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July 7, 2017

USDA Denies Pennsylvania Request for National Dairy Hearing

 |  By: Jim Dickrell

Earlier this week, the United States Department of Agriculture (USDA) denied a request by the Pennsylvania Agriculture Organization that the agency conduct a national dairy hearing to reform Federal Milk Marketing Orders (FMMO).

The proposal, sent to USDA in early June, would have collapsed the four current dairy product classifications from four to two, combining all non-fluid dairy products into a single class. Minimum price levels for both classes would have been based on cost of production estimates rather than market prices.

USDA ran the proposal through its national econometric model, and concluded the proposal wouldn’t achieve the goals of increasing farmer revenue while conforming to established Federal Order tenets, says Dana Coale, Deputy Administrator for USDA’s Agricultural Marketing Service Dairy Program. USDA concluded that manufacturers would not participate in the proposed Class II pool because prices would not be linked to commodity dairy market prices that they receive.

“Consequently, only producers directly servicing the Class I market would see increases in their all-milk prices…. Other producers would experience a decrease in their all-milk prices because manufacturers would choose not to pool their milk within an FMMO and thus would not be required to pay minimum FMMO prices,” Coale says.

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