USDA’s initial recommendations for modernizing the Federal Milk Marketing Orders came out on July 1. Erica Maedke, vice president of insights at Ever.Ag, talks about some of the potential challenges in those recommendations.

“I do think one of the challenges that USDA had to address was make-allowances. We haven’t updated it in 24 years. Clearly, they’re out of date, but when you change the make allowance, it is a direct transfer of money from dairy producers to the processors. Again, it’s a zero-sum game where there’s only so much money, and either you get it, or I get it, as a dairy producer and a processor.”

She’s not sure USDA went far enough in changing the make allowance regulations.

“There were proposals, there were USDA-commissioned price studies, and USDA didn’t go the full extent of what the economics would say. And in this case, I would say they had to make a political decision and did increase them, but not as much as what all of the studies had to say.”

Maedke was quick to say that modernizing the FMMOs is a tough job.

“So, USDA has a tough job because they’re setting the rules of play. They have multiple stakeholders. They’re trying to make everybody at least partially happy. At the end of the day, it is the dairy producers who vote yes or no, so they’re the ones who have the most say here.”