American Farm Bureau Federation Zippy Duvall penned an open letter to Agriculture Secretary Tom Vilsack calling for comprehensive milk pricing reform. The move comes in response to recent petitions from the International Dairy Foods Association and the Wisconsin Cheese Makers Association to increase allowances.

While AFBF supports changing parts of the Federal Milk Marketing Order system, Duvall believes the IDFA and WCMA proposals would create additional burdens on dairy farmers. He cites USDA production estimates that show a hundredweight of milk costs dairy farmers $27.50 to produce but only yields a return of $21.23. Loss estimates are even higher for farmers with less than 50 cows.

“Given the present situation, we have grave concerns about the petitions submitted by the International Dairy Foods Association and Wisconsin Cheese Makers Association requesting an FMMO hearing to increase make allowances and solely increase make allowances,” Duvall said. “This one-sided approach to updating federal order pricing would be devastating to America’s dairy farmers.”

While the AFBF does not oppose updating milk allowances, Duvall says the IDFA and WCMA proposals do not address the wider need for changes to the current milk pricing regulations. Instead, AFBF supports replacing the current voluntary reporting system with mandatory cost and yield surveying. Duvall contends this would prevent larger producers from declining to report, potentially skewing the cost survey results.

USDA does not have the authority to institute a mandatory reporting system. However, AFBF officials are pushing Congress to introduce legislation to change that.

Duvall added that USDA should also consider other improvements like adjustments to the Class I and II skim milk price formulas. According to him, these changes should include updates to the Class I and II differentials, and a return of the Class I base price formula to the “higher-of” the Class III or IV formula.

“Dairy farmers continue to face market challenges as part of the high cost, high risk age we live in,” Duvall says. “Trust is critical to maintaining an efficient and resilient federal order system that promotes orderly marketing of milk to consumers across the country. The petitions we oppose here threaten to undercut trust between farmers who produce the milk and the processors who turn it into the dairy products we all know and love.”