Here's How Pooling of Dumped Milk Works
Even though Federal Milk Market Order (FMMO) pricing boils down, in its essence, to arithmetic, it’s not always easy or simple to understand.
The pooling of dumped milk adds to the complexity. But the basic principles of pooling apply: Everybody in the order shares a bit of the pain, and the individual producer who had to dump the milk does not bare that burden alone.
John Newton, chief economist with the American Farm Bureau Federation, has done a summary of how it all works and can be accessed here. In summary: “The dumped milk will be allowed to be priced and pooled on the FMMO. The FMMO draw will not make any pooling handler or dairy farmer whole, but it will provide nominal financial assistance to the pooling handler to offset the lost revenue associated with dumped milk.”
The handler, unless it’s a cooperative, will still be required to pay Federal Order minimum blend prices. Cooperatives can share losses among their members internally through re-blending.
Newton also notes that in the past, USDA did provide additional assistance and financial compensation for milk that had been dumped due to natural disasters such as hurricanes, floods, tornadoes, snowstorms and wildfires. No such assistance has yet been announced for milk that is currently being dumped due to the COVID-19 pandemic.