feb. 15, set make allowances were cited by panelist Mike McCully as margin guarantees that “encourage commodity production and deter innovation.”

He believes ‘value-added’ products are the path to return more dollars to farmers in the future for all classes, including Class I fluid milk.

“If (FMMO) end-product pricing continues, then the make allowances will have to be raised, and this will come at a cost to producers,” said McCully, referencing the Cost of Processing study commissioned in 2019 by USDA and completed in 2022 by Dr. Mark Stephenson, dairy economics professor at University of Wisconsin-Madison.

In a USDA AMS webinar Feb. 23, Dr. Stephenson talked about the report as well as previous reports in 2006-08 when make allowances were last raised. He observed that today’s plants are more complex with a wider range of products and innovations. Therefore, isolating the costs for the four basic commodities was more difficult this time.

He said 80% of the data came from participation by processing plants owned by cooperatives. Many proprietary plants chose not to participate.

The Class III make allowances for cheese and whey currently total $3.17 per hundredweight, and the Class IV make allowances for butter and nonfat dry milk total $2.17, according to Dr. John Newton, chief economist for the U.S. Senate Agriculture Committee Republicans.

Newton said the new Cost of Processing report shows these make allowances could go up to $4.00 for Class III and $3.12 for Class IV, which represents a nearly $1.00 impact in Federal Order minimum class price reductions if implemented.

“The ultimate result is a reduction in farm milk checks,” said Newton speaking virtually to Kentucky dairy producers at their annual Dairy Partners conference Wed., Feb. 23 in Bowling Green.

“The make allowances are designed to cover the costs of taking raw milk and converting it to these products, where the component value is captured in end-product pricing,” said Newton, observing that they haven’t been raised for more than 10 years, but this hasn’t stopped explosive growth in product production and significant re-blending of farm milk prices in recent years.

“Processors have opportunities to add value in the many other product streams outside of the make allowance and end-product pricing formula, already,” said Newton, noting some of the cumulative numbers and describing this as “effectively a subsidy from farmers to processors to process their milk.”

“This will be a very tough debate, and hopefully farmers are at the table as this debate happens,” he said.

U.S. dairy herds fall below 30,000: Milk’s changing landscape prompts lawmaker’s interest in revitalizing dairy and rural economies in Southeast and beyond

The map shows the annual data released by USDA of licensed dairy herds, cow numbers and milk production by state for 2021 vs. 2020 as the number of dairies fell below 30,000 even though the number of exits, 1799, was below the 20-year annual average (2300) and milk production grew by 1.3% nationwide. Compiled by Sherry Bunting from USDA NASS data.

By Sherry Bunting, published in Farmshine, March 4, 2022

WASHINGTON, D.C. — The U.S. produced 226.3 billion pounds of milk in 2021, up 1.3% compared with 2020, with 56,000 more cows and 1799 fewer dairy herds nationwide.

In fact, the average number of licensed dairy herds fell below 30,000 in 2021 — reported by USDA at 29,858, down 5.7% from 2020. This was less than the larger than average loss of 2550 dairies in 2020 and less than the 20-year average of 2300 exits annually.

The average number of milk cows for the year increased 0.6% in 2021 to an estimated 9.45 million head. Output per cow was slightly higher for the year, but slipped in the second half of 2021 compared with the previous year.

It is important to note that USDA’s annual data released on Feb. 23 computes the average number of cows and the average number of licensed dairy herds for 2021 compared with 2020. This is more like a rolling average for the year. These are not end-of-year numbers.

Furthermore, the landscape of change is getting the attention of some influential lawmakers ahead of 2023 Farm Bill discussions  as interest centers on the economic health of rural communities, and where Dairy thrives, it brings jobs and vitality.

2021 started out strong in production gains, but in the second half of the year, cow numbers began to shrink heading toward 2022, along with output per cow. 

The USDA semi-annual All Cattle and Calf Inventory Report, in fact, estimated 1% fewer milk cows on farms as of Jan. 1, 2022 compared with the previous year and 3% fewer dairy replacement heifers. That is significant compared to the higher 2021 average numbers.

