USDA’s Agricultural Marketing Service (AMS) this week published a final rule that reauthorizes the Dairy Forward Pricing Program (DFPP) in accordance with the American Relief Act, 2025.
Establishing new contracts under the DFPP was prohibited between the expiration of the program on September 30, 2024, and publication of this final rule in Wednesday’s Federal Register.
The Relief Act reauthorizes the DFPP program to allow handlers to enter into new contracts until September 30, 2025. Any forward contract entered prior to the September 30, 2025, deadline is subject to a September 30, 2028, expiration date.
The Dairy Forward Pricing Program, which was initially established under the 2008 farm bill, allows milk handlers, under the Agricultural Marketing Agreement Act of 1937, to pay producers or cooperative associations of producers a negotiated price for producer milk, rather than the federal milk marketing order (FMMO) minimum blend price for non-fluid classes of milk (Classes II, III and IV under the FMMO system). The DFPP does not allow for forward contracting Class I milk.
The DFPP has expired and then been reauthorized several times since it was first established. Most recently, it had expired on September 30, 2024.
USDA, including market administrator personnel, does not determine the terms of forward contracts or enforce negotiated prices. This regulation also does not affect contractual arrangements between a cooperative association and its members.
Under the DFPP, regulated handlers must still account to the FMMO pool for the classified use value of their milk. Regulated handlers claiming exemption from the federal order minimum pricing provisions must submit to the market administrator a copy of each forward contract.
The contract must contain a disclosure statement, either as part of the contract itself or as a supplement, to ensure producers understand the nature of the program as well as the basis on which they will be paid for their milk. Contracts that do not contain a disclosure statement are deemed invalid and returned to the handler.
Signed contracts must be received by the market administrator before the first of a month in order to be effective for the month. For example, contracts must be received by the market administrator by December 31, 2024, to be effective for the month of January 2025.
Handlers with forward contracts remain subject to all other milk marketing order provisions. Payments specified under a forward contract must be made on or before the same date as the federal order payments they replace.
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