A bill to prevent USDA from using a milk differential formula included in the department’s final rule on milk marketing order reform has been introduced with the enthusiastic support of the nation’s largest milk producer organization.  Instead of a revised Option 1B on differentials, USDA would have to use Option 1A which backers say would yield greater revenue for dairy farmers.

The National Milk Producers Federation says dairy farmers could lose nearly $200 million a year if the revised 1B option were implemented.  A bill to force the change was introduced Thursday by Rep. Roy Blunt (R-MO).

Jerry Kozak, NMPF’s chief executive, said the federation supports the bill because “Congress did not ask USDA to reduce dairy farmer income as it reforms the federal order system, but our analysis shows that’s exactly what will happen” under 1B.

Blunt’s bill has 125 co-sponsors.

USDA offered two options in its proposed rule last year for setting Class I differentials.  The differentials pay for that portion of milk sold for drinking.  Option 1A proposed higher levels of differentials than 1B.

However, in the final reform proposal, released March 31, USDA used a modified version of 1B, a decision with “negative ramifications for U.S. dairy producers,” Kozak said.

“We support this legislation, because it reflects the majority of the comments that USDA received when it asked the industry for input on the two options proposed,” Kozak added.  “USDA’s own analysis of the public comments found that by an eight-to-one ratio, the industry preferred Option 1A to 1B.  Yet the department elected to go with 1B.”

Other parts of the pricing structure also are problematic, Kozak said, including lower prices for Class III products such as cheese.  He said NMPF will work either administratively or legislatively to address the price problems.