Some of the data shown in the USDA production report raise questions about how milk production is counted and the reliance of NASS on Federal Milk Marketing Order data — given the significant decline in the percentage of U.S. milk production participating in FMMO pools today.

In 2011, an estimated 82% of total U.S. milk production participated in FMMO pools. This fell to 60% in 2021.

Looking over the data, the Eastern Seaboard saw declines in the number of herds, number of cows and in milk production for 2021. The exceptions were New York, Georgia and North Carolina in terms of production.

Starting with the Southeast, past data show the region held its own in 2020, but sustained collective losses of herds, cows and milk in 2021.

The two major reporting states of Florida and Georgia went in opposite directions. As Florida’s trends have pointed lower, Georgia dairies are expanding to take up some of the slack.

In Georgia, where the average herd size has grown by more than 300-head over the past four years, there was an average of 110 dairies in 2021, down by 20, but they milked 1000 more cows to produce 1.5% more milk. The average herd size grew to 745. January’s monthly milk production report shows Georgia is starting the year strong on production and cow numbers as well.

Innovation grants, avid promotion partnerships with retailers and a strong focus on heat stress mitigation, heat-resistance genetics and crossbreeding as well as programs for improved production per cow and milk quality throughout the Southeast are helping progressive herds in some areas take advantage of opportunities to grow or diversify, unless cooperative base programs get in the way.

By contrast, Florida’s dairy herd number fell to 75 in 2021, milking 5000 fewer cows and producing 5.1% less milk, with the average herd size stable at 1440.

North Carolina is not among the 24 major reporting states, but their annual production grew by 2.5%, according to the USDA report, even though they lost 5 dairies and milked 1000 fewer cows.

Virginia is among the 24 major reporting states, and annual production there fell by 3.4% as 54 fewer dairies milked 2000 fewer cows.

Kentucky and Tennessee each had 2000 fewer milk cows with production falling 3.4 and 6.3%, respectively, with 30 fewer dairy herds in Kentucky, 20 fewer in Tennessee.

Collectively, the Southeast region from Virginia to Florida to Arkansas totaled 1,531 licensed dairy herds in 2021 – down 199 (11.5%) from the 1730 reported in 2020. 

Cow numbers in the Southeast region declined by 15,000 head from 430,000 in 2020 to 415,000 in 2021.

During the Kentucky Dairy Partners conference in Bowling Green Feb. 23, John Newton, chief economist for the U.S. Senate Ag Committee Republicans talked about the upcoming 2023 Farm Bill and referenced these herd losses. 

The Kentucky native mentioned Senate Ag Committee Ranking Member John Boozman’s concern about the decline of dairy farms in the Southeast.

“One of the Senator’s dairy initiatives is to look at this. There are only 30 dairies left in his home state of Arkansas. They have lost nearly 90% of their dairies over the last couple of decades. He wants to figure out how to revitalize dairies in the Southeast,” said Newton referencing the secondary map showing the significant exodus.

“Sen. Boozman wants to look at how do we protect the Southeast dairy industry to grow and to revitalize these rural economies so our next generations are not leaving the farm for other economic opportunities,” Newton said, observing that broad band and available labor are two big issues the committee will look at that affect all rural communities.

Newton talked about the average loss of 2300 U.S. dairy farms annually from 2003 to 2020, putting percentages to the numbers and shading the states according to the rate of exodus. States heavily shaded in yellows and reds are losing dairy farms at the fastest rates; however, for different reasons. In the Southeast, Midatlantic and Northeast, the decline in farm numbers is accompanied by a decline in production except for New York, Georgia and North Carolina. Elsewhere, the rapid decline in farm numbers is replaced by larger dairies. States in the Central U.S. like Texas, South Dakota, Minnesota and Wisconsin are seeing significant milk production increases along with decline in dairy herd numbers. This is also true of the Mideast region — Michigan, Indiana and Ohio.

