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Regulated FMMO milk prices for Classes II through IV are identical across the country.
The long-standing (around since the 1930s) Federal Milk Marketing Order (FMMO) program covers most regions and regulates minimum prices buyers must pay based on the "end use" of the milk.
The FMMO system in the United States dates from early in the New Deal era of the Great Depression in the 1930s.
Federal Milk Marketing Orders (FMMOs) were named by three-fourths of survey respondents as an impediment.
The majority of farmers in other states operate under an FMMO, which provides uniform dairy prices for milk based on market prices.
Cooperative leaders from CDI, DFA and Land O'Lakes began advocating for an FMMO to work with the California Department of Food and Agriculture to correct pricing disparity.
Within each FMMO, dairy processors are required to pay a minimum price for milk, depending on its end use (referred to as classified pricing), and the values of all milk sales are pooled to generate a uniform average price that is paid to all dairy farmers.
In the following sections, I review the economic drivers of this historic shift in milk price policy, outline some economically important differences between the new California FMMO and the program it replaced, and explain some major economic implications of the policy change.
Over the decades, both the FMMO system and its California counterpart evolved; certain features (some details and some more basic) have been different all along.
They estimate that the FMMOs effectively cost the average US household $152.88 per year.
Over the years, it has been affected by dairy price support programs, import quotas on dairy products, and the FMMO. For several decades, the supports, quotas, and marketing orders jointly determined farm, wholesale, and retail prices for processed fluid milk and manufactured products.
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