USDA began hearings this week regarding producer-handlers, farms who bottle their own milk and therefore compete with other bottlers. National Milk’s Chris Galen on Thursday said “The issue is whether the very largest producer handlers should continue to be exempt from a decades-old regulation that has created a loophole, allowing these very large operations to not pay into the Class I pool” and “has to do with how all farmers are paid in Federal milk marketing orders.”The highest value milk is Class I, he explained, and that revenue is shared by bottlers with all dairy farmers in a given region, with the exception that some of these large bottlers, if they’re owned by a dairy producer, do not have to pay into the Class I pool, thus reducing the revenue available to all other farmers.
The proposal to close this loophole was sought by National Milk and the International Dairy Foods Association, according to Galen, but also seeks to maintain and even expand the loophole for smaller producer-handlers who “don’t really have the opportunity to disrupt milk marketing because they’re not of a sufficient size, but we do think that once you reach a certain size threshold and can fly with the big boys, you ought to be regulated in the same way.”
Some frame this effort as large corporations trying to control smaller competitors but Galen argued that a lot of these bottlers have grown so big that they’re bigger than plants that are paying into the pool.
“This is about producer revenue,” Galen said. “All that money that the producer-handlers don’t have to pay into the Class I pool means a lower blend price for all other farmers who don’t happen to be their own bottler.”“It’s about making certain that, when you get to a certain threshold a certain size that you are regulated the same as any other large bottler,” he concluded. “It’s not about regulating farms it’s about regulating the bottling aspects of these very large operations.”