The U.S. Department of Agriculture (USDA) Agricultural Marketing Service (AMS) recently announced a final rule amending the uniform pricing formulas that apply to all 11 Federal Milk Marketing Orders (FMMOs). This final rule, which was made available on Jan. 16, 2025, in the Federal Register and on AMS’s National Federal Milk Marketing Order Pricing Formula Hearing webpage, will be officially published in the Federal Register on Jan. 17.

The final rule comes after a 49-day national hearing that took place from Aug. 23, 2023, to Jan. 30, 2024, in Carmel, Indiana. During this hearing, AMS heard testimony and received evidence on 21 proposals from various stakeholders in the dairy industry. AMS issued a recommended decision on July 1, 2024, and published it in the Federal Register on July 15, 2024, initiating a 60-day public comment period. A total of 128 comments were received, and after thorough analysis, a final decision was issued on November 12, 2024, and published in the Federal Register on December 2, 2024.

Following the publication of the final decision, AMS conducted 11 referenda, allowing producers whose milk was pooled on an FMMO in January 2024 to vote in favor of or against the proposed amendments to the FMMOs. Producers in each of the 11 FMMOs approved the following pricing formula amendments:

1. Updating skim milk composition factors to 3.3 percent true protein, 6.0 percent other solids, and 9.3 percent nonfat solids, with a six-month delayed implementation.
2. Removing 500-pound barrel cheddar cheese prices from the Dairy Product Mandatory Reporting Program survey.
3. Updating Class III and Class IV manufacturing allowances and butterfat recovery factor.
4. Returning the base Class I skim milk price formula to the higher-of the advanced Class III or Class IV skim milk prices for the month.
5. Updating Class I differential values to reflect the increased cost of servicing the Class I market.

These amendments will come into effect on June 1, 2025, with the exception of changes to skim milk composition factors, which will be implemented on Dec. 1, 2025. These changes will apply to milk marketed on and after these dates and will be reflected in the pricing factors released before the start of the month and the class and component prices announced after the close of the month.

Copies of the final rule, educational materials, and the entire hearing record can be found on the hearing webpage or obtained from USDA/AMS/Dairy Program. Questions can be submitted to fmmohearing@usda.gov.

In conclusion, the final rule amending the pricing formulas for the FMMOs represents a significant step in ensuring fair and transparent pricing in the dairy industry. Producers and stakeholders are encouraged to familiarize themselves with the changes and reach out to USDA/AMS/Dairy Program for any clarifications or additional information.