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Dairy Facts 2016

IDFA and NMPF Call for End to Producer-Handler Exemptions

Feb 02, 2009

IDFA and the National Milk Producers Federation simultaneously filed petitions with the U.S. Department of Agriculture last Friday requesting a national hearing to consider eliminating the current producer-handler exemption in the Federal Milk Marketing Order System. The petitions also call for a clarification of the exemption for small distributing plants in all marketing areas.

A federal exemption historically has 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. Some of these producer-handler operations have grown quite large in recent years, resulting in millions of pounds of unregulated milk and putting regulated producers and processors at a competitive disadvantage.

"Having some but not all handlers subject to the Class I minimum price clearly creates disorderly marketing conditions," said Connie Tipton, IDFA president and CEO, in the petition. "This provides a producer-handler a very substantial cost advantage over regulated plants, solely as a result of this regulatory exemption."

Recognizing that some plants are too small to cause market disruption, the petitions call for a modest expansion of the exemption for small handlers. IDFA and NMPF proposed raising the current size limit for exemption from 150,000 pounds of fluid milk a month to 450,000 pounds a month.

'This will reduce the regulatory burden — for small handlers and for USDA — without having a significant impact on orderly marketing and federal order pool values," the NMPF petition states.

The two petitions support identical changes to the current regulatory language.

Under new federal order proceedings required by the 2008 Farm Bill, USDA's Agricultural Marketing Service must take action on the petitions within 30 days. AMS has three options: It can reject the petition, request additional information from the petitioners or publish an action timeline. This timeline will include a process for completing a hearing not more than 120 days after the timeline is published.

For more information, contact Bob Yonkers, IDFA vice president and chief economist, at or 202-220-3511.


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