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Producer-Handler Exemption No Longer Necessary, Yonkers Testifies

May 18, 2009

"Whatever historical justification may have once existed for the producer-handler exemption, it clearly no longer applies in light of the significant structural changes which have occurred at all levels of the dairy marketing chain." That's what IDFA Chief Economist Bob Yonkers told federal officials last week at a national hearing to review producer-handler provisions in all Federal Milk Marketing Orders.

The U. S. Department of Agriculture hearing, which began on May 4, has attracted attendees from across of the industry, including dairy farmers, producer-handlers, dairy farmer cooperatives, fluid milk processors and associations.

Earlier this year IDFA and the National Milk Producers Federation submitted petitions seeking to eliminate the current producer-handler exemption and clarify the size-based exemption for all handlers in all marketing areas. After receiving the petitions, USDA accepted nearly 30 new proposals, held an information session and announced the hearing.

Unlike other farmers and processors within a federal order area, dairy farmers who process milk from their own farms and market the products themselves 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.

"Handlers not subject to such regulations can use their artificial cost advantage to offer customers lower-priced processed milk, or to offer increased customer services, or to invest additional funds in their plant operations," Yonkers testified.

Yonkers also testified in support of a second proposal to expand the exemption for handlers considered too small to disrupt the market. The proposal would raise the current size limit for exemption from 150,000 pounds of fluid milk a month to 450,000 pounds a month.

"Proposal 2 allows for future growth while keeping the limit in line with the industry structure," Yonkers said.

The hearing is expected to wrap up early this week, after running every weekday since May 4.

Yonker's testimony is available for members. For more information, contact Yonkers at or 202-220-3511.


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