Depooling isn’t a one-rule fix
First, a quick reminder of how milk may move in and out of the pool. Dairy order director Erin Taylor from USDA described how fluid and manufacturing processors are regulated differently under the Agricultural Marketing Agreement Act of 1937.
“The way the rules are set up, Class I handlers are required to be regulated. They don’t have a choice. They pay minimum classified prices because the orders are set up to make sure the fluid needs of the consumer are always met,” she said. “That allows our Class II, III, and IV processors to make a decision on whether they want to participate in the pool. It’s not really depooling, it’s just choosing to not pool this month.
Is a single federal order in our future?
Hoard’s Dairyman DairyLivestream, commentators including Cornell’s Chris Wolf, Dairy Farmers of America’s Ed Gallagher, and dairy policy consultant Alan Zolin responded to the question, “Is it time to consider more consolidation in federal orders?”
Just as those involved in the dairy industry across the country would differ in their responses to this question, the panel had varied perspectives.
“Not if it’s strictly consolidation. There are a number of things I would do, but I wouldn’t consolidate how pricing works now,” Wolf shared to initiate the conversation. Instead, he suggested separating out and balancing volatility rather than making a single order applicable to the whole country.
Fair pricing must meet the needs of all
As we have seen before, the intricacies of the Federal Milk Marketing Order system mean that any changes to the orders will result in multifaceted consequences. Being able to balance how all stakeholders in the dairy supply chain farmers, processors, and consumers are impacted by those consequences will determine how effective any changes are.
Hoard’s Dairyman DairyLivestream, Alan Zolin emphasized that how federal order changes “improve” the system or not depends on your perspective. In addition to working for Kraft’s dairy procurement division, Zolin was employed at the USDA’s Agricultural Marketing Service in the federal order system for a number of years. Trained in accounting, he noted that in the early years of his career, he found federal milk marketing orders more complex than our nation’s tax code.