USDA OKs amendment to federal milk order

WASHINGTON – The USDA issued an interim order July 25 amending the current pooling provisions of the Mideast Federal milk marketing order as approved by area dairy farmers, effective Aug. 1.

The goal of the order amendment is to prevent inappropriate pooling of milk on the Mideast order.

It’s about time. The decision comes none too soon, as outside milk is being pooled on the Mideast federal order in a record amount, according to OSU Ag Economist Cameron Thraen.

“By my estimate, we surpassed the previous record amount set in June 2001 of 480 million pounds in May, with a record 484 million pounds of outside milk dipping into our pool revenues,” Thraen said. “In May, our Class I utilization fell to 32.1 percent, and in June it fell again to 29.2 percent.

“The Class III utilization, and this is where the pool riding milk hides, increased to 51.9 percent in June,” Thraen added.

The changes. The approved amendments to the Pool Plant provisions will:

* eliminate automatic pool plant status March through August;

* eliminate milk shipments to a distributing plant regulated by another federal milk order as pool-qualifying shipments;

* eliminate the “split plant” feature of the order;

* eliminate the inclusion of diversions to pool distributing plants made by a supply plant located outside the marketing area as part of the supply plant’s qualifying shipments; and

* establish a “net shipments” standard for supply plants.

This interim order also changes the producer milk provisions by increasing the number of days that the milk of a producer needs to be delivered to a pool plant; instituting year-round diversion limits, adjusted seasonally, for all pool plants; and excluding from receipts the diversions made by a pool plant to a second pool plant from the calculation of the diversion limitation.

Lost income. Thraen said pool riding has cost Mideast dairy farmers and their families “dearly.”

“My calculations suggest that from January through May we have lost 32 cents per hundredweight or an additional $18 million,” Thraen said. “This puts my total at $102 million dollars in direct cash outflow since the pool raiding started.”

California surfs Midwest. Thraen said another new development to watch is the influx of California milk on the Midwest order.

“After the Upper Midwest Federal Order 30 received a favorable response from USDA and successfully shut down the double dipping of California milk on their order, that milk has now surfaced on – you guessed it – our Federal Order 33.”

He said there were 23 producers/shippers of California milk associated with the Mideast revenue pool.

There were 109,000 pounds pooled in March, 12.1 million in April and 21.9 million pounds in May.

The new amendment, although it does not directly address this situation, may hamper such double dipping.