More details on the National Milk “Foundation for the Future”

The National Milk Producers Federation releasing more details of their Foundation for the Future plan for federal dairy policy. NMPF president and CEO Jerry Kozak, Senior Vice President and CWT Chief Operating Officer, Jim Tillison and Senior VP of Strategic Initiatives, Jaime Castenada explained the plan to reporters on Friday.

The plan would replace the federal dairy component price support system and the Milk Income Loss Contract with a Dairy Producer Margin Protection Program. Operated by the Farm Service Agency, the program would calculate the margin of milk-over-feed cost on a model dairy farm enterprise including for all milk cows, hospital cows, dry cows and replacement calves and heifers. The calculation will be done monthly using corn, soybean meal and alfalfa hay.

Margin coverage will be available on two levels, base at no cost and supplemental for a premium. It will cover all producers regardless of size or region. Support will only be for base production, it would not cover expansion.

The plan also changes the Federal Milk Market Orders. It would maintain a minimum price for Class I price with no change in differentials. The Class I mover would use a national weighted average competitive Class III price based on surveys of both regulated and unregulated proprietary cheese plants processing a minimum of 500,000 pounds of milk a day and covering all varieties of cheese.

Maintain a minimum Class II price also using a national weighted average competitive Class III price plus a differential. The Class III price would be a competitive pay price. There would be no minimum Class III price. Maintain a minimum Class IV price using the present formula with the addition of an indexing feature for energy costs. Establish the lowest regional competitive Class III price as the pool draw base.

The plan also has a program to stabilize production based upon the Producer Margin. If the producer margin falls below a trigger price, the percentage of production covered by the Margin Protection Program declines.

Monies to fund the program will be collected by the USDA Ag Marketing Service using the framework of the dairy promotion checkoff.

Further details of the program are available here:

AUDIO: Jerry Kozak talks about the plan

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