Federal Milk Marketing Orders (FMMOs) establish certain provisions under which dairy processors purchase fresh milk from dairy farmers supplying a marketing area. In Federal order provisions, dairy processors are referred to as handlers and dairy farmers are known as producers. A marketing area is generally defined as a geographic area where handlers compete for packaged fluid milk sales, although other factors may be taken into account when determining the boundaries of a marketing area. Federal orders serve to maintain stable marketing relationships for all handlers and producers supplying marketing areas, thus facilitating the complex process of marketing fresh milk.
The Agricultural Marketing Agreement Act authorizes FMMOs and USDA amends and establishes them through a hearing process overseen by the Secretary of Agriculture. The hearing process enables the dairy industry to submit proposals and evidence to support the establishment of and amendments to Federal order provisions. This process allows the Federal order provisions to meet the changing needs of the dairy industry. The establishment and amendments to a Federal order become effective only after approval by producers via a referendum process.
Benefits of the Program
Assures dairy farmers a reasonable minimum price for their milk throughout the year.
Assures consumers of an adequate supply of milk to meet their needs throughout the year and help prevent wild fluctuations in price through periods of heavy and light milk production.
Each milk marketing order includes:
- Classified price plan
- System of minimum prices
- Terms of the order
- Provisions for administering the order