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February 28, 2019

USDA Reauthorizes Dairy Forward Pricing Program

 |  By: Jim Dickrell

The United States Department of Agriculture announced reauthorization of the Dairy Forward Pricing Program (DFPP) today. The program had expired September 30, 2018, but was reauthorized with the 2018 Farm Bill.


The DFPP allows proprietary milk handlers to voluntarily enter into forward pricing contracts with farmer or cooperative associations of producers for a negotiated price of raw milk for non-fluid classes of milk (Class II, III and IV milk) and pay less than Federal Order minimum prices. “The DFPP does not allow for forward contracting of fluid or Class I milk,” notes the Final Rule published in the Federal Register today.


Cooperatives, because they are owned by farmers, can pay less than Federal Order minimum prices. Prior to the DFPP being established in the 2008 farm bill, proprietary plants could not offer any forward contracts that had the possibility of paying prices below Federal Order minimums, placing proprietary plants at a competitive disadvantage to cooperatives.


The 2018 farm bill allows handlers to enter into new contracts until Sept. 30, 2023. Any forward contract entered prior that date is subject to a Sept. 30, 2026 expiration date.


You can read Final Rule the making the announcement here.