CHILTON, Wis. — March 30, 2026 — The American Dairy Coalition (ADC) is drafting final comments for submission to USDA AMS on the Advance Notice of Proposed Rulemaking (ANPR) for mandatory manufacturing cost and yield surveys tied to Federal Milk Marketing Order (FMMO) make allowances. In it, ADC raises concerns about transparency, scope, and limited time for farmer input.
The survey is tied to make allowances—embedded deductions within federal milk pricing formulas that directly reduce the value of milk paid to farmers.
Those deductions are already significant. In ADC’s submission, analysis of the first eight months under the 2025 Federal Milk Marketing Order (FMMO) changes, show an average increase of $0.93 to $1.00 for total make allowances ranging from $3.22 to $5.04 per hundredweight across Class III and Class IV minimum price formulas at pool average test, with further total impact per pound of components above average.
“In practical terms, that’s a multi-dollar deduction built into the pricing system on the front-end,” said Laurie Fischer, CEO of ADC.
ADC analysis shows the 2025 changes increased estimated processor gross margins by 26% to 39%, while reducing minimum milk value to farmers by 5%. Further analysis demonstrates this 5% reduction essentially offsets nearly two decades of modest, incremental average milk price gains for farmers at a time when they are facing significantly higher input costs.
Furthermore, the gap between the reported All-Milk price (before deductions and used in the DMC program) and the AMS Mailbox price (includes line item deductions) has widened to $1 per cwt., which impacts risk management effectiveness.
ADC’s comments emphasize that farmers believe this mandatory survey will function as an audit, providing clarity on what is being deducted from their milk checks and what those deductions are paying for. However, the 30-day comment period, coupled with limited public outreach, left many farmers unaware of the process and unable to provide meaningful input.
“Farmers didn’t have time to fully engage in a process that directly affects how their milk is priced,” Fischer said. “There is a real expectation that this survey will provide transparency, and USDA needs to ensure that expectation is met.”
Modern dairy plants produce a wide range of products beyond those used in federal pricing formulas. ADC warns that without clear reporting distinctions, costs tied to those products could be shifted back onto farmers through make allowances.
ADC is urging USDA to ensure the survey clearly separates costs tied to products used in pricing formulas from those outside the formula and prevents cost shifting across product lines, while also incorporating plant efficiencies gained. For example, in 2025, almost 25 fewer tankerloads of milk per day are required to produce one million pounds of 38% moisture cheddar cheese compared to 2000 due to increased milk components.
ADC also recommends that if USDA collects cost data on additional products, it should collect mandatory price data for those products as well, to provide meaningful context for future policy decisions.
Dairy farmers produce and ship milk weeks before knowing the price they will receive, while pricing announcements and pooling decisions occur after the fact—directly affecting the final milk check.
At the same time, farmers face rising costs without a mechanism to recover those costs within the pricing system. “Dairy farmers remain the only participants in the supply chain without the ability to set prices or recover costs through a built-in mechanism,” Fischer said.
ADC stresses that this mandatory processor cost survey must avoid “scope creep” and remain focused on its intended purpose: measuring the physical cost of converting milk into the four specific products used in federal pricing formulas.
“This is about transparency and fairness—farmers should not be paying for costs tied to products that do not determine their milk price,” Fischer said.