“The Senator’s concern about revitalizing rural economies extends beyond the Southeast to other parts of the country as well,” said Newton. His map illustrated similar concerns in the Northeast and MidAtlantic region, and anyone drilling down into data for communities throughout the rest of the country can see consolidation is reaching a tipping point.

Pricing formulas and inequitable distribution of revenue could be playing a role and will be part of Farm Bill discussions that have already begun, said Newton. He encouraged Southeast producers to be thinking about a better way to price milk and bring it to the broader industry discussions because the outcome has to work for dairy producers in all regions.

The swath of states in the Central U.S. and West is where milk production has grown substantially — in many cases this occurred because state initiatives were set in motion a decade ago to specifically attract dairies and bring processing plant construction and jobs to the rural economies in those states.

The trend in the Southwest has hit some speed bumps in New Mexico and Arizona, but Texas, Kansas, and Colorado are still big gainers. The Upper Midwest and Central Plains are the areas of strong growth too in the past two to three years, followed by the Mideast region – all having seen the building or expansion of significant Class III or IV milk processing capacity owned jointly by cooperatives and global corporations.

Like the Southeast, the Northeast and MidAtlantic region held its own overall in 2020, but milk production fell across the region in 2021, except for New York.

New York’s production grew 1.6% in 2021 with 1000 more cows and 220 fewer dairies. 

However, Empire State was surpassed by the Lone Star State in total milk production. Rapidly growing Texas is now number four in the nation for milk production. New York is number five.

Among the other major reporting states in the Northeast and MidAtlantic milkshed, Pennsylvania’s production for 2021 was barely above 10 billion pounds and 1.6% lower than in 2020.

The number of dairy herds in the Keystone State in 2021 fell by 230 to 5200, and cow numbers fell by 8000 head to 472,000 for the year. In January, the monthly reporting shows the number of milk cows on Pennsylvania farms fell below 470,000 for the first time. 

Pennsylvania remains 8th, having been surpassed by Minnesota for 7th in 2020.

In Vermont, the number of licensed dairy herds in 2021 fell by 60 to 580, and 2000 fewer cows were milked — pushing production 1.4% below year ago.

Of the other states in the Northeast / MidAtlantic milkshed, New Jersey took an almost 11% hit on milk production while Rhode Island declined 7.3%, Delaware 4.3% and Maryland was more stable, down 0.7%, losing 20 dairies. The remaining New England states ranged 1.5 to 4.5% lower in milk production for 2021.

Moving west to the Mideast states of Indiana, Ohio and Michigan — where a huge new processing plant in Michigan became operational a little over a year ago — production grew 4.6% in Indiana, 2.3% in Michigan and 0.4% in Ohio with 24,000 more cows milked collectively in the tristate region on 220 fewer farms in 2021.

Wisconsin had a story of its own, where the 2021 milk production increase on a pounds basis set records after being lower for the year in 2020. The No. 2 dairy state lost more dairy herds than any other state, but the 340 exits were half the number seen a year earlier. 

The number of dairy herds in the Dairyland State fell to 6,770; however, those dairies milked 15,000 more cows, and milk production grew by 3.1% in 2021.

Just south in Iowa and Illinois, production split trends, down fractionally (0.7%) in Illinois, with 1000 fewer cows and 30 fewer dairies, but growing 3.1% in Iowa, with 8000 more cows and 85 fewer dairies.

Throughout the rest of the growing Central region, South Dakota produced 15.5% more milk with 21,000 more cows and 15 fewer dairies. Just east, Minnesota continued to grow milk production 3.7% over year ago in 2021, milking 13,000 more cows on 135 fewer dairies. To the west, Wyoming’s herd numbers were cut in half at 5, but those 5 dairies milked 1000 more cows and grew the state’s production by almost 16.6%. Colorado lost 10 dairies but gained 6000 cows and a 2.3% increase in milk production.

Rounding the bend in Kansas and Nebraska, the trends were split. Kansas saw production growth of 1.9% in 2021, milking 2000 more cows on 10 less farms. Nebraska’s production fell 2.5% on 1000 fewer cows.

