The California dairy industry continues to adjust to changes brought about by the Federal Milk Marketing Order (FMMO). The FMMO rollout has been coming along relatively smoothly over the past months as the state’s dairy industry learns to function under a new system of pricing and milk pooling.
“I think the coffee shop conversations were at an all-time high, where people were trying to gauge where they stood in relation to this whole new system,” said Director of Economic Analysis for Western United Dairies, Annie AcMoody. “Overall, now we’re over eight months in and I think most people are pretty happy with what we’ve seen. In particular, if you look back at what our California Class prices have been compared to what the federal order class prices are, it’s showing an improvement at least on that front.”
California represents more than 18 percent of all U.S. milk production and with this new order, FMMO’s now regulate nearly 85 percent of the milk produced in the U.S. AcMoody has spent significant time reviewing how California dairies are faring under the FMMO, compiling an in-depth report at the request of CoBank. Some of the highlights include a look at pricing improvements under the federal order. Prior to the implementation of the FMMO, California’s equivalent to federal class III averaged $1.33 per cwt below the federal level.
“If you look at the difference between what the cheese milk prices have been; about $0.43 higher for the regulated federal price. The butter powder price, about $0.27 higher for the federal price,” AcMoody noted. “I think most producers feel they’re getting a higher value in their milk check through this.”
There have been a few challenges along the way for the FMMO rollout, particularly for dairy processors who may have never dealt with federal orders before. One specific area that is undergoing substantial change is how milk is moved now that the transportation allowance system has been eliminated. “I think overall it has allowed an efficient relocation of how the milk is moving and we’ll keep seeing changes as we move down the line and processors get more efficient at moving the milk,” AcMoody noted.
Listen to AcMoody’s interview below.