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No Farm Bill, No Dairy Forward Pricing Exemption

October 8, 2012

The United State's Department of Agriculture’s Federal Milk Marketing Order offices sent letters out last week notifying producers the end of the exemption on paying minimum prices for new Class II, III and IV contracts in forward pricing programs offered by proprietary milk plants.

The program ended because Congress has not passed a new Farm Bill and has not extended the forward pricing program for producers shipping to proprietary plants.

"Therefore, proprietary handlers establishing new forward contracts on or after October 1, 2012, will not be exempt from paying minimum Federal Order prices," says Paul Kyburz, market administrator for the Upper Midwest Order. "Previously established contracts that extend through September 30, 2015, are not impacted."

"With the expiration of the Forward Pricing Program, all producers may still chose to (but are not required to) have forward pricing contracts," he says. "For producers being paid by proprietary plants, however, such contracts do not exempt the proprietary plants from its obligation to pay the producer at least Federal Order minimums on milk pooled on the order."

If you have questions, contact your local Federal Order office.


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