In the Southwest, Texas continued its multi-year rapid growth pattern as production increased 5% with 27,000 more cows milked on 20 fewer dairies.

New Mexico was a different story. After holding somewhat steady in 2020, production fell by 4.5% in 2021. The big reason was the exodus of 12,000 cows from the state and the loss of 20 dairies. Arizona also lost cows and production, down 1.5% from a year ago.

The No. 1 dairy state for milk production, California grew milk output by 1.3% in 2021, with 3000 fewer cows and 20 fewer dairies.


Future of Federal Milk Pricing Forum got ‘wheels turning’

‘We need to figure out a way to get farmers’ voices incorporated into this discussion’

Table I reflects a decade of change in FMMO participation as total U.S. milk production grew 13.3% from 2011 to 2021, and the percentage of milk pooled on FMMOs fell from 82% in 2011 to 60.5% in 2021. California became an FMMO in 2018 after previously being a state order, so California’s production is not included in the 2011 pooling comparison so the pooling percentages are relative to production in FMMO and unregulated regions. Class I pounds as a percent of total production fell from 28.7% in 2011 to 18.6% in 2021. Figures for 2021 are shown both ways, including and excluding California to compare to 10 years ago when the number one dairy state had its own state order with different pooling and classification rules and incomplete data, but the percent of change is nonetheless eye-opening. Chart compiled by S. Bunting 

By Sherry Bunting, published in Farmshine, Feb. 18 and 25, 2022

GREEN BAY, Wis. — Do dairy farmers want to save the baby, save the bathwater, change the flow of the bathwater, or tighten the plug on the drain before the bathwater drains to the point of taking baby with it?

That’s a brutal take after 90 minutes and a lot of information, starting with the basics and hearing perspectives and questions during the American Dairy Coalition’s Future of Federal Milk Pricing Forum on Feb. 15.

It was a first step in what ADC sees as a continuing conversation and effort to engage dairy farmers to lead the process. They said the next forum will be in March.

Geared specifically for dairy farmers, the forum attracted 160 participants from across the country, representing every element of the dairy industry — including dairy farmers.

The virtual format was moderated by Dave Natzke, markets and policy editor with Progressive Dairy magazine. Featured presenters were Calvin Covington, retired co-op COO with 45 years of experience in federal and state marketing orders; Frank Doll, a third generation Illinois dairy farmer involved in American Farm Bureau’s dairy policy committee, and Mike McCully, industry consultant on the IDFA dairy ingredients board and economic policy committee.

Included were comments presented by attendees, who pre-registered for three-minute slots. Others typed into the queue.

“This is complicated, and many people say it can’t be fixed, but we have a great amount of expertise and value here. We covered a lot,” said Laurie Fischer, CEO of ADC at the end of the forum. “We can’t just let this drop. We need to continue to move forward.”

“We heard a lot of good information that has everyone’s wheels turning,” added ADC president Walt Moore of Walmoore Holsteins, Chester County, Pa. He encouraged producers to reach out and engage to tackle the hard topics.

The goal of this initial forum was to inform dairy producers on the Federal Milk Marketing Orders (FMMO) and pricing process to become engaged and have a greater voice in guiding future policies.

For its part, American Farm Bureau Federation spent the past couple years going through a similar working group with policy recommendations coming from states to national and back to states. 

Several commenters concurred with the position of ADC, Farm Bureau and other organizations that Class I pricing should return to the ‘higher of’ method until future policies can go through what could be a long hearing process of potential revision for the future.

In fact, one eye opener during the Forum was Doll’s confirmation that Farm Bureau policy now includes support for going back to the ‘higher of’ — plus adding 74 cents — in the calculation of the Class I mover price, while remaining open to other ideas.

Doll said consensus was hard to find in the Farm Bureau working group of 13 members from across the country due to regional differences in the makeup of processing. But general recommendations found agreement, including the reference to Class I as well as modified bloc voting where co-ops can vote for their members on Federal Orders, but farmers can cast their own votes and be encouraged to do so.

