The U.S. Department of Agriculture (USDA) Agricultural Marketing Service (AMS) has issued a final rule amending uniform pricing formulas across all 11 Federal Milk Marketing Orders (FMMOs). The rule, unveiled in the Federal Register on January 16, 2025, follows extensive industry consultation and will formally take effect on June 1, 2025, with certain provisions delayed until December 1, 2025.
This decision is the culmination of a 49-day national hearing held between August 23, 2023, and January 30, 2024, in Carmel, Indiana. During the hearing, testimony and evidence were presented on 21 proposals aimed at modernizing FMMO pricing formulas. Following the hearing, AMS issued a recommended decision on July 1, 2024, initiating a public comment period that drew 128 responses. A final decision was published on December 2, 2024, and was subsequently approved by producer referenda in each of the 11 FMMOs.
The finalized amendments include the following key changes:
- Revised Skim Milk Composition Factors: Updates to 3.3% true protein, 6.0% other solids, and 9.3% nonfat solids, with implementation delayed until December 1, 2025.
- Cheese Pricing Adjustment: Removal of 500-pound barrel cheddar cheese prices from the Dairy Product Mandatory Reporting Program survey.
- Updated Manufacturing Allowances: Adjustments for Class III and Class IV products, including $0.2519 for cheese, $0.2272 for butter, $0.2393 for nonfat dry milk, and $0.2668 for dry whey, along with a butterfat recovery factor of 91%.
- Class I Pricing Formula: Reinstatement of the “higher-of” approach for determining the base Class I skim milk price using advanced Class III or Class IV skim milk prices. Additionally, an extended shelf life (ESL) adjustment will be introduced, calculated as the average-of mover plus a 24-month rolling average adjuster with a 12-month lag.
- Updated Class I Differential Values: Reflecting increased costs associated with servicing the Class I market.
The amendments aim to modernize FMMO pricing structures, improve transparency, and ensure that formulas better align with industry realities. The changes will apply to milk marketed on or after the specified effective dates and will be reflected in both advanced pricing and class and component price announcements.
For more information, including access to the final rule, educational resources, and the complete hearing record, visit the AMS National Federal Milk Marketing Order Pricing Formula Hearing webpage or contact the USDA Dairy Program. Inquiries can be directed to fmmohearing@usda.gov.
