Dairy economist Marin Bozic expects new federal milk marketing orders to offer more producer premiums for components, balancing processor make allowance deductions.
A prominent dairy economist is forecasting significant changes in the dairy industry, with expectations of new offsets to accompany higher Federal Milk Marketing Order (FMMO) make allowances. Marin Bozic, from the University of Minnesota and Edge Dairy Farmer Cooperative, shared insights during a recent interview with Brownfield Ag News.
Bozic anticipates that producer milk checks will see increased premiums for components, providing a necessary counterbalance to the deductions associated with processor make allowances. He believes these changes will encourage more milk to be pooled as processors aim to secure a portion of the producer price differential.
“Under the previous system, the Class III milk price failed to meet market demands, often leading to disappearing premiums and large volumes of milk being depooled. The introduction of the new orders aims to rectify this disconnect, bringing milk back into the pooled market and reinstating over-order premiums,” Bozic explained.
The changes to the 11 federal milk marketing orders, recommended by the USDA, received approval earlier this month through a producer referendum. These changes will be implemented on June 1st, with specific adjustments to skim milk composition taking effect on December 1st.
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