USDA Announces Limitation on Producer-Handler Exemption

The U.S. Department of Agriculture (USDA) announced last Thursday that beginning April 1, producer-handlers in the Pacific Northwest and Arizona-Las Vegas marketing areas will only be exempt from Federal Milk Marketing Order pricing and pooling requirements if they produce, process and market less than 3 million pounds (about 348,000 gallons) of fluid milk products per month.

Under a required referendum, producers in both markets approved the amendments contained in the final decision, which was published by USDA on December 9, 2005. (See previous story in December 12 edition of News Update).

A federal exemption has historically been given to dairy farmers who process milk from their own farms and market the products themselves. Unlike other farmers and processors within a federal order area, these producer-handlers have been largely exempt from pricing and pooling requirements. However, some of these producer-handler operations have grown very large in recent years, resulting in millions of pounds of unregulated milk and putting regulated producers and processors at a competitive disadvantage.

The new limitation on the producer-handler exemption in the two marketing areas is the result of testimony and evidence given at a public hearing in Tempe, Ariz., beginning in September 2003, which was reconvened and continued in Seattle, Wash., beginning in November 2003, and again reconvened and concluded in Alexandria, Va., in January 2004. In the more that two years since then, USDA reviewed the voluminous hearing record and post-hearing briefs filed by participants, published a proposed rule on April 13, 2005, and reviewed numerous comments on the proposed rule before publishing the final rule last December.

To read USDA's press release on the new policy, click here.

Posted February 27, 2006