Breaking News: USDA Issues Final Decision on Amendments to the FMMO Pricing Formulas

On November 12, 2024, the USDA released a draft of the Final Decision on amendments to the Federal Milk Marketing Order (FMMO) pricing formulas.

Based on public comments and reevaluation of record evidence, the USDA made several changes from the Recommended Decision to the Final Decision:

1. Reduction in the delayed implementation of the revised skim milk composition factors from 12 months to 6 months. Implementation timelines have still not been set on the remaining formula changes. Those will NOT be provided by USDA until the Final Rule is published in the Federal Register AFTER the producer vote.
2. Addition of a $0.0015/lb. marketing cost factor to all make allowances.
3. Modification to the methodology used to determine the nonfat dry milk make allowance, resulting in an additional increase of $0.011/lb*.
4. Limited changes to certain county-specific Class I differentials.

According to the USDA, the official Final Decision will soon be published in the Federal Register.

Next Steps: Producer Referendum

With the release of the Final Decision, the USDA will now move forward with the referendum process in each FMMO. Here’s what to expect:

1. Education: Before the referendum, AMS will hold webinars to inform stakeholders about the final decision and voting process. The Zoom link will be posted on the AMS hearing website before each session. These Zoom webinars are scheduled for:
   • November 19 at 11 a.m. EST
   • November 21 at 3 p.m. EST
   • November 25 at 11 a.m. EST
2. Producer Eligibility: Producers who pooled milk in an FMMO in January 2024 are eligible to participate in the referendum. Approved cooperatives may choose to bloc vote on behalf of their eligible members; if a cooperative opts for bloc voting, it casts the vote on behalf of its members, and the producer will not vote individually.
3. The Vote: Producers (or cooperatives) will vote either “YES” to approve the amended Federal Order or “NO” to reject it, which would effectively terminate the Order. For the amended Federal Order to pass, two-thirds of voting producers or two-thirds of the milk volumes must vote “YES.” Each FMMO will conduct its vote independently, so theoretically, it could pass in one region but fail in another.
4. Voting Timeline: AMS will send ballots to eligible independent producers and qualified cooperative associations. To be counted, ballots must be postmarked by December 31, 2024, and received by January 15, 2025.
5. Results: Once the votes are counted, the USDA will issue a Final Rule (if approved) or Termination of Proceeding (if rejected) for each Order. A final rule would be expected in the Federal Register in early 2025 and would include implementation timelines.

Timing and Outlook

HighGround Dairy anticipates that the referendum process will begin next month, with results expected in early 2025. The Final Rule for each FMMO could be announced in Q1 or early Q2 of 2025, with implementation as soon as late Q2 or Q3 of 2025. Further adjustments to skim component factors would be delayed six months, meaning the end of 2025.

Stay tuned for more updates as the FMMO rulemaking process unfolds.

Resources:

• Press Release
• Final Decision Draft
• AMS Hearing Website
• Final Decision Overview and FAQ Document
• Final Decision Contents Video
• Referendum Overview Document
• Referendum Process Video

*Including the marketing cost factor, the USDA increased the nonfat dry milk make allowance from $0.2268/lb. in the Recommended Decision to $0.2393/lb. in the Final Decision.