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Organic dairy farmers in the United States have launched a series of legal challenges against the federal government, arguing that current milk pricing rules unfairly disadvantage their sector and divert revenue to conventional producers.

Three federal court filings submitted by members of the Coalition for Organic Dairy Exemption (CODE) contest the constitutionality of requiring organic producers to participate in the US Department of Agriculture’s Federal Milk Marketing Order (FMMO) programme.

In parallel, a class action claim seeks compensation for what farmers describe as six years of improperly collected payments into the system.

The plaintiffs argue that the FMMO structure forces organic producers to contribute to a pricing pool that does not return value to them. Elvin Ranck, an organic dairy farmer in Pennsylvania and one of the claimants, said the system “actively harms organic dairy farmers” by redistributing income generated from organic milk sales to non-organic producers.

Ranck added that his cooperative, CROPP Cooperative, pays millions of dollars annually into the FMMO pool without receiving any financial benefit in return, describing the arrangement as equivalent to a government taking.

Organic dairy now represents more than 10% of US dairy farms, with its share of fluid milk sales rising from 1.9% in 2006 to 7% in 2025. Industry representatives argue that the current pricing framework undermines this growth by extracting resources that could otherwise be used to expand production and meet rising consumer demand.

CODE members claim that successive administrations have failed to address the issue despite repeated efforts by the organic sector. Proposals submitted in 2015 were not advanced, while organic-specific recommendations raised during a national FMMO hearing in 2023 were not considered. Further objections and administrative challenges lodged in 2024 and 2025 have also gone unresolved.

The FMMO programme was originally established in the 1930s to stabilise the conventional dairy market and ensure adequate milk supply.

Organic producers argue that the system has not evolved to reflect fundamental differences between organic and conventional dairy, including separate supply chains, stricter production standards and higher operating costs.

Under current rules, organic and conventional milk are treated identically for pricing and pooling purposes, despite federal regulations preventing the two from being intermingled. Farmers say this mismatch places additional financial strain on organic operations, which already face higher feed costs and stricter regulatory requirements.

The legal action does not seek to dismantle the FMMO system but instead calls for organic dairy to be excluded from a framework that, according to plaintiffs, was never designed for it. Industry representatives argue that federal law already recognises organic products as distinct and that pricing mechanisms should reflect that distinction.

The outcome of the case could have significant implications for the structure of US dairy pricing and the future growth of the organic sector.