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Dairy economist warns changing the Federal Milk Marketing Orders for coronavirus relief is a bad idea

A dairy economist says an effort underway by several milk processors to change the Class I Federal Milk Marketing Order is a huge mistake.

Marin Bozic with the University of Minnesota says the dairy industry needs help, but changing the federal orders is the wrong way to provide it. “My heart goes to producers in Florida and Georgia and New York and Pennsylvania, and elsewhere that are caught in the crosshairs of this virus, but the best way to help them is not by putting the program that was with us for 80 years in total jeopardy delegitimizing it. The best way to help them is through coronavirus payments that USDA will announce next week in the rulemaking.”

A group of processors sent a letter Monday to the USDA requesting an emergency national hearing to amend all federal milk marketing orders.  They want USDA to establish a minimum Class I milk price mover of $15.68 for the months of June, July, and August. 

Bozic says not all dairy leaders are on board with this proposed change, and many are meeting in the next day or two. “I think if AMS is under the impression that the dairy industry is united over this proposal, they’re in for a surprise.”

So far, USDA has not responded to the request.

Bozic says once the U.S. is past the coronavirus pandemic, there should be a discussion about the market orders, the block-barrel spread, and other issues but he says to do so now is like combing your hair while the house is on fire. He says, “My opinion is the direct payments with no caps is the least distorting way that we can do this and still promote good risk management practices on the producer side and good milk balancing practices on the cooperatives and milk buyer’s side.” Bozic says changing the order puts the cost more directly on the consumer immediately instead of on all after recovery from the virus.