Agricultural Marketing Service

United States 

Department of 

Agriculture

An Overview 

of the 

Federal Milk 

Marketing 

Order 

Program
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The U.S. Department of Agriculture (USDA) 

oversees the Federal Milk Marketing Order (FMMO) 

program which includes 11 milk marketing orders 

and applies to about 75 percent of total U.S. milk 

production. The regulatory provisions of the 

individual orders apply to handlers, not dairy 

farmers, and specify how dairy farmers supplying a 

marketing area will share the money from their raw 

milk sales.

What is a Marketing Area?

A geographic area where dairy processors compete 

for their sales. FMMO regulations and area-specific 

provisions in each marketing area are administered 

by a regional “Market Administrator.” Areas not 

covered by an FMMO are either unregulated or 

are regulated by a state system. A map of the 11 

marketing areas is at: 

https://tinyurl.com/FMMOmap

What is a Handler?

A handler is a processor of raw 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.). 

An FMMO must regulate fluid milk handlers—

manufacturing handlers typically participate when 

it is economically beneficial.
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What does 

the FMMO 

Program do?

1 Establishes Minimum 

Uniform Prices

FMMOs establish minimum prices paid to farmers 

through a three-step process:

1. Collect dairy commodity market prices

2.Determine handler prices based on end-use

3.Establish minimum uniform prices through 

pooling

FMMOs establish monthly uniform prices paid to 

farmers by first classifying milk by its end-use. The 

FMMO then combines the value of that milk (this 

is referred to as pooling) and shares the value among 

those farmers whose milk is pooled. There are four 

uniform “classes” throughout the FMMO system: 

y Class I: fluid milk

y Class II: milk used to make soft products (ice 

cream, cottage cheese, yogurt, etc.)

y Class III: milk used to make hard cheese products

y Class IV: milk used to make butter and powdered 

dry milk products

2 Ensures Proper 

Payments

Through auditing, each FMMO ensures payments 

to farmers are accurate and timely. In addition, 

FMMO dairy scientists establish or verify tests of 

milk components (butterfat, protein, other solids) to 

ensure farmers are paid for the proper component 

levels in their milk.
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How Does 

Pooling 

Work?

3 Provides Market Information

Industry, academia and other government agencies 

rely on the dairy-related regional and national data 

collected and analyzed by the FMMO program. The 

weekly, monthly and annual publication of FMMO 

program data is a comprehensive and timely source 

of dairy information currently not reported by any 

other entity.

FMMOs establish monthly uniform prices paid 

to farmers by first classifying milk by its end use. 

The FMMO then pools the value of that milk and 

shares that value among the farmers participating 

on that marketing order. Pooling allows farmers 

to receive the uniform price of all milk in the pool 

regardless of what end product their milk was used 

for. In this way, pooling makes a farmer’s payment 

independent of how the milk was used.

The chart on the following page shows a simplified 

example of how pooling works for two different dairy 

farmers, Farmer A and Farmer B. CWT stands for 

hundredweight, or 100 pounds.
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This is a simplified example of how pooling works for two different dairy farmers.
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How can an 

FMMO be 

amended?

Changes to the FMMO require a rulemaking 

process that is:

1.Industry-driven: changes are proposed by the 

industry, not USDA.

2.All-inclusive: anyone can take part in the hearing 

and public comment periods.

3.Transparent: decisions are based solely on the 

record of the rulemaking proceeding.

4.Farmer-approved: farmers must approve any 

change via a voting process.

More information about Understanding the 

Milk Order Amendment Process is at: 

https://tinyurl.com/MilkAmendment

To learn more about FMMO's, visit:

https://tinyurl.com/learnaboutFMMOs

This booklet is designed to provide an overview of 

the Federal Milk Marketing Order program. It is not 

intended to provide comprehensive guidance. Program 

rules can be found in Title 7 of the Code of Federal 

Regulations (CFR), Part 900-General Regulations. 

USDA is an equal opportunity provider, employer, 

and lender. October 2019