The dairy industry is abuzz with talks of reform. The American Farm Bureau Federation (AFBF) is at the helm, urging changes in milk pricing strategies. This proposal was presented by Chief Economist Roger Cryan during the Federal Milk Marketing Order Pricing Formula hearing.
The spotlight is on the removal of Class I and II milk from the current advanced pricing formula. To elucidate, Class I milk quenches our thirst, whereas Class II graces our desserts like ice cream.
Findings from the AFBF highlight the turbulence caused by advanced pricing. This system, they argue, often puts dairy farmers in an unfavorable spot, especially when other milk classes' prices overshoot the pre-decided advanced price.
The AFBF's suggested reforms chiefly target the reduction or outright removal of negative producer price differentials. Such differentials lead to the prevalent issue of de-pooling. An orderly, stable pool, they maintain, is paramount to ensure the dairy market functions optimally for all stakeholders. And at the heart of this pool lies the harmonization of the four milk Class prices.
The main issue is when prices are announced at different times. The difference between the early and final prices can cause confusion, which often results in frequent adjustments and makes the dairy market unpredictable.
Source : wisconsinagconnection