The U.S. Department of Agriculture last week released an action plan in response to two industry petitions calling for a hearing to reconsider the producer-handler exemption in the Federal Milk Marketing Order system. As a first step, USDA will accept additional proposals and comments before deciding whether a hearing is necessary.

On January 30, IDFA and the National Milk Producers Federation simultaneously filed petitions with USDA to request the hearing to consider eliminating the current exemption. The petitions also asked USDA to consider expanding the exemption for small distributing plants in all marketing areas.

"We’re pleased that the department has responded so quickly to our proposals," said Bob Yonkers, IDFA vice president and chief economist.

According to the action plan, additional proposals and comments are due by March 9. A pre-hearing workshop "will likely not be held" and a tentative hearing date has been set for sometime in April. This quick response is mandatory under new federal order proceedings in the 2008 Farm Bill, which requires USDA's Agricultural Marketing Service to take action on petitions within 30 days.

The exemption currently is 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 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. This creates disorderly marketing conditions, according to IDFA and NMPF.

Noting 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.

Members with questions may contact Yonkers at byonkers@idfa.org or 202-220-3511.

• Producer-Handlers and Exempt Plants: Action Plan
• Producer-Handlers and Exempt Plants: Request for Additional Proposals
• Producer-Handlers and Exempt Plants: National Milk Producers Federation
• Producer-Handlers and Exempt Plants: International Dairy Foods Association