Several attendees cited the need for a vehicle for producers to have real input without fear of retribution, that farmers should collectively ask questions of their cooperatives, seek better representation and together, hold their cooperatives accountable to represent their interests. 

“We need to figure out a way to get farmers’ voices incorporated into this discussion. I hear from producers all the time, but there is fear of retribution, the threat that your milk is not going to get picked up. If you are on a board and speak up, you’re not there very long,” said Kim Bremmer, representing Venture Co-op in Wisconsin, a third-party ‘testing co-op’ qualified by USDA.

She addressed bloc voting, saying: “What’s the point of having a hearing if producers can’t vote? We don’t have great representation from some of the groups that say they represent us.”

Bottomline, said Bremmer: “We have to address how to get more of the producer voice and not just the processor voice — because they’re not the same.”

She asked: “Is it a conflict of interest if you’re a processor and you’re marketing milk and you’re also advocating for producers? I think that’s an important question that needs to be answered. We need to stay engaged in this and be able to ask the tough questions and demand some answers.”

ADC’s Fischer said the organization wants to work with farmers and their state and national organizations to provide a vehicle to bring farmers together and compose a list of pricing policy items to explore further with experts.

One clear change in the dairy industry formed the crux of the discussion: The growth of milk production in the U.S. — in concert with growing export sales and declining fluid milk sales — put export sales volume above Class I volume as a percentage of total milk solids in 2021.

McCully described this as “a seismic change.”

Covington confirmed that Class I sales — as a percentage of total milk production — fell below 20% in 2021. The percentage of Class I milk within the 137 billion pounds pooled on 11 FMMOs in 2021 was about 30%.

Contrary to the widely held belief that FMMOs regulate a majority of the milk, they simply do not. Covington confirmed that the 137 billion pounds of milk pooled on 11 FMMOs in 2021 represents only about 60% of U.S. milk production.

The FMMOs aren’t designed for this direction that the dairy industry is going toward global markets, according to McCully.

He said the world will look to the U.S. as the “go-to market,” claiming New Zealand and the EU are maxed out. He described the “white gallon jug” as being the most prime example of a low-margin commodity and predicted ‘value-added’ products will return more dollars to farmers in the future. These are recurrent themes heard from speakers at winter meetings this year.

(Author’s note: In contrast, current industry-wide discussion on the ‘sustainability’ side is for a ‘stable’ U.S. cattle herd to be an indicator of dairy’s climate neutrality. If exports grow, and the U.S. herd remains ‘stable’, then export milk will have to come from growth in output per cow and displacement of Class I production. One can see how geographic camps can set up, since fresh fluid milk sales are vital to the viability of dairy farms in areas outside of the earmarked growth areas for dairy manufacturing in the Central U.S. — the question is how to bridge it.)

At the same time, dragging feet doesn’t seem to be much of an option.

If dairy policy remains ‘status quo,’ leaving the FMMOs ‘as-is,’ they could eventually cover less and less milk and potentially collapse, according to McCully.

Covington also addressed this, noting that FMMOs “were designed for fluid milk, but today, fluid milk is a minority use. People used to drink their milk, now they are eating their milk.”

McCully noted the need for dairy innovation. He said make allowances have facilitated large-scale commodity plant construction supplied by large-scale farms, suggesting it is these built-in make allowance ‘margins’ that favor commodity production and deter innovation. 

“If end-product pricing continues, the make allowances will have to be raised,” he said, citing a new make allowance study “fresh off the press.”

In 2019, USDA commissioned Dr. Mark Stephenson, dairy economist at University of Wisconsin-Madison, to do the study. Stephenson recently announced it is complete and will soon be released by USDA. McCully’s glimpse at the report shows make allowance calculations to be “significantly higher” than the amounts embedded currently in end-product pricing formulas.

Western Pennsylvania dairy nutritionist Harry Stugart offered his concise, data-driven argument that the make allowances be removed from the formula for the ‘advance’ Class I mover price because these make allowances do not pertain to fluid milk. In January 2022, he said they amounted to $2.67 per hundredweight.

