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Senator Gillibrand Begins Bipartisan Push To Restore Former Milk Pricing System

A bipartisan push has begun, being led by Sen. Kirsten Gillibrand, to restore the way the milk price is set for dairy farmers to the “higher of” Class I pricing formula.

Gillibrand, who is also the chair of the Senate Agriculture Subcommittee on Livestock, Dairy, Poultry, Local Food Systems, and Food Safety and Security, led a bipartisan group of 13 senators in urging the United States Department of Agriculture to restore the pricing formula through the Federal Milk Marketing Order system to fairly compensate dairy farmers and prevent additional losses of Class I skim milk revenue. In the letter sent to the USDA by the senators, they highlighted how dairy farmers have lost more than $1.1 billion in Class I skim milk revenue over the past five years since the “higher of” Class I pricing formula – the pricing formula for fluid milk – was modified in the 2018 Farm Bill.

Before the 2018 Farm Bill, Class I milk was calculated using the “higher of” Class III or Class IV price plus the applicable Class I differential. This was changed in the most recent Farm Bill to an averaging method of Class III and Class IV plus $0.74. The resulting loss of income for dairy producers has led to increased calls from the industry for USDA to resolve this issue with the Class I mover through the Federal Milk Marketing Order system.

“When the dairy pricing system isn’t working for farmers, the economic ramifications are felt across the country,” Gillibrand said. “The ‘higher of’ Class I mover was in place for nearly two decades prior to it being modified in the last Farm Bill, and despite the best of intentions, the current formula has not performed as intended and has cost dairy farmers over a billion dollars nationwide. Restoring the previous ‘higher of’ Class I mover is the right move to ensure our dairy farmers are properly compensated, and I urge the USDA to restore the formula in the draft and final FMMO changes.”

Locally, Chautauqua County Farm Bureau President Dick Kimball, agreed that it was something that “absolutely needs to be done.”

“It has been costing the producers billions,” Kimball said. “During Covid, people were also depooling, which has caused other problems. With depooling, they can take themselves out of the pool to be included to calculate the milk price if the price is high.”

Kimball said the goal needs to be to go back to the “higher of” Class I milk price, and to also make it harder for others to depool, and once they do make it harder for them to get back into the pool later. Kimball added that depooling was happening a lot during Covid, but is still happening even now.

“It is good that they are pushing to go back, and we definitely want to go back to the ‘higher of’ pricing system,” Kimball said. “The current way has been costing us billions of dollars. Of course, nobody could predict Covid but it has been costing us a lot of money.”

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