Producer-handler proposal: USDA poised to cap milk bottling

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WOOSTER, Ohio — The amount of milk a farmer is allowed to bottle could soon be capped if a USDA policy gets the approval of producers across the country.

The USDA has published a proposed decision in the Federal Register to cap the production of farmers who bottle their own milk, known as “producer-handlers,” to no more than 3 million pounds of milk per month.

Any producer-handler who exceeds this amount will be required to participate in the federal pooling and pricing provisions.

The entity will be treated the same as other bottling operations not owned by farmers, being made to share Class I proceeds with farmers in their respective federal order regions.

What the limit will do

The National Milk Producers Federation, in a released statement, said the bottling limit will help control the price advantage enjoyed by the largest farms that bottle their own milk outside of the federal marketing program.

The limit will help control about a half-dozen large producer-handlers from “cherry-picking Class I milk sales at the expense of other producers in federal order pools,” said Jerry Kozak, president and CEO of the National Milk Producers Federation.

“These largest operations should no longer enjoy a regulatory loophole intended for smaller players. Once you’re bottling 3 million pounds of milk monthly, you’re a large plant, and should contribute to the marketing pools just like any other large Class I handler,” Kozak continued.

Comments on the decision are due by Dec. 21. A final decision is expected in February.

Milk producers will then be asked to vote on the issue through USDA’s Agricultural Marketing Service.

Decision process

In May, USDA held a hearing on the matter in Cincinnati, where several bottling producer-handlers attended and voiced concern over the proposed limit.

The proposals initially submitted called for complete elimination of producer-handlers’ exemption to the federal program, said Gino Tosi, a senior marketing specialist with USDA.

“They thought the time had come to eliminate the provision from the orders,” Tosi said of those who wanted to dissolve the exemptions altogether.

Following the hearing, however, a proposal was put together by USDA to continue allowing producer-handlers exemption, up to 3 million pounds a month.

Federal milk orders

The federal order pool system was created in 1937, as a means of establishing an orderly marketing system for producers and those who buy milk from them — the handlers.

It ensures a minimum payment to dairy farmers for their product, determined by USDA.

Other side

But some milk producers say requiring participation could affect their ability to sell a product consumers demand, and could tap into their own ability to be profitable in the marketplace.

“The decision won’t affect our dairy, specifically, because we’re under the limit,” said Jeff Brunton, of his family’s 100-cow dairy farm in Beaver County, Pa.

He’s more concerned about the “principal” of the decision, and whether it punishes business growth and effective marketing.

“It messes with the market by interfering with an efficient business model,” he said. “I think you earn what you get. If you’re able to put together a large producer-handler operation that can deliver quality milk at a fair, affordable price, I think you should be rewarded for it, not punished for what you do.”

Only about a half dozen operations in the country are believed to be directly affected by the 3 million-pound cap.

“Almost everybody is below 3 million (pounds), and almost everybody that’s over 3 million, they’re way over 3 million,” Tosi said.

Conclusions

The Agricultural Marketing Service concluded most federal milk marketing areas would benefit by the 3 million pound cap, because more producers would be made to pool their prices.

Ohio is located in the Mideast Marketing Area, which has more than 7,200 dairy farmers, about 93 percent that are considered small businesses, with the other 7 percent considered large businesses.

Producers “large and small could benefit by receiving a higher blend price, if the recommended 3 million pound monthly Class I route disposition limitation for producer-handlers is adopted,” AMS officials wrote.

About the Author

Chris Kick lives in Wooster, Ohio. An American FFA Degree recipient, he holds a bachelor’s in creative writing from Ashland University. He spends his free time on his grandparents’ farms in Wayne and Holmes counties. More Stories by Chris Kick

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