Another crucial part of the discussion was how FMMOs actually work and what they do, besides pricing.

Covington gave attendees a primer of key points to think about as discussions move forward. What he shared may be old news to some, but it’s surprising how many people do not know these facts:

— FMMOs are not required by law, they are simply “enabled” to exist by law. This means producers vote to have them (California in 2018) or to terminate them (Idaho 2004).

— Only Class I fluid milk plants are required to be regulated under FMMOs.

— Class II, III and IV plants participate voluntarily, and they tend to do so “when it’s economically feasible.” Rules of participation vary from Order to Order.

— FMMOs establish other things besides minimum pricing for regulated plants. This includes setting payment terms, providing market information and market services such as testing and auditing.

— The last FMMO reform (2000) was complicated and took four years. It was a combination of legislation (1995 Farm Bill) and an administrative rulemaking process.

— Today, there are four classes of milk, but that was not always the case.

— Today, the Class I mover (base price), as well as the Class II, III and IV prices are established to be the same in all FMMOs, but in the past different FMMOs had different mechanisms.

— Cooperatives are not required to pay FMMO minimum prices even if they own regulated Class I plants because cooperatives are viewed by the FMMOs as one big producer and can make their own decisions about distributing the revenue received to their farmer-members.

— Today, over half of the Class I fluid milk plants in the U.S. are either owned by cooperatives or by large retail supermarkets. Over the past 60 years of consolidation, FMMOs have gone from regulating 2250 fluid milk plants in 1960 to just 225 in 2021.

— Cooperatives balance the Class I market at a cost. Excess milk can go to unregulated buyers at a price that is several dollars below the minimum price. Some co-ops run their own balancing plants. These costs can result in paying farmers below minimum price.

“Milk pricing should return a fair cost to producers, processors and retailers. A chain is only as strong as its weakest link,” said Sherry Bunting, speaking on behalf of the Grassroots PA Dairy Advisory Committee. She also highlighted the Whole Milk for Healthy Kids Act, H.R. 1861, explaining how support for this legislation is essential — no matter how milk is priced.

“In the process of working on this legislation, our (Grassroots PA) committee has identified other concerns. It is hard for producers to advocate when even such a simple and good thing as whole milk in schools is rebuked,” said Bunting. “Farmers hear from leaders and inspectors: ‘If we sell whole milk in schools, do you think we can just stop making cheese and other products?’ Or ‘All you are doing is disrupting markets and creating a butterfat shortage.’ Or ‘Be careful what you wish for.’ These are veiled threats.”

Bunting highlighted the need for greater competition, accountability, transparency and timeliness of price reporting. 

“Dairy farmers have farms to run, cows to care for, and they become paralyzed by the complexity and lack of transparency in the system and their milk checks. They become overwhelmed and unconfident, even fearing retribution,” she said.

Bremmer specifically addressed milk check transparency.

“We have members with attorneys that cannot interpret their milk checks. That has to stop,” said Bremmer. “Why wouldn’t processors want to show farmers what they are paying them? What is the reason? To have attorneys and others looking at it and they can’t figure it out, that’s a real problem. We think they’re probably re-blending some things to make another ‘make allowance’. We know these things are happening all across the United States.”

Payment terms are critical in this conversation. Even the best-made plans for risk management mean nothing if farmers don’t receive timely and consistent payments for their milk due to the high capital costs and cash flow needs of running a dairy farm. 

One commenter said farmers want their income to come from consumers, not from the federal government. He wondered why Federal Milk Marketing Orders (FMMOs) are even needed to guarantee payment.

“Why? So you get paid,” replied panelist Covington. “The FMMOs all establish dates when advance and final payments are made. Having been a co-op manager working with fluid milk plants, I can’t emphasize enough how important this is.”

He also pointed out the important auditing, weights and measures, and market information the FMMOs provide.

McCully said these other services provided by FMMOs are “something we need more of going forward. We need less (price) regulation and more (market) information,” he added. “What’s not working is the milk pricing.”

