Washington, D.C. – U.S. Senators Susan Collins and Angus King called on the U.S. Government Accountability Office (GAO) to evaluate the federal milk pricing system’s effectiveness, as it currently leaves many of Maine’s small and mid-sized dairy farmers at risk of inadequate pay.  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, regardless of the size of its operations.

“We would like to ensure that the FMMO Program is being administered in a manner that accounts for the interests of smaller-scale operations, particularly in the regions of the country that are dependent on smaller-scale farms to provide stable and adequate supplies of milk,” the Senators wrote.  “We would also like to ensure that the FMMO Program is being administered in a manner that does not cause undue burden and cost for state dairy regulatory and support programs that maintain the viability of small-scale farms.”

Senators Collins and King are longstanding advocates for dairy farmers and have 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.

The letter is a follow-up to a bill Senator Collins introduced and Senator King co-sponsored, the Dairy Pricing Opportunity Act, which would pave the way for reforming and modernizing federal milk pricing.  The bill 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, Senators Collins and King are requesting that the GAO answer the following questions:

1. 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? 
2. 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? 
3. 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?  
4. Is a tiered producer payment structure reflecting the different costs of production for different-sized operations a viable method of achieving the policy objective?
5. 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?
6. 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?

In addition to Senators Collins and King, the letter was signed by Senators Kirsten Gillibrand (D-NY), Jeanne Shaheen (D-NH), Patrick Leahy (D-VT), and Roger Marshall (R-KS).

The full text of the letter to GAO is available HERE.