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Dairy Association’s Biggest Member Quits Over Pricing Reforms

June 21, 2023
Dairy Farmers of America is leaving the International Dairy Foods Association over the latter’s suggested changes to the Federal Milk Marketing Order system.

The International Dairy Foods Assn.’s largest dairy cooperative member, Dairy Farmers of America (DFA), is quitting the association over IDFA's petition to modify the Federal Milk Marketing Order system.

At nearly $20 billion worth of raw milk handled and $5.5 billion (our estimate) of that turned into consumer-ready products, DFA is the largest milk processor in the country, with 83 processing plants throughout the U.S. But it’s a farmer-owned co-op, and pricing changes that favor its processing side usually harm its farmer/producer side.

The dairy-producing industry is heavily regulated by USDA, and the agency’s Federal Milk Marketing Order (FMMO) system sets pricing formulas -- meant to balance profitability between producers and processors. The current FMMO last was changed significantly in 2000. There have been more than 150 meetings over the past two years to discuss updates, according to the National Milk Producers Federation.

After many of its own meetings to seek consensus, IDFA apparently submitted a proposal to change the “make allowances” in the “the Class I mover” that apparently benefit processors more than they do producers. IDFA called it a "balanced approach" based on sound data and beneficial to both processors and dairy farmers.

Producers see it otherwise.

"While IDFA generally maintains a neutral position on policies lacking full membership consensus, a critical exception was made earlier this year when they submitted a divisive milk pricing policy proposal to USDA," DFA said in a statement carried by various dairy media. "This placed DFA in the untenable position of being represented as supporting a policy position [that] contradicts what we believe to be in the best interests of our farmer-owners and the dairy industry.

“Following requests to return to a neutral policy position until a consensus position could be reached, DFA made the difficult decision to submit notice to withdraw from IDFA membership."

The association countered: "IDFA has a broad membership … from all segments of the dairy supply chain, from cooperatives to proprietary processors to retailers who produce their own private labels. No other dairy association has this kind of diverse, influential membership with a global footprint. Because we are a diverse membership and expect disagreements from time to time, our job is to be inclusive and balance those diverse interests."

About the Author

Dave Fusaro | Editor in Chief

Dave Fusaro has served as editor in chief of Food Processing magazine since 2003. Dave has 30 years experience in food & beverage industry journalism and has won several national ASBPE writing awards for his Food Processing stories. Dave has been interviewed on CNN, quoted in national newspapers and he authored a 200-page market research report on the milk industry. Formerly an award-winning newspaper reporter who specialized in business writing, he holds a BA in journalism from Marquette University. Prior to joining Food Processing, Dave was Editor-In-Chief of Dairy Foods and was Managing Editor of Prepared Foods.

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