Today, U.S. Senator Kirsten Gillibrand, chair of the Senate Agriculture Subcommittee on Livestock, Dairy, Poultry, Local Food Systems, and Food Safety and Security, held a video press conference calling on the U.S. Government Accountability Office (GAO) to evaluate the workability of the federal milk pricing system, which leaves many of New York’s small and mid-sized dairy farmers at risk of inadequate pay. This action is a follow-up to Senator Gillibrand’s introduction of her legislation, the Dairy Pricing Opportunity Act, which would pave the way for reforming and modernizing federal milk pricing. The requested GAO report would provide important information to help modernize the Federal Milk Marketing Order system (FMMO) and ensure that it is working in the best interests of all farms, but especially small and mid-size farmers.
“Our current milk pricing system is wholly inadequate and nearly a century out of date,” said Senator Gillibrand. “Volatile milk pricing and industry consolidation, among other factors, have left thousands of family farmers with no choice but to leave the dairy industry entirely. It is time for comprehensive reform. We need a system that fairly compensates our dairy farmers, reflects the modern marketplace, and puts power back in farmers’ hands. I urge the GAO to rapidly provide the requested information so that we can begin to create a system that works for New York’s small farmers.”
New York is the fifth largest dairy-producing state in the nation and home to nearly 3,500 dairy farms. Senator Gillibrand is a longstanding advocate for these farmers and has consistently worked to reform the FMMO system, which is one of the most complicated economic systems in the country and, in its current form, forces farmers to contend with potentially volatile milk prices and the risk of inadequate pay. These challenges, in addition to rising costs and intensifying competition, have forced many small dairy farmers to leave the industry. The U.S. has lost nearly 60% of its licensed dairy operations since 2003, and in New York the number of dairy farms declined from 4,190 to 3,430 between 2018 and 2021 – a loss of approximately 18%.
Last year, Senator Gillibrand introduced the Dairy Pricing Opportunity Act, which would require the U.S. Department of Agriculture (USDA) to initiate the process of holding FMMO hearings within six months, allowing producers and industry to consider and review proposals that could change Class I skim milk pricing and other topics deemed necessary for reform by the dairy industry. This would ensure that producers who understand these dynamics firsthand will have a voice in formulating any potential changes in calculating the price of Class I milk and additional policy proposals.
In order to have complete information to reform the FMMO system, Senator Gillibrand is requesting that the GAO answer the following questions:
- Can the FMMO Program be administered under its current statutory authorization to maintain operation of smaller-scale farms, or must the enabling legislation be amended in order to achieve this objective?
- If needed, how should the FMMO Program’s enabling language be revised to best assure the sustainability of small and mid-size dairy farm operations while still accounting for the importance of larger scale farms?
- Should the enabling language replace the uniform national Class II-IV pricing series with differing pricing formulas and pooling provisions that reflect the distinct marketing conditions among the nation’s regional dairy markets?
- Is a tiered producer payment structure reflecting the different costs of production for different-sized operations a viable method of achieving the policy objective?
- Is incorporation of cooperative base excess plans into the FMMO Program, or some other form of governmental regulation of milk production, together with pooling and price regulation, necessary to achieve the policy objective?
- Would such revision to the FMMO program also reduce the costs for states that have implemented programs to maintain operation of small and mid-size dairy farms?
The full text of Senator Gillibrand’s letter to the GAO is available here.
A resource guide for New York’s dairy farmers is available here.