Dairy Industry Details Challenges from the Class One Milk Mover

A hearing on milk pricing recently took place in the Senate regarding the Class One Milk Mover. Alan Bjerga, the Senior Vice President of Communications with the National Milk Producers Federation, says the hearing took place because U.S. dairy farmers are frustrated with the Federal Milk Marketing Order System.

“Yeah, this all plays together and, of course, you start unraveling issues like the federal milk marketing order system, and you quickly become bewildered by the complexity. But we at National Milk have been focusing on the Class One Movers as an issue because, as you know, it’s really at the root of a lot of what was going on last year, and this was really more sort of an educational, informational hearing to get some of the concerns that dairy farmers have out into the public eye. There’s a lot of discussion about some of these issues in terms of milk pricing, really some of the stresses that we’ve seen through the pandemic, and some of the weaknesses and flaws that have been highlighted by what’s been going on over the past year.”

Witnesses at the hearing talked about the current problems with the milk mover; “We have a couple of things going on revolving around the Class One Mover: you have this Pandemic Market Volatility Assistance Program that the USDA just announced last month that is supposed to compensate farmers, at least partially, for some of the losses that they experienced because of the change of the Mover Formula in the 2018 Farm Bill. Now, the other question was looking at what you do with the Class One Mover itself? You still have this problem here.”

U.S. dairy farmers lost a lot of money after the mover was changed in the 2018 Farm Bill; “Your first problem is that farmers lost about $750 million because of this change, and the USDA’s program compensates $350 million, so where does that other $400 million go, and how do you come up with some sort of solution that’s fair to all sizes and regions? It’s gonna be a challenging thing when these checks come out because I guarantee you that no two dairy farmers are going to get the same amount of money in a check, and how this formula is determined is not going to seem very transparent to a lot of these producers.”

Bjerga says some of the risk that shifted from processors to producers needs to be evened out; “Meanwhile, you’re heading into the next farm bill, and you’re looking at, okay, what do we do to make sure that this problem doesn’t happen again? Dairy farmers right now, the way the mover is structured, is we have seen from the pandemic that, compared with processors, a lot of price risk now falls on the back of the farmer that wasn’t falling back there before. So how do we make sure that this is an equitable risk, and what sort of a formula have you come up with? There are several proposals out there, and NMPF has its own, and some other ones are floating around there as well. We’ve got to figure out for Congress what is the best solution because this is a problem that needs to be solved.