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Changes to milk pricing for producers, not consumers

A photo from the Midwest Dairy of three cows in headlocks provided by the Nebraska State Dairy...
A photo from the Midwest Dairy of three cows in headlocks provided by the Nebraska State Dairy Association.(Matt Addington | Marresa Burke)
Published: May. 3, 2021 at 4:47 PM CDT
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NORTH PLATTE, Neb. (KNOP) -The Nebraska State Dairy Association is the voice of Nebraska Dairy Farmers. The NSDA is working to promote growth, success and sustainability for the dairy industry in Nebraska.

“Farmers only have limited options to sell their milk in Nebraska. The demand for fluid milk processing or raw milk processing has never been higher than it is today,” said Kris Bousquet Executive Director of Nebraska State Dairy Association.

Dairy farmer groups are proposing Class III Plus for better milk pricing plans. Compared to other dairy industries, dairy farmers are not compensated equally.

“If this proposal is adopted, it will affect the entire country. The entire United States will follow this Class III Plus pricing structure. It would provide stability for not just Nebraska farmers but farmers all across the United States,” said Bousquet.

Class III Plus aims to build on the current pricing system. Recent proposals by dairy cooperatives and dairy farmer petitions are calling for a better Class I pricing system. The Class III Plus proposal would connect the Class I (fluid) skim milk price to the Class III (cheese) milk price plus an adjuster and do away with advanced pricing.

“The problem really kind of aspirated some issues where our farmers weren’t able to utilize some of the federal programs,” said Bousquet.

Last year, advanced pricing caused a negative producer price differential (PPD). This new proposal is more equitable among farmers, processors and customers. Class III Plus also creates stability for farmers, including protection from PPD and better risk management ability.

“You can either go out there and get revenue back for farmers that lost money, or you can make the changes for the industry and balance everything so everyone benefits in the future,” said Bousquet.

Class III Plus does not increase prices to the customers. In stores, milk pricing is decided by the margins of processors. Proposal changes are not increasing the price of production but balancing things out.

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