Here’s where the crux comes into play: The FMMOs are not set up to regulate a global product market, and the industry has set its sights on exporting even more. This is leading the dairy industry to look at how other countries price milk as it relates to the U.S. pricing system and its ability to “be globally competitive.”

As the percentage of Class I sales have declined in relation to growth of U.S. milk production over the past decade, the percentage of milk pooled on FMMOs has also declined from 82% in 2011 to 60% in 2021 (See Table I).

Covington explained how pooling plays out within the FMMO system: “A regulated plant is required to pay its direct shippers and any co-op supplying milk a minimum blend or uniform price. Each Order takes the revenue from each class at the minimum price and pulls it together into one pool to come up with the uniform price.”

He said Class I differentials “have two purposes, to move milk to fluid use and to gain additional revenue for dairy farmers.” They range from $1.60/cwt in the extreme northern U.S. to $6.00/cwt in Miami, Florida and are added to the base Class I mover price. 

The regulated Class I plants pay the difference between the uniform price and the Class I minimum price into the FMMO. Other class plants voluntarily participate to take a draw from the FMMO to add to what they pay their producers. That’s how it has worked most of the time – until now.

Diminished Class I sales as a percentage of total milk flip this switch, and the 2018 Farm Bill change to averaging Class III and IV skim plus 74 cents — instead of the ‘higher of’ — along with the advance pricing element, have increased the de-pooling pressure on this system, especially during times of volatility.

When asked about wide price inversions that occurred in some months over the past two years, both Covington and McCully observed the impact on bottlers paying above minimum prices to attract milk away from then higher-value Class III.

In thinking about the future, Covington reminded attendees of the past. He said at one time some Orders had individual handler pools — not marketwide pools — a nod to the idea of how FMMOs could continue to regulate Class I, if handlers in the other classes lose interest in participation.

Back when California was a state order, virtually all milk was pooled. Plants had to make decisions about pooling annually by January 1. 

McCully contended that this scenario led to dumping of milk and inefficient transport to other areas. According to his analysis, the idea of making the pooling rules more restrictive and uniform across all FMMOs would lead processors to completely leave the system, and they can do that because their participation is voluntary, except for Class I.

Risk management was on the mind of several commenters, including Doll. He pointed out how the ‘holes’ in the Class I pricing change were exposed by the pandemic volatility. (Significant losses to Class I value are occurring again in the February and March 2022 Class I price.)

Joining Doll as a fellow Illinois dairy farmer was Bryan Henrichs. He said the class price inversions during the pandemic left many farmers on the losing end of what they thought were ‘safe’ $18 Class III forward contracts. The up to $9 negative PPDs kept them from achieving that price when the Class III price exceeded the contract level, but the farmer didn’t receive that price in the milk check — a double whammy.

Henrichs and others noted that milk should be priced competitively and simplified. Henrichs mentioned the idea of pricing milk at one price — no matter what it is used for — allowing market participants, including farmers, to manage risk and trade location basis, like for corn.

Arden Tewksbury’s comments from Progressive Agriculture Organization based in Meshoppen, Pennsylvania were presented by Carol Sullivan — highlighting the need for cost of production in the pricing equation, along with a realistic supply management program. 

Annual FMMO pooling decisions (instead of in and out), and his longtime support for whole milk in schools were other key points offered by Tewksbury.

One attendee stated that if processors are looking to raise their ‘make allowances,’ why not add a ‘make allowance’ for producers?

On cost of production, McCully pointed out that the range is wide between a 50,000-cow dairy in western Kansas and a 40-cow dairy in northern Vermont, for example. He said interstate movement of milk and the fact that FMMO participation is voluntary for over 80% of the milk outside of Class I creates issues for using a blanket national average cost of production.

McCully said ‘cost-plus’ contracts are being used today by some processors and producers, but this is only for milk sold outside of the FMMO system.

As confirmed by Covington, 40% of the U.S. milk supply was priced outside of the FMMOs in 2021. He said this could increase as Class I becomes a smaller slice of the growing pie, especially in areas of the country where Class I is already quite small.