How the USDA’s New Milk Pricing Rules Impact Dairy Producers

MID-WEST FARM REPORT - MADISON

Picture starting your day with a glass of milk or a splash of cream in your coffee—simple, comforting moments that bring us together. But have you ever stopped to think about how that milk gets from the farm to your fridge? Behind the scenes, a complex pricing system affects the farmers, processors, and supply chains that keep our dairy industry running. Changes are coming that will reshape how milk is valued and impact everyone in the dairy chain. Dana Coale, Deputy Administrator of USDA’s Agricultural Marketing Service Dairy Program, explains how the recent Federal Milk Marketing Order ruling will affect the dairy market.

The updates focus on five main areas:

1. Make Allowances: Adjustments were made to the allowances for processing costs in price formulas for Classes III and IV milk.
2. Cheese Survey Adjustments: Barrel cheese was removed from the product formula used to calculate minimum prices.
3. Class I Differentials: The pricing method for skim milk in Class I products returned to the "higher of" formula. For extended shelf-life products, the average price plus 74 cents will apply.
4. Milk Composition Factors: Changes were made to better align formulas with the composition of milk.
5. Industry Data Input: The changes were based on industry feedback, including over 12,000 pages of testimony and input from 65 producers.

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