The FMMO and Co-Packing for Dairy Farmers

Understanding the Federal Milk Marketing Order (FMMO) and Opportunities for Small-Scale Processing

 

• The FMMO is regulatory body that establishes the minimum price farmers receive for their milk.
• The FMMO operates under set of rules impacting how milk moves and is processed at different plants. 
• Two key themes in FMMO regulations affect co-packing:

1. Classification of the plant affects where the supplied milk is sourced from, and how much is sourced.
2. Timing of diversion can affect a dairy farmer coming in and out of the pool.

Processor Classifications

There are different classifications and associated rules for dairy processing plants, also known as handlers. A handler is a processor of fluid milk or a cooperative (an association of dairy farmers which has full authority in the sales of its members). There are two types of handlers: fluid (beverage milk) and manufacturing (cheese, ice cream, butter, etc.). The FMMO must regulate fluid milk handlers—manufacturing handlers typically participate when it is economically beneficial.  

In Massachusetts, most plants fall under these categories: 

 

Classification of handler​	Definition	​
Producer Handlers (PH)​	Farmers who process between 150,000 – 3 million lbs. of fluid milk per month​	Can buy up to 150,000 lbs. of outside milk a month from a pooled source (i.e. from a cooperative). ​ Ability to co-pack for other farmers is limited by FMMO requirements for purchasing outside and pool milk
Pool Distributing Plants​	​25 percent or more of the total quantity of fluid milk products physically received at the plant are disposed of as route disposition or are transferred in the form of packaged fluid milk products to other distributing plants.	Pay into the pool ​under certain circumstances
Non-Pool Plants (NP)​	Cheese  or other dairy processing plants that process Class II-IV products and do not process Class I products. ​	No limits on the amount of Class II-IV products processed, packaged and sold at these facilities. ​ No limits on the source of milk which can either be fully-regulated (pooled) or diverted (non-pool)​
Exempt Distributing Plants (ED)​	Farmers or processing plants selling less than 150,000 lbs. of Class I fluid milk. ​	Can buy outside milk directly from another farmer o(non-pooled) or from a pooled source. ​ Can process unlimited volume of Class II-IV products using own farm’s milk or milk from another source.​ As long as stay under volume restriction for sales of fluid milk per month, EDs have ability to co-pack milk for other farmers​

Additional Resources

The FMMO: An Overview

What dairy farmers need to know:

If the farmer who wants to co-pack is a member of a cooperative or has an annual supply contract with a pool plant: 

1. If the farmer wants to transport their milk to a non-pool facility, the farmer will need to adjust their contract to divert or remove the volume of milk targeted for value-added products from the pool. This is a contract discussion with the farmer’s Cooperative or Pool Plant.  

2. If the farmer wants their milk to be bottled at a pool facility, the farmer will need to work with their cooperative to arrange for transportation to the pool facility. 

2. The FMMO does not allow milk to exit and re-enter the pool, except during specific time periods, to prevent milk from leaving the pool in the low-supply season (fall and winter) and returning in the high-supply season (spring and summer).  The revised contract should set a time period and provide for a reset during June to coordinate with when a DFOM (Dairy Farm Out of Market) can return to the pool. 

Additional Resources

Northeast Order Language effective May 2019

Dairy Farmer for Other Markets (DFOM) Matrix

How do I know what facilities can co-pack for my dairy farm?

Our map of dairy co-packers lists the facilities that are interested in co-packing for dairy farmers. When you click on a facility's icon, the FMMO designation will appear in the description. 

We ask that you contact MDAR before reaching out to a co-packer so that we can work with the FMMO to ensure that your dairy farm can co-pack with a